Today’s #FridayRead is on the Income Tax (Amendment) No. 2 Act, 2021 (Act 1071). The Parliament of Ghana amended the Income Tax Act 2015 (Act 896) to review the rates of income tax on wages particularly the minimum wage in Ghana.
Thus, the new income tax schedule for calculating Pay As You Earn (P.A.Y.E) has been revised to capture the changes in the wage structure and comparatively reduce the burden of tax on employees.
The tax schedules below shows the tax payable on an employee’s income under the Act 896 as shown in old schedule and the Act 1071 as shown in the new schedule:
| Old Schedule | New Schedule |
| Chargeable Monthly Income(Old) | Rates | Tax Thereon | Chargeable Monthly Income(New | Rates | Tax Thereon | |
| First | 319 |
0% |
0 |
365 | 0% | 0 |
| Next | 100 |
5% |
5 |
110 | 5% | 5.5 |
| Next | 120 |
10% |
12 |
130 | 10% | 13 |
| Next | 16,461 |
25% |
4,115.25 |
16,395 | 25% | 4,098.75 |
| Exceeding | 20,000 |
30% |
6,000 |
20,000 | 30% | 6000 |
From the above, income that falls within the minimum wage is not taxable. In addition, assuming an employee earns an income of GHS 2,000.00 the tax payable on that amount would be GHS 272.68 under the old schedule and 262.66 under the new schedule.
From the foregoing, it is evident that the tax burden on the income of employees has been reduced