As Ghana’s social media influencers and celebrities continue to flaunt extravagant birthday gifts, including luxury vehicles and substantial cash sums, existing tax legislation requires them to pay significant amounts to the state, with some liabilities reaching 15 per cent of a 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 excludes only gifts from deceased estates or immediate family, placing many of the lavish items displayed online firmly within the taxable category.
The Ghana Revenue Authority (GRA) categorises taxable gifts into three types. A “Gift from Employment” includes those from an employer or “a third party under an arrangement with the employer.”
A “Gift from Business” relates to presents connected to a business owned by the recipient.
For many public figures, the most applicable category is “Gift from Investment,” defined as “a gift received by a person other than a gift received in respect of business or employment.”
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, long established in law, requires prompt action. For investment-type gifts, the recipient “shall, within 21 days of receiving the gift, submit to the GRA in writing a return detailing the gift’s description, location, total value, and donor information.
Furthermore, the taxpayer “shall remit to the Commissioner the amount of tax calculated as payable, and the payment of tax is due at the time the return is submitted.”
With a specific Gift Tax Return form available for this purpose, the existing regulations present a clear financial obligation to Ghana’s social media elite: those expensive gifts showcased online come with a mandatory tax bill that must be settled within three weeks of receipt.
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