What is the Growth and Sustainability Levy (GSL) Act 2023 (Act 1095)?
Introduction
The Growth and Sustainability Levy Act 2023 (Act 1095) has been introduced in Ghana to foster economic growth and fiscal sustainability by raising revenue from specified companies and institutions. The levy is on profits before tax or production for the assessment years 2023, 2024, and 2025. Understanding and managing this levy is critical as a business owner to ensure compliance and optimize your financial strategies. In this article, we’ll explore the critical provisions of the Act and provide valuable tips for business owners to navigate the levy effectively.
Know Your Category
The first step in managing the Growth and Sustainability Levy is to determine which category your business falls into. The Act divides businesses into three categories: A, B, and C. Each class has different levy rates based on the type of business and its financial activities. Ensure you accurately identify your category to calculate and remit the appropriate levy.
| CATEGORY | RATE OF LEVY |
Category A
|
5% of Profit Before Tax |
| Category B
Mining companies and upstream oil and gas companies |
1% of gross production |
| Category C
All other entities not falling within Category A or Category B |
2.5% of profit before tax |
The Growth and Sustainability Levy Act explicitly states that the levy applies to specified companies and institutions, regardless of any provisions for tax holidays or exemptions.
Be Proactive in Estimating Levy Payable
The Act mandates that businesses subject to the levy file an estimate of the payable levy for each year of assessment with the GRA Commissioner-General. Being proactive in estimating your levy liability can prevent any surprises and ensure you set aside the necessary funds. Remember that the levy is paid quarterly, so plan your finances accordingly to meet the payment deadlines of March 31st, June 30th, September 30th, and December 31st each year.
Evaluate the Impact on Financial Planning
Because the levy is not an allowable deduction for corporate income tax purposes, it has a direct impact on the profitability of your business. As a result, the levy cannot be deducted from income when calculating and paying taxes. As a business owner, you must consider how the levy affects your financial plans and how it affects your cash flow, budget, and investment decisions. It might be a good idea to talk to some financial experts who can help you plan your money better and deal with the levy’s effects.
Compliance and Reporting
To meet your obligations under the Act, ensure your business files a return in respect of the levy with the GRA Commissioner-General as per the determined time and manner. Thus, If you have to pay the Levy for a particular year, you need to tell the tax office how much you expect to pay for that year. You do this when you pay the first installment of your taxes. This estimate helps the tax office understand how much Levy you’ll owe.
When you give them this estimate, you need to fill out a particular form that they provide. This form has specific information they need from you. The tax office might also ask for some additional information. So, you’re letting them know in advance how much Levy you think you’ll have to pay for the year. Compliance with reporting requirements is essential to avoid penalties and maintain good standing with the authorities.
Seek Professional Guidance
Navigating tax laws can be complicated and intimidating. To ensure your business fully complies with the Growth and Sustainability Levy Act and makes informed financial decisions, consider seeking professional guidance from tax advisors or consultants. They can provide valuable insights, help with accurate levy calculations, and offer personalized advice tailored to your business’s needs.
Conclusion
The Growth and Sustainability Levy Act 2023 is a crucial step toward promoting economic growth and fiscal sustainability in Ghana. Understanding and managing this levy as a business owner is critical to complying with the law and optimizing your financial strategies. You can effectively navigate the levy and contribute to the nation’s growth and development by knowing your category, estimating the levy payable, evaluating economic planning impacts, understanding tax holidays and exemptions, ensuring compliance, and seeking professional guidance. Embrace these tips, stay informed, and adapt your financial strategies to make the most of the opportunities that arise despite the levy’s imposition.