How to start a business in Ghana as foreigner
Do you like to know how to start a business in Ghana as foreigner/ foreign investor?
Those who start a business in Ghana, must follow the laws and regulation according to Companies Code 1963 (Act 179) and under the Code, investors regardless foreign or local can establish and register a place of business in Ghana.
- The government of Ghana has already clarified the laws in the purpose of attracting direct foreign investment requires an enabling legal environment along with encouraging foreign investments and replaced some that previously stifled it which is the Ghana Investment Promotion Center (GIPC) Act, 1994 (Act 478). Right now, the investors are free to set up investment projects in all sectors of the Ghanaian economy without prior approval by the GIPC except the mining, petroleum, and free zones sectors, as well as portfolio investments under the company act in Ghana.
- Investments in the mining and petroleum sectors require approval by the Minerals Commission and the Ministry of Mines and Energy in Ghana. Ghana Free Zones Board approves Free Zones (Export Processing Zones) investment and portfolio investments are handled by the Ghana Stock Exchange.
- The sectors like banking, non-banking financial institutions, insurance, fishing, securities, and real estate are regulated by sector-specific laws and the most important thing is the government has realized that foreign investors are required to satisfy not only the provisions of the investment act but also the provisions of sector-specific laws in Ghana.
Process of starting a business
Investors regardless local or foreign must go through the following necessary procedures in course of registering the company.
- Acquire a Tax Identification Number (TIN)
Before proceeding to the company registration, the applicant needs to acquire a Tax Identification Number and the TIN form is acquired with the ID card of applicants which is obtained for free. The total time of getting the Tax Identification Number could be on average two days. The Registrar-Generals Department or the Ghana Revenue Authority provides the Form to the interested applicants.
- Fixing the company name
Investors need to check for availability of company name and submit company documents to obtain the certificate of incorporation. Initially the applicant may pick up a prescribed Form A from the in-house bank which should be submitted at the bank. The Registrar of the company will not only examine and issue business registration certificate but also certify true copy of the form to be submitted as an attachment. The following information should be provided in the Forms such as name of the company, nature of the business that subscribers intend to engage in Ghana, full name of subscribers and shareholders, their addresses, percentage shareholdings, occupation, and any directorships in any other company should be provided. A company must have a minimum of 2 directors and at least one director must be a resident of Ghana which is recommended and the directors should be sound mind, and of legal age (not younger than 21). Besides, full name and address of company secretary and auditors which is a a letter of consent to act as auditor is attached. The information of the number of shares that the company is to be registered with and the stated capital must be provided. An attestation that the minimum nominal capital complies with the requirement that a company 100% where the Ghanaian-owned has minimum nominal capital of at least GHC 500. Investors must fill a form for tax purposes at the Registrar-General’s Department. Officials and concerns of the Revenue authority in Ghana assist in the generation of a tax identification number for both the company and all the employees of the company to be registered after filling the Form. The department of register general prides the tax identification number (certificate) on behalf of the incorporated company where four or five copies of the company regulations and Forms 3 and 4 are required about auditors, banks, solicitors, company secretaries may each require a copy which should be submitted. Another important thing is a letter from an auditing firm must also be presented during the document submission.
- Commissioner of Oaths authenticates forms
To enable a company for obtaining the certificate to commence business, The Commissioner for Oaths, located in the Registrar General’s Department, usually swears the oath within a day and the Registrar of Companies automatically registers new companies with the IRS in Ghana.
- Deposit paid-in capital in an account
The investors must submit copies of the following documents such as company regulations; the certificate of incorporation and the certificate to commence business; and signatures of the authorized company representatives to deposit the paid-in-capital in a bank account.
- Apply for business licenses at the Metropolitan Authority
The business license is also known as the Business Operating Permit (BOP) and this is the formal permission to run the business along with it would give the go-ahead for the commencement of the business.The important thing is if the investors fail to obtain the permit before running the business would result in some issues with the metropolitan authorities. The price of application at the Metropolitan Authorities varies on the category of business regardless local or foreign entrepreneurs should bear in mind that. Besides, they should submit the documents on the type of enterprise such as restaurants must have permits from the fire department and the Town and Country Planning Authority and, among other documents, an inspection certificate from the Ghana Tourist Board.
When the investors will finish the previous stated steps, an officer will then visit the business premises and report to the Revenue Accountant of the Metropolitan Assembly through submitting a report to the Revenue Mobilization Subcommittee of the Metropolitan Assembly.After that, the sub-committee will meet to deliberate on the report and then recommend to the Executive Committee of the Metropolitan Authority to identify whether any adjustment is required or not.
All the business owners register their employees and themselves with the Social Security and National Investment Trust (SSNIT) which is recommended because of making contributions towards their retirement.The company must attach the list of employees, their respective salaries and social security numbers, the company’s certificate of incorporation and certificate to commence business for the applying purpose in social security.
Cost and time of starting a business
To acquire a Tax Identification Number, investors need 2 days on average and no charge will be needed, 1 day will be needed to check the availability through Customers Service Office of the Registrar General’s Department. To get the Oaths authenticates forms, 1 days will be needed. 2 days will be needed with GHC 100 form fees for obtaining from the Registrar-General Department the certificate to commence business. No extra charge will be needed to deposit paid-in capital in an account which is required 1 day. Investors should pay GHC 270 for applying the business licenses at the Metropolitan Authority which is required for 7 days. No extra charge will be required for inspecting of work premises by the Metropolitan Authority which is required 1 day. Besides, the Processing Fee is GHC 11,760, Renewal fee is GHC17,640, Transfer value up to $500,000 per annum is 17,640, transfer value up to $750,000 per annum is GHC 24,696, Transfer value greater than $10,000,000 per annum is GHC 2,297,183.
Along with legal formalities some pre-plan should take being foreign investors how to start a business in Ghana. For example: Market analysis, required capital for 1st, 2nd and 3rd year, and product / service price.