Business entities worldwide are primarily profit-driven. In many cases, they struggle merely to break even amid challenging economic conditions. Yet, beyond profitability lies a broader responsibility, public accountability.
In Ghana, the law extends a clear legislative invitation to corporate entities to participate in nation-building through a tax regime that remains powerful but underutilised under the Income Tax Act, 2015 (Act 896).
If properly understood and strategically applied, this framework can stimulate corporate philanthropy, expand educational access for deprived communities, and promote infrastructure development nationwide.
Despite the clarity of the law and the Ghana Revenue Authority’s (GRA) administrative guidance, many corporate bodies continue to underexploit these incentives.
This article examines the legal framework and calls on corporate Ghana to embrace this opportunity to help build a better Ghana for all.
Under the Income Tax Act, 2015 (Act 896), and the general principles of income taxation, taxpayers are permitted to deduct expenditure incurred wholly, exclusively, and necessarily in the production of income.
However, charitable donations do not always fully fall within that framework. Consequently, Parliament enacted specific statutory allowances for donations to approved worthwhile causes.
Section 2 of the Income Tax (Amendment) Act, 2016 (Act 924), identifies the following as worthwhile causes approved by the Government:
- A charitable organisation that meets the requirements of Section 97;
- A scholarship scheme for academic, technical, professional, or other courses of study;
- Development of any rural or urban area;
- Sports development or promotion; and
- Any other worthwhile cause approved by the Commissioner-General.
To further clarify implementation, the Commissioner-General of the Ghana Revenue Authority issued Practice Direction No. DT/2016/003 on October 6, 2016, addressing Contributions or Donations to a Worthwhile Cause under Act 896. The Practice Direction outlines how corporate entities may benefit from these deductions.
The Practice Direction emphasises the following:
- Prior Approval Requirement: Donations to worthwhile causes generally require prior approval from the Commissioner-General, unless the donation is made to an institution already recognised as an eligible beneficiary.
- Documentation: Official receipts and letters of acknowledgement must be retained as proof that the donation was applied to the approved purpose.
- Quantitative Limits: Allowable deductions are capped at a percentage of the entity’s assessable income to safeguard the tax base and prevent abuse under the guise of philanthropy.
- Infrastructure Donations: Expenditure on public infrastructure—such as classroom blocks, boreholes, health facilities, or roads may qualify where the asset is donated to the Government or a recognised public institution.
While the Practice Direction encourages structured corporate social investment, it simultaneously protects revenue integrity. However, awareness of these provisions remains generally low within corporate circles, particularly among small and medium enterprises that could significantly benefit from tax-compliant philanthropy.
Ghana continues to grapple with regional disparities in educational infrastructure and economic opportunity. Deprived communities face chronic shortages of classroom blocks, ICT facilities, potable water, healthcare infrastructure, and scholarship support. The concept of a “worthwhile cause” is designed precisely to promote participatory development and reduce such disparities.
Profitable corporate organisations, especially those in extractive industries, banking, finance, telecommunications, and manufacturing, are uniquely positioned to respond to this legislative invitation.
Structured scholarship schemes for needy students and investments in rural infrastructure align not only with national development priorities but also with Ghana’s medium-term development framework.
Where prior approval is secured, and donations are made to the Government or recognised public institutions, the cost is treated as an allowable deductible expense before the corporate tax rate is applied. This ensures that philanthropy and fiscal prudence can coexist.
Despite the legislative framework, legitimate concerns remain. These include bureaucratic delays, uncertainty about what qualifies as a “worthwhile cause,” and fear of disallowance during tax audits.
These concerns should not discourage participation. Rather, they should prompt improved engagement and streamlined administrative processes. Prior written approval should be sought in good time.
The Ghana Revenue Authority could further enhance clarity by providing defined timelines for approval decisions. Corporate entities should also engage tax professionals to ensure that donations are structured within statutory limits, with proper documentation and transparent valuation of donated assets.
Allowable deductions toward worthwhile causes represent more than a tax provision. They are a legislative invitation for corporate Ghana to actively participate in national development.
The Income Tax Act, 2015 (Act 896), its amendments, and the accompanying Practice Direction provide clear pathways for aligning corporate profitability with a shared national vision.
Students in Nwenesu Number One, Pinda, Mansu Apunuapunu, and many other communities need educational support. Kayoro needs a health centre. Manyoro and Navio need that bridge to be reconstructed. The University of Science and Technology’s School of Medical Sciences in Navrongo needs a teaching hospital. The Navro-Pio, his chiefs, elders, landlords, and indeed many landowners would be prepared to provide the land required for such a transformative project.
Our laws support it. Our tax system encourages it. Ghana cannot afford to wait and has extended the invitation.
Over to you, Corporate Ghana.
By Jonathan Balinia Adda, Esq.
Houston, Texas.
