Tax Alert Tax Services

Issue 5 Recent Double Taxation Agreements Signed Between Ghana and Other Countries July 2017

In brief Ghana has between January and June this year (i.e. 2017) signed Double Taxation Agreements (DTAs) with Morocco, Mauritius, Singapore and Czech Republic this year. Additionally, the existing DTA with the Kingdom of Netherlands which has since 2009 been in force has been amended. These new DTAs are expected to be ratified soon to come into effect.

The above brings to thirteen, the total number of DTAs that Ghana has signed with other countries namely: Denmark, the United Kingdom, Belgium, Italy, South Africa, Switzerland, Netherlands, France, Germany, Morocco, Mauritius, Singapore and Czech Republic.

In detail These DTAs are expected to enhance cross any other place of extraction of natural border trade and business activities between resources” to constitute a PE. residents of the contracting states by avoiding double taxation and preventing fiscal/tax Note however that other activities when evasion. conducted in Ghana may create a PE for a non- resident person under the PE article of each of These DTAs cover income taxes, including gains the DTAs. from the realization of capital assets. Business Profits Once ratified by Parliament, the terms of the DTAs will become effective. Profit connected to a PE is taxable in the country where the PE was created or is situated. In New Agreements determining the profits of a PE, the DTAs with Morocco, Mauritius and Czech Republic The Ghana-Morocco DTA was signed on 17 maintain the requirement that payments made February 2017 while the Ghana - Mauritius DTA by the PE to its head office for royalties, fees and was signed on 11 March 2017. These 2 DTAs are other similar payments for use of patents or the second and third Agreements that Ghana has other rights are not deductible by the PE. entered into with other African countries (the Conversely, if the PE charges its head office for first being with South Africa). The DTAs with use of such items, these income are excluded Czech Republic and Singapore were also signed from the PE’s income. This provision is omitted from the DTA with Singapore. Also, it is worth on 31 March 2017 and 11 April 2017 respectively. noting that Ghana’s current Income Tax Law Permanent Establishments does not contain such provisions. This however, used to be the case up until end of 2015 when the The DTAs contain similar provisions on what repealed Tax Law was in force. With the new Tax constitutes a permanent establishment (PE). All Law, it appears that the DTAs with Morocco, 4 DTAs generally consider “a place of Mauritius and Czech present unfavourable tax management, a branch, an office, a factory, a provisions with respect to deductibility of workshop, a mine, oil and gas well, quarry or royalties, fees and other similar payments by PEs in Ghana.

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Withholding taxes Ghana Netherlands Protocol The table below shows the various withholding This is the first time there has been an tax rates that are applicable to payments made amendment to the Ghana-Netherlands Tax for various transactions. These rates indicate the Treaty. The following are some of the maximum tax applicable on the transactions. amendments to the Treaty:

Type of MAR MUS SGP CZE Local A new Article has been introduced to provide for Income Law circumstances under which a Tax Authority may Dividends 5%/10% 7% 7% 6% 8% Interests 10% 7% 7% 10% 8% disqualify or deny a person from applying the Royalties 10% 8% 7% 8% 15% Tax Treaty. The denial may occur if the Tax Technical 10% 10% 10% 8% 20% Authority believes that a transaction was services structured purposely to enjoy a particular /Service fees benefit. *MAR- Morocco *MUS- Mauritius This Protocol also sought to update the names of *SGP- Singapore Ghana’s Tax Authority and its respective Heads. *CZE- Czech Republic It also focuses on exchange of information between the two countries among others. Finally, the Protocol does not amend the tax rates in the existing DTA between Ghana and Netherlands.

We can assist you by:

 providing professional advice regarding how to manage your tax affairs in order to optimise your tax position based on the provisions of these and other DTAs if you are a resident of any of these countries and have been doing business (or intend doing business) with partners (suppliers/customers) in Ghana or vice versa; and

 training your staff to fully understand changes to the tax regime through our available Business School events.

PwC Business School - Upcoming Courses

• Optimising your VAT compliance status – 18 July • Succeeding as a withholding agent – 19 July • IT Audit Module 3 – 25 July

Let’s talk

For a deeper discussion of how this issue might affect your business, please contact: George Kwatia Ayesha Bedwei Tax Leader Partner +233 (30) 2761459 +233 (30) 2761500 +233 (54) 4334009 +233 (24) 4813956 [email protected] [email protected]

Abeku Gyan-Quansah Kingsley Owusu-Ewli Associate Director Associate Director +233 (30) 2761500 +233 (30) 2761500 +233 (20) 8208106 +233 (57) 2290124 [email protected] [email protected]

© 2017 PricewaterhouseCoopers (Ghana) Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers (Ghana) Limited which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.