Regulations affecting Foreign and Non-Resident Investors
The new Foreign Exchange Act of 2006 (Act 723) has done away with these limits. Therefore non-resident investors can now invest in our market with no limits or prior exchange control approval. There is free and full foreign exchange remitability for the original capital plus all capital gains and related earnings. There is an 8% withholding tax (which is also the final tax on dividend income) for all investors, both resident, and non-resident.
Tax and Investor Information
The current Income Tax and Foreign Exchange laws impacting the capital market are as follows:-
(i) Capital Gains Tax – We are in discussions with MoF to either permanently waive this on gains from the realisation of securities traded on the Exchange or extend the exemption for a further five years. However, for non-listed securities:-
- A resident individual can elect to pay tax on capital gains on the realization of an investment asset at 15%, otherwise, the capital gain is taxable at the investor’s marginal tax rate.
- A non-resident individual can elect to pay tax on capital gains on the realization of an investment asset at 15%, otherwise, the capital gain is taxable at 20%.
- Companies are to pay tax on capital gains on the realization of an investment asset at the entity’s corporate tax rate.
(ii) An 8% final withholding tax on dividend income is payable by all investors. Withholding tax on interest income earned by individual investors is 0% but 8% for institutions.
(iii) A stamp duty (per the Companies Act) of 0.5% on the documentation of an increase in the stated capital of all companies including listed companies is payable to the Registrar of Companies. Therefore, all offers for subscription done by companies attract a documentation fee of 0.5% of the amount of new capital raised.
(iv) A 20% withholding tax on fees and allowances payable to all resident directors of listed and unlisted companies.
(v) A general corporate tax rate applicable to listed and unlisted companies of 25%. The highest individual PAYE tax rate is 30% for incomes above GH¢20,000 per month.
(vi) Gift Tax – Gifts received in respect of employment, business, and investment are to be included in calculating the gains and profits from employment, business, and investment and taxed based on the recipient’s marginal tax rate.
(vii) The Exchange as a company limited by guarantee is a trade association and as such the income of GSE derived from members qualifies for exemption from Section 98(3) of the Income Tax Act, 2015 (Act 896). However, the income of GSE coming from outside of the traditional sources of a trade association is taxable at the current tax rate of 25%.
(viii) There is no limit per the Foreign Exchange Act on the participation of non-resident foreign investors in Ghana’s equity capital market except for prior Bank of Ghana and National Insurance Commission approvals in respect of acquisitions in banks and insurance companies respectively. For debt securities, participation by non-resident foreign investors is limited to securities with maturities of 2 years and above.
(ix) The guidelines for the implementation of regulation 13 of the Minerals and Mining(local content and participation)Regulations, 2020 LI 2431 requires all Mineral Holders to list at least 20% of their equity to Ghanaian Investors through a listing on the Ghana Stock Exchange.
(x) Under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), a person shall not without prior approval in writing by the Bank of Ghana, acquire shares in a bank, specialized deposit-taking institution, or financial holding company if the acquisition will take the person’s holdings to 5%, 10%, 20%, 30%, 50% or 75%.
(xi) Under the Insurance Act, 2021 (Act 1061), a person shall not without prior approval in writing by the Insurance Commission, acquire or sell shares in an Insurance company if the acquisition will take its holdings to significant interest, defined as 10% holdings and above.
(xii) There is free remitability of interest, principal, dividend, and capital gains by non-resident foreign investors.
(xiii) Under the Securities Industry Act of 2016 (Act 929), the annual Licensing fee for Stock Exchanges is GH¢10,000 and SEC Market Operators Levy is GHs 20,000.
(xiv) The new minimum Capital requirement for Securities Exchanges is now GHs10 million.
Procedures for Non-Residents Investing through The Stock Exchange
There are currently twenty (20) licensed stock broking firms that have set up systems for serving non-residents. Their names, addresses, and contact details are provided on this site as Licensed Dealing Members (Stockbrokers). Please contact any of the stockbrokers directly.