No matter who you are or what you do, one thing you will always have to deal with is taxes.
Taxes are a cumbersome but necessary part of life. And attempting to avoid paying your taxes can have serious legal ramifications, like fines and jail time.
Paying taxes is especially difficult when you are a startup company. You need to cut costs and save as much as you can to be cash flow positive.
In an interview with TechVoiceAfrica Kingsley Osei Amponsah, COO of Roots Digital, mentioned some interesting things about tax exemption.
According to him, the Tax Exemption Policy, pursuant to Parliamentary approval for the 2018 national budget, allows entrepreneurs up to the age of 35 years to apply for a tax holiday.
During this tax holiday, companies are exempted from paying income tax for 5 years. This is to say that, your income tax money can be channelled into other ventures for the next five years without any legal problems in this regard.
This, will also allow tech start-ups to invest in their companies and grow them.
This policy also renders entrepreneurs qualified to apply for withholding tax exception, (an amount that an employer withholds from employees’ wages and pays directly to the government).
Speaking on how Roots Digital got involved with this policy, Mr. Osei Amponsah revealed that, although the company heard about the tax exemption policy it had no idea with regards to how to apply for it, so they took a step by visiting Ghana Revenue Authority (GRA).
After gathering some information from GRA, and conducting a little research, Kingsley and his colleagues in Roots Digital discovered the NEIP (National Entrepreneurship and Innovation Plan); an office set up by government, to help Ghanaian entrepreneurs, where they got the assistance needed to proceed.
What Do You Need in Applying for a Tax Exemption?
With the information gotten, they were required to provide the registration papers of the company (Roots Digital), the profile of the directors and their products to show they were under 35.
After providing the details, they were given a letter by NEIP which was forwarded to GRA, after which the proceedings begun.
Within 2 months, they were approved! As simple as that.
How Important is it?
Speaking on the significance of tax exemption to tech start-ups, Mr. Osei Amponsah mentioned that there are lots of taxes to be paid by companies however, this policy has benefitted his organization positively since they got involved.
“The tax exemption is a real start to helping us entrepreneurs. So far without having to pay tax exemption, we have the space to make use of our revenue in support of growing the business as suppose to paying 25% of our profits every year, ” he said.
He mentioned that although the tax relief has been of great help, Tech start-ups need more help especially for VAT and as such it would be appreciated if government steps in.