Finance Ministry refutes publications in media on proposed taxation of pensions

The Ministry of Finance says its attention has been drawn to publications in sections of the media concerning taxation of Pensions.

Unfortunately, the publications have misrepresented the comments of the sector minister.  

A statement in Accra said the Minister at no point in his presentation said the Income Tax Act, 2015 (Act 896) imposes a tax on pensions or that there is an intention to tax. 

It noted that reference to the pension income in the minister’s delivery was to explain the philosophy of taxation of pension adopted generally in literature and in countries that tax pensions. 

The statement said pensions are not taxable in Ghana adding that Article 199 (3) of the constitution exempts pension from tax.

However, under Section 112 (5) of the National Pensions Act, 2008 where voluntary contributions are made to a pension fund and withdrawal from the fund is made before one goes on pension, the amount will be taxed appropriately, if the contribution is not open to ten years for those in the formal sector and five years for those in the informal sector. 

Furthermore, Section 112 subsection (5) of Act 766 further provides that a withdrawal of all or part of a contributor’s accrued benefits under a provident fund or personal pension scheme on or after retirement shall be exempt from tax. 

GBC