Overview
Pay As You Earn (PAYE) is the system by which employers deduct income tax from their employees' salaries and wages at source and remit it to the Ghana Revenue Authority (GRA). As an employer, you are legally a withholding agent and bear direct responsibility for correct calculation, timely deduction, and prompt remittance of PAYE.
Registering as a Withholding Agent
Every employer in Ghana must register with the GRA as a PAYE withholding agent before making the first salary payment. Registration requires:
- Your business TIN (Taxpayer Identification Number)
- Business registration certificate from the Registrar General's Department
- Details of your business address and bank accounts
- List of employees with their TINs and salary details
Failure to register as a withholding agent can result in the employer being personally liable for all PAYE that should have been deducted, plus penalties and interest.
Monthly PAYE Calculation Process
Each month, follow these steps to calculate PAYE for each employee:
- Start with gross monthly pay — Include basic salary, overtime, bonuses, commissions, allowances (housing, transport, etc.), and benefits in kind (company car, accommodation, etc.).
- Deduct exempt items — Subtract SSNIT Tier 1 employee contribution (5.5% of basic salary, capped at GHS 35,000 per annum), Tier 2 employee contribution (5% of basic salary), and approved provident fund contributions.
- Determine chargeable income — The result after deductions is the employee's monthly chargeable income.
- Apply the graduated tax brackets — Use the GRA monthly tax table to calculate the tax on chargeable income (see our Income Tax Brackets article for the current rates).
- Deduct the calculated PAYE — Withhold this amount from the employee's pay.
- Remit to GRA — Pay the total PAYE for all employees to GRA by the 15th of the following month.
Payment Deadline and Methods
PAYE must be remitted to GRA by the 15th of the month following the payroll month. For example, January salaries PAYE is due by 15th February.
Payment can be made through:
- Direct bank deposit to the designated GRA collection account at any approved bank
- GRA online portal (electronic payment)
- Ghana.gov payment platform
- Mobile money (for smaller amounts, where GRA has approved this channel)
SSNIT Contributions (Tier 1 Pension)
In addition to PAYE, employers must make Social Security and National Insurance Trust (SSNIT) contributions:
| Contribution | Rate | Paid By | Basis |
|---|---|---|---|
| Employer contribution | 13% | Employer | Basic salary |
| Employee contribution | 5.5% | Employee (deducted from salary) | Basic salary |
| Total SSNIT Tier 1 | 18.5% | — | Basic salary |
The employer's 13% is split: 11% goes to the SSNIT pension scheme and 2% goes to the National Health Insurance Authority (NHIA). The employee's 5.5% goes entirely to the SSNIT pension scheme.
SSNIT contributions are due by the 14th of the following month. Contributions are calculated on basic salary only, not on allowances and benefits. There is an annual ceiling on the basic salary subject to SSNIT contributions.
Tier 2 Pension (Occupational Pension)
| Contribution | Rate | Paid By | Basis |
|---|---|---|---|
| Employer contribution | 5% | Employer | Basic salary |
| Employee contribution | 5% | Employee (deducted from salary) | Basic salary (voluntary, but common) |
| Total Tier 2 | 5% (mandatory) + 5% (voluntary) | — | Basic salary |
Tier 2 is managed by approved private pension fund managers (trustees), not SSNIT. The employer's 5% contribution to Tier 2 is mandatory. Employees may also contribute voluntarily. Contributions must be remitted to the approved trustee by the 14th of the following month.
Annual PAYE Reconciliation
At the end of each tax year (January to December), employers must:
- Prepare an annual PAYE reconciliation statement showing total emoluments paid and total PAYE deducted for each employee during the year.
- Submit the reconciliation to GRA by 28th February of the following year.
- Issue each employee with an annual tax deduction certificate (Form IRS 52) by 28th February, showing total income earned and total PAYE deducted.
- Resolve any discrepancies between monthly remittances and the annual total.
Annual PAYE reconciliation and employee tax certificates (IRS 52) are due by 28th February of the following year.
Common Mistakes and How to Avoid Them
| Mistake | Consequence | How to Avoid |
|---|---|---|
| Not updating tax tables | Over- or under-deduction of PAYE | Check GRA announcements annually; use Nexus Ledger which updates automatically |
| Excluding taxable benefits | Under-deduction and employer liability | Include housing, car benefits, meal allowances in chargeable income |
| Late remittance | Penalties + interest | Set up automated reminders for the 15th of each month |
| Wrong SSNIT calculations | SSNIT penalties + employee complaints | Calculate SSNIT on basic salary only, not gross pay |
| Not issuing IRS 52 certificates | Penalties + employee filing difficulties | Generate certificates in January for the prior year |
| Mixing up Tier 1 and Tier 2 | Wrong trustee receives payment | Tier 1 goes to SSNIT; Tier 2 goes to your approved private trustee |
How Nexus Ledger Helps
Nexus Ledger's Payroll module automates the entire PAYE process. It calculates PAYE using the latest GRA brackets, computes SSNIT Tier 1 and Tier 2 contributions, generates payslips, produces monthly PAYE returns, and creates IRS 52 certificates at year-end. The Compliance Calendar sends reminders before every deadline so you never miss a payment.