In Ghana there is a mixed system of English common law and customary law.
Nana Addo Dankwa Akufo-Addo
Mining, lumbering, light manufacturing, aluminium smelting, food processing, cement, small commercial ship building, petroleum
Asante 14.8%, Ewe 12.7%, Fante 9.9%, Boron (Brong) 4.6%, Dagomba 4.3%, Dangme 4.3%, Dagarte (Dagaba) 3.7%, Akyem 3.4%, Ga 3.4%, Akuapem 2.9%, other (includes English (official)) 36.1%
Christian 71.2% (Pentecostal/Charismatic 28.3%, Protestant 18.4%, Catholic 13.1%, other 11.4%), Muslim 17.6%, traditional 5.2%, other 0.8%, none 5.2%
- Capital markets
Regulatory body or bodies
The Securities and Exchange Commission (SEC):
- maintaining surveillance over the securities business to ensure orderly, fair and equitable dealings in securities;
- among other things, registering, licensing and authorising the stock exchange, investment advisors and securities dealers; and
- protecting the integrity of the securities market against any abuse arising from the practice of insider trading.
Public offers / disclosure regulations
Public companies not listed on the GSE will have to comply with the Companies Act 1979 and the SEC Code (where applicable). Listed companies will have to comply with the GSE Listing Rules, the GSE Trading Rules and the SEC Code (where applicable).
Ghana Stock Exchange (GSE)
Takeover / merger regulations
The SEC Code on Takeovers and Mergers (SEC Code) regulates takeovers and mergers involving companies listed on the GSE and public companies.
Securities Industry Act 1993 (PNDCL 333)
Corporate governance code
The SEC has issued guidelines on best practices in corporate governance.
Current number of listed companies
- Competition regulation
The UCA does not apply in the same way as anti-trust or competition legislation in other jurisdictions. It is a general mechanism for the protection of intellectual property and proprietary information (whether or not it is registered), as well as the protection against practices and activities which restrict competition. Those that seek protection or redress under the UCA have to go to court.
Ghana does not currently have a composite competition law or authority, although it is currently being discussed by the Government. Competition issues are dealt with under the regulatory regime of various industries, as well as the Protection Against Unfair Competition Act 2000 (UCA).
Impact of the regulatory regime on business
Competition exists in those sectors / industries which have a competition policy as part of the regulatory regime. These sectors include banking, telecommunications and mining.
- Corruption / transparency
Signatories to the African Union Convention on preventing and Combating Corruption?
Signatories to United Nations Convention Against Corruption (UNAC)?
Corruption Perception Index score for 2017
Corruption Perception Index rank worldwide for 2017
Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?
Effectiveness of the court system
Ghana operates a common law legal system, based on judicial precedents. Decisions of English courts are of persuasive effect in Ghanaian courts. The court system of Ghana is generally effective; there are however issues of poor judicial case management which have been known to cause delays in litigation proceedings. Some of the measures introduced by the judiciary to minimise delays include compulsory alternative dispute resolution mechanisms (pre-trial settlement conferences) which have been incorporated in the court processes of some courts like the commercial division of the High Court. The Judiciary has also embarked on the process of automating the courts. The automation of the courts ensures greater accuracy in recordation of court processes. The Supreme Court, the Court of Appeal and the specialised divisions of the High Court have all been automated.
Enforcement of arbitral awards
Ghana is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (Convention). The circumstances in which enforcement will be refused are limited and broadly reflect the grounds set out in Article V of the Convention and Section 59(3) of the Alternative Dispute Resolution Act, 2010 (Act). One point of potential uncertainty rests with Section 59 of the Act: it does not include an express exemption from enforcement on the grounds of public policy. It is, however, thought unlikely that the Ghanaian courts would be prepared to enforce an arbitral award that directly contravened Ghanaian public policy. This issue is yet to be tested in the Ghanaian courts.
Enforcement of foreign judgments
Enforcement of foreign judgments in Ghana is governed by the doctrine of reciprocity. Based on this doctrine, judgments originating from Brazil, France, Israel, Italy, Japan, Lebanon, Senegal, Spain, the United Arab Emirates, and the United Kingdom are enforceable in Ghana. Judgments from the United States are not currently enforceable in Ghana.
The Uniform Act on Arbitration (Uniform Act) governs the arbitration regime in Ghana. The Uniform Act does not limit arbitration to commercial and professional matters; individuals and corporate bodies alike may refer their dispute to arbitration.
Structure of the court system
Ghana's legal system is based on British Common Law. The most important exception for the purpose of investment is the acquisition of interests in land, which are governed by both statutory and customary law.
Perception of the local courts
In general, the courts are perceived by the local population to be fair and are seen as the best way to administer justice in Ghana. However, the procedure may be slow and may last for an indefinite period.
The Ghanaian court structure in hierarchical order comprises:
- The Supreme Court
- The Appeal Court
- The High Court
- The Regional Tribunals
- The Circuit Courts
- Foreign investments
The Ghana Inve stment Promotion Centre Act 1994 (GIPC) sets out provisions for foreign investment in companies listed in Ghana. Any enterprise with foreign participation must register with the GIPC, indicating its activity and the amount of foreign capital invested.
Previously, shares held by any single external resident in a company listed on the Ghana Stock Exchange was limited to 10%, and the maximum level of foreign ownership for each firm was 74% unless prior exchange approval was obtained from the Bank of Ghana. These limits were removed with the Foreign Exchange Act, 2006.
Foreign investment incentives
The Ghana Investment Promotion Centre Act 1994 (GIPC) encourages foreign investment in Ghana. Foreign investors are not subject to differential treatment on taxes, prices, access to foreign exchange, imports, and credit. Various steps have been taken over the past few years to remove legal and administrative impediments to foreign investment.
Ghana is also a member of the Multilateral Investment Guarantee Agency of the World Bank, which provides investment guarantees against non-commercial risk for investments in developing countries.
Export Processing Zones and the Ghana Free Zones Board (GFZB)
The Free Zones Act 1995 is the legal framework that establishes the right to set up a business under the Free Zones Programme in Ghana (these areas are known as export processing zones (EPZ)). Under the programme, companies that export 70% or more of their annual production are exempted from the payment of almost all taxes and may import their inputs duty free. According to the Act, the GFZB has the mandate to establish new Free Zones, grant licences, attract new investors, and monitor the activities of EPZ enterprises.
Foreign investor rules
The Ghana Investment Promotion Centre Act 1994 (GIPC) governs investment in all sectors of the economy except minerals and mining, oil and gas, and the Free Zones. Sector-specific laws further regulate banking, non-banking financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate.
Foreign investors are required to satisfy the provisions of the GIPC as well as the provisions of sector-specific laws where applicable.
The Regulator (see above) prohibits advertisements that promote tobacco products. The Public Health Bill (Bill) was passed into law in July 2012 and is awaiting Presidential Assent. The Bill bans direct and indirect advertising of tobacco products. The Bill also bans tobacco promotion and sponsorship. Additionally, Ghana is a signatory to the World Health Organization Framework Convention on Tobacco Control (Convention), and seeks to enact the Convention into law by making the Convention a schedule to the Public Health Bill.
Article 266 of the Ghanaian Constitution establishes that foreigners may not own freehold interest in land in Ghana. However, they may lease residential, commercial, industrial, or agricultural land for renewable periods of up to 50 years. The strengthening of land administration is currently the subject of an intensive reform programme.
The telecommunications sector in Ghana has been liberalised and reformed. The monopoly of the former Post and Telecommunications Corporation was abolished with the enactment of the National Communications Authority Act 1996 (now repealed), which established the National Communications Authority as a sector regulator.
Order No. A/94/5099/HCI/CAB dated 30 December 1994, relating to the determination of advertising rates, advertising and subscription to the national radio (Radio-diffusion Nationale), national television and to the daily newspaper run by the Ministry of Information (Horoya AGP).
The insurance industry is governed by the Insurance Act 2006 (Insurance Act). The Insurance Act complies significantly with the International Association of Insurance Supervisors Core Principles, and gives regulatory powers to the Ghana National Insurance Commission.
The advertising of alcohol in Ghana is controlled through the National Media Commission (Broadcasting Standards) Regulations 2002 (L.I. 1715), (Regulation) and guidelines issued by the Food and Drugs Board (FDB).
The aviation industry is governed by the Ghana Civil Aviation Act 2004. The regulatory body is the Ghana Civil Aviation Authority.
Drug regulation in Ghana falls under the FDB. Advertisements of drug products must be approved by the FDB.
Sectorial and locational incentives
Tax incentives are available to companies based on the business the company is engaged and its location. Some of the available incentives are as follows:
Enterprises located in free zone enclaves have a tax holiday on their income for the first 10 years of operation and are charged at the rate of 8% on their income from exports of their products outside Ghana after 10 years in operation however, the 2015 budget has proposed that such enterprises be liable to corporate tax of 15% after the tax holiday. Income received from the sale of the products of free zone enterprises within the domestic market does not enjoy any tax exemption.
Income of manufacturing companies located outside Accra, Tema and outside all other regional capitals is charged at a rate of 12.5%; and income of agro processing companies located outside the Regional Capitals is charged at a rate of 0%.
- Income of Companies engaged in non-traditional exports is charged at a rate of 8%;
- Income of real estate companies derived from construction for sale or letting of low cost affordable residential premises is charged at a rate 0% for the first 5 years (A company engaged in the construction for sale or letting of low cost affordable residential premises shall be issued with a certificate certifying that it is engaged in the construction of low cost affordable residential premises by the Minister responsible for Works and Housing before it can claim on this tax incentive);
- Income of Companies engaged in farming tree crops is charged at a rate of 0% for the first 10 years; and
- Income of Companies engaged in cattle farming is charged at a rate of 0% for the first 10 years.
Direct investments are free and can be financed by contributions and goods.
Constitutions and liquidations of direct foreign investments are subject to a report to the Central Bank.
Ghanaian banks are entitled to carry out the transfer of incomes resulting from direct investments (dividends and profits) upon the presentation of evidence to that effect.
Direct foreign investments consist of any operations carried out by non-residents, companies which are under a foreign control or by the purchase by non-residents of a participation in the share capital of a resident company.
Capital gains tax
Businesses are taxed on gains made on realisation of chargeable assets at a rate of 15%.
Chargeable assets include land, buildings, shares, goodwill and business assets.
Exemptions are as follows:
- gains derived from mergers, amalgamations or re-organisation of a company where there is continuity of underlying ownership in the asset of at least 25%;
- capital gains up to Ghc 50.00;
- where the gain is used to acquire a replacement asset within one year of realisation;
- transfer of an asset in a divorce settlement; and
- transfer of an asset to a spouse.
Personal income tax
Levied on income from business, employment and investment. For a resident person, tax is paid on income accruing in, derived from, brought into, or received in Ghana. For a non-resident person, tax is levied on income accruing in, and derived from, Ghana, regardless of whether the income is received in Ghana. Pay As You Earn is the method of collection.
Rate: 0% - 25% dependent on income band.
- payment to employees;
- directors' fees;
- payment of interest;
- fees to part-time lecturers and teachers;
- dividends to shareholders;
- commission to insurance and sales agents;
- commission to lottery agents;
- payment for goods and services supplied; and
Rate for residents: 5% - 15%
Rate for non-residents: 5 - 20%
Personal income tax rates apply in respect of payment to employees.
Exemption for companies holding more than 25% shareholding. Note: where a company (controlled by not more than 5 persons) records profit over a reasonable period but does not declare dividends, the Commissioner has the authority to treat part of the company income as distributed and demand tax on dividends. The rate charged on the dividends is 8% for both residents and non-residents.
Applies to both resident and non-resident companies. It is a direct tax on income relating to business and investment, derived from, accrued in, brought into, or received in Ghana. Interest deductions are allowable for the purpose of ascertaining income.
Corporation tax rate is 25%
Mining companies are subject to an additional windfall levy of 10% (Total Rate: 35%).
Transfer pricing rules
Nothing in the legislation disallows related party transactions: the Commissioner General has the authority to adjust income in transactions to reflect the chargeable income and/or tax payable that should have arisen had the transaction been conducted at arm's length.
Capital Allowances are granted in respect of fixed assets both tangible and intangible, acquired by persons in business. The assets must be capital in nature, owned by the business and used for the purposes of carrying on the business.
Thin cap regulations
A resident company (50% or more owned or controlled by a resident), other than a financial institution, is deemed to be thinly capitalised if the ratio of interest bearing debt (from its shareholders) to equity exceeds 2:1.
Tax losses can be carried forward for 5 years, subsequent to the year in which the losses were incurred, by certain industries. This includes foreign currency exchange losses, subject to certain conditions.
Foreign tax relief
Foreign tax credits are available to relieve double taxation on overseas income. Credits are calculated separately for each source of business, employment and investment income.
Branch profits tax
Where a foreign company doing business in Ghana repatriates its branch profit after tax, it will be required to pay a levy on the amount repatriated at the rate of 10%.
Double taxation treaties
Ghana has double taxation treaties with: United Kingdom; Germany; France; Italy; South Africa; Netherlands; Switzerland; and Belgium.
Payable by every person on the total value of taxable gifts that exceed GHc 50.00 at a rate of 15%.
Value added tax
Standard Rate: 12.5%
Flat rate scheme for retailers: 3%
Export of goods: 0% zero-rated
Levied on a wide range of instruments and documents. Rate: Varies
Levied on persons for the extraction of minerals. Rate: 5%
Export processing zone
10 year income tax exemption
8% post-exemption income tax
National insurance levy
Imposed on certain goods and services at a rate of 2.5%.
Levied on income derived from rents at a rate of 8%.
Communication service tax
Levied on communication services at a rate of 6%.
Rate varies depending on location (0% - 25%)
Ghana does not have turnover tax.
Industrial concessions (exemption period)
Exemption from corporation tax
Hotel and hospitality
Taxed at a rate of 20%
Estimated life use
Rate: 0% - 25%
Real estate companies (low cost affordable)
First 5 years
Assets relating to minerals and petroleum
Buildings and structures
Computers and data handling equipment
Automobiles, plant and machinery
Assets in respect of long term crop planting
Rail, water, air-transport, plant, machinery and fixtures
Farming tree crops
Venture capital investments
Construction (low cost affordable residential)
Cocoa farming and processing cocoa by-products
Agro-processing business (pre 2004)
Processing waste materials
Agro-processing business (2004 and post 2004)
Vehicle income tax