As social media influencers and celebrities in Ghana showcase extravagant birthday gifts, such as luxury cars and large sums of cash, they must also consider existing tax laws. These regulations require them to pay substantial amounts to the government, with tax liabilities reaching up to 15 percent of the gift’s value.
Long-standing provisions under the Income Tax Act, 2015 (Act 896), state that a gift becomes taxable when received “in respect of their employment, business, and/or investment.”
This legal framework only excludes gifts from deceased estates or immediate family, which means that many of the extravagant items displayed online fall into the taxable category. The Ghana Revenue Authority (GRA) classifies taxable gifts into three categories.
Gift from Investment: This is the category most applicable to many public figures, defined as a gift received by a person that is not related to business or employment.
Gift from Employment: This includes gifts from an employer or those received from a third party in a prearranged agreement with the employer.
Gift from Business: This refers to gifts associated with a business owned by the recipient.
The tax burden is substantial and varies by category. While gifts linked to employment or business are added to the recipient’s annual income and taxed at graduated rates, gifts classified as being from investment face a direct flat rate. “The tax payable on Gift from Investment is 15 per cent for a resident Ghanaian and 25 per cent for a non-resident Ghanaian,” the existing legislation states.
This means a resident Ghanaian influencer receiving a GH¢500,000 luxury car as a birthday gift faces an immediate tax liability of GH¢75,000. The GRA mandates that “the value of a taxable gift is the market value of the gift at the time of the receipt,” ensuring calculation based on full market value.
The compliance process, which is well-established in law, requires prompt action. For gifts classified as investment-type gifts, the recipient must submit a written return to the GRA within 21 days of receiving the gift. This return should detail the gift’s description, location, total value, and donor information.
Additionally, the taxpayer must remit the calculated amount of tax to the Commissioner, and this payment is due when the return is submitted. A specific Gift Tax Return form is available for this purpose. These existing regulations create a clear financial obligation for Ghana’s social media influencers: the expensive gifts they showcase online come with a mandatory tax bill that must be settled within three weeks of receipt.
Source: Kweku Zurek
