TaxLawGHby MSL Business School
MSL Business SchoolCross-border income-tax framework
Ghana Tax Residence, Source and Foreign Tax Credit
Determine who is Ghana resident, which income has a Ghana source and how a resident taxpayer claims relief for qualifying foreign income tax.
Published by MSL Business School.
MSL Business School — Cross-border income-tax framework at a glance
Controlling answer
Residence identifies the taxpayer's reach; source identifies the income's connection.
A Ghana resident is generally taxed on income within the resident rules, including foreign-source income unless an exemption applies. A non-resident is taxed on Ghana-source income. A qualifying resident may claim a foreign tax credit for foreign income tax paid on assessable foreign income, subject to the statutory cap and supporting evidence.
Cross-border income-tax framework
Apply the test for the legal form and the year
| Person | Ghana residence test under section 101 |
|---|---|
| Individual | A citizen, subject to the permanent-home exception; a person present for at least 183 days in a relevant twelve-month period; a Ghana Government employee or official posted abroad; or a citizen temporarily absent for not more than 365 continuous days who has a permanent home in Ghana. |
| Company | Incorporated under Ghana company law, or management and control of its affairs is exercised in Ghana at any time during the year. |
| Partnership | Any partner is resident in Ghana at any time during the year. |
| Trust | Established in Ghana, has a Ghana-resident trustee during the year, or a Ghana-resident person directs or may direct senior managerial decisions. |
Do not use nationality alone: citizenship, physical presence, permanent home, incorporation, management and control, partner residence and trust direction are separate statutory tests.
Cross-border income-tax framework
A change of residence can trigger asset consequences
A person resident during a year is generally treated as resident for the whole year. An individual resident through the 183-day rule is resident from the start of the relevant 183-day period.
The net cost of a non-domestic asset held immediately before residence generally resets to market value at that time.
A non-domestic asset held immediately before departure is generally treated as realised at market value when residence ceases.
Section 102 preserves the stated exception for assets that are domestic immediately before entry or immediately after exit.
Keep travel records, homes, contracts, board and management records, valuations and asset-location evidence.
Cross-border income-tax framework
Classify source by the statutory payment and asset rules
Act 896 separates Ghana-source and foreign-source income and losses. The statutory source map includes direct amounts connected to domestic assets and liabilities and specified payments.
| Payment or amount | Typical Ghana-source connection |
|---|---|
| Dividend | Paid by a resident company. |
| Interest | Secured by Ghana real property, paid by a resident person or paid by a Ghana permanent establishment. |
| Natural-resource payment | Connected to a resource situated in Ghana or its territorial waters. |
| Rent | For the use, right to use or forbearance from using an asset situated in Ghana. |
| Royalty | For the use, right to use or forbearance from using an asset in Ghana. |
| Insurance, transport and communications | Apply the detailed risk, embarkation, equipment and transmission tests in section 105. |
Employment, business and investment amounts can require separate calculations where both Ghana and foreign sources exist. Do not use the payer's bank location as a substitute for the statutory source test.
Cross-border income-tax framework
Resident foreign income is taxable unless a specific exemption applies
Section 111 states that foreign-source income of a resident person is taxable. It then exempts income of a resident individual from employment exercised in a foreign country with a non-resident employer, or with a resident employer where the individual is present in the foreign country for at least 183 continuous days during the year.
Foreign business and investment losses are quarantined and calculated separately under section 103. A double-tax agreement may modify the domestic result where its conditions are met.
Cross-border income-tax framework
Match the foreign tax to the same assessable foreign income
- 01Confirm Ghana residence
The section 112 credit is available to a resident person other than a partnership.
- 02Include the related foreign income
The foreign tax must relate to assessable foreign income for the same year.
- 03Separate each stream
Calculate the credit by year and separately for foreign employment, business and investment income.
- 04Apply the cap
The credit for each calculation cannot exceed the taxpayer's average Ghana income-tax rate applied to that assessable foreign income.
- 05Keep official evidence
Regulation 34 requires a tax-credit certificate, official receipt or functional equivalent from the foreign tax authority identifying the income and tax paid or deducted.
- 06Choose credit or deduction
A taxpayer may elect to relinquish the credit and deduct the foreign income tax; the same amount cannot receive both treatments.
Cross-border tax position matrix
Test the person, income and foreign tax as one connected file.
Identify the legal form and apply the residence test for that person and period. Do not apply an individual's day-count test to a company, trust or partnership.
Classify each employment, business, investment or property amount and apply its specific Ghana source rule.
For business activity, test whether a fixed place, project, services, equipment or agent creates a Ghanaian permanent establishment and what income is attributable to it.
Where an agreement is in force, confirm residence, entitlement, the relevant article and any permanent-establishment condition before relying on relief.
Match the foreign tax to the same taxpayer, income type and basis period. Retain the foreign assessment, certificate or official receipt.
Calculate the statutory limit for the relevant foreign income. A credit cannot exceed the amount permitted by Ghana law or create an unrelated credit against other income.
Reconcile gross foreign income, allowable expenses, foreign tax, Ghana tax and the credit claimed in the annual return workpapers.
If foreign tax is refunded or changed, reassess the Ghana credit and make the required correction rather than leaving the original claim unchanged.
Frequently asked questions
Ghana Tax Residence, Source and Foreign Tax Credit questions
When is an individual resident for Ghana income tax?
The tests include citizenship subject to the permanent-home exception, at least 183 days' presence in a relevant twelve-month period, specified Government postings and certain temporary absences by citizens with a permanent home in Ghana.
Is a Ghana resident taxed on foreign income?
Generally yes, unless a statutory exemption or applicable treaty provision changes the result.
Does payment into a foreign bank account make income foreign source?
Not by itself. Source follows the statutory rules for the employment, payment, asset, payer and activity.
Who may claim a foreign tax credit?
A resident person other than a partnership may claim for qualifying foreign income tax paid on assessable foreign income.
What evidence supports the credit?
A foreign tax-credit certificate, official receipt or functional equivalent from the foreign tax authority that identifies the income and tax.
MSL Business School legal reference map
Primary authority and official sources
- Income Tax Act, 2015 (Act 896)Open source →
- GRA practice note on double-taxation reliefOpen source →
- GRA personal income tax guidanceOpen source →
- GRA tax terminologyOpen source →
Institutional publisher
TaxLawGH is MSL Business School's Ghana tax education platform.
MSL Business School publishes TaxLawGH to make Ghana's tax law easier to find, understand and apply.
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