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The economy of Ghana, the country that lies in the Gulf of Guinea, is rapidly flourishing with its rich natural resources. Ghana is a multicultural and festive country. Since the early 2010s, the service sector has experienced rapid growth. Ghana's production is driven by a combination of the private and government sector. Ghanaian Cedi (GH₵) is the official currency of Ghana.
Ghana is a developing country that is working to ramp up its economic growth by eliminating poverty and improving the quality of life through industrial development and business investment. In 2022, the Gross Domestic Product (GDP) in Ghana was around US $76.2 billion. For hiring & payroll processing in Ghana, it has a flexible labor market, but employers must abide by the payroll laws of Ghana. For payroll in Ghana, the basic minimum wage has been revised from January 1, 2023 onwards. The daily minimum wage has risen from GH₵ 13.53 to GH₵14.88.
Payroll Cycle and Working Hours in Ghana
For payroll processing in Ghana, the payroll cycle is monthly, with payments due on the same day of each month or the last working day of the month. However, some employers prefer to pay their employees biweekly as well. As per payroll laws in Ghana, the normal work schedule in Ghana is 40 hours per week, divided into 8 hours per day for a five-day workweek. In some businesses, the working hours can be up to 48 hours per week.
Social Security Contribution for Payroll Tax in Ghana
The Social Security and National Insurance Trust (SSNIT) is a legislated public fund for payroll in Ghana that is in charge of running and maintaining the National Pension Scheme. The Trust's primary responsibility is to substitute a portion of the lost revenue of Ghanaian workers due to old age, disablement, or death of a member, in cases where dependents receive a lump sum payment. SSNIT is responsible for disbursing the emigration benefit to a non-Ghanaian employee who is going to leave Ghana permanently.
The National Pensions Act of 2008 governs pension contributions and establishes the following pension systems for payroll processing in Ghana:
- The First Tier - Contribution should be made to a legally required basic national social security scheme.
- The Second Tier - Employee contributions are done to a compulsory fully funded and privately run occupational pension scheme.
- The Third Tier - Employee contributions are voluntary to a fully funded and privately operated provident fund and personal pension scheme.
Under the social security contribution for the payroll tax in Ghana, the total contribution to be made is 18.5% of each employee’s basic salary to the first two mandatory tiers of the Social Security scheme on or before the 14th day of the month. Out of this total contribution, the employer pays 13% while the employee pays 5.5% of his basic salary.
Employer Payroll Contribution in Ghana (2022)
- Social Security & Pension (SSNIT) - 13%
Employment Cost - 13%
Employee Payroll Contribution in Ghana (2022)
- Social Security & Pension (SSNIT) - 5.5%
Employee Cost - 5.5%
The employment cost and employee cost incurred are divided under the Social Security and National Insurance Scheme (SSNIT) – "Tier 1" and "Tier 2" Schemes. Out of a total contribution of 18.5% to social security, 11% of total contributions are paid to SSNIT's Tier 1’ for old age benefits, disability & survivor’s benefits, 5% of the fund goes to ‘Tier 2 for mandatory occupational pension, and 2.5% is paid to the National Health Insurance Authority (NHIA) as the National Health Insurance Levy.
Employee Income Tax in Ghana
In Ghana, there is a Pay-As-You-Earn System (PAYE) that is governed by the Ghana Revenue Authority (GRA). The fiscal year for income tax followed in Ghana is the calendar year i.e from 1st January to 31st December.
Pay-As-You-Earn (PAYE), is a framework where the employer sets aside income tax from employees' salaries and disburses the tax to the Ghana Revenue Authority by the 15th of the next month. It is also the employer's responsibility to file a tax return on behalf of the employee by the 30th of April following the end of the calendar year.
Income Tax Slab in Ghana for 2022
Wages, incentives, overtime, and other perks and remuneration are all taxable for Ghanaian employees. Compensation generated by a resident employee for work performed outside the boundaries of Ghana will be taxed when earned rather than when received.
There is a tax relaxation for the employment income of a resident employee who works outside Ghana and is employed by a non-resident employer or a resident employer and is present outside Ghana for more than 183 days. The Ghanaian employees pay taxes on a progressive income rate i.e. from 0% to 30%.
