What PAYE is
PAYE — Pay As You Earn — is the income tax your business withholds from each employee’s salary and pays to the Ghana Revenue Authority on their behalf. The employee never handles it; the employer computes it, deducts it, and files it monthly.
It is calculated on chargeable income: gross pay minus the employee’s own SSNIT contribution and any other approved reliefs. That ordering matters — SSNIT comes off first, then tax bands apply.
How the graduated bands work
Ghana taxes monthly income in slices, not at a single flat rate. The first slice of chargeable income is tax-free; each following slice is taxed at a progressively higher rate, topping out at 35% for the highest earners.
A common misunderstanding: moving into a higher band does not re-tax your whole salary at the higher rate. Only the cedis inside that band are taxed at that band’s rate. Someone earning slightly into the 25% band pays 25% on those few cedis only.
- Slice 1 — tax-free allowance: 0%
- Following slices — 5%, 10%, 17.5% and 25% as income rises
- Upper slices — 30%, with 35% on the highest incomes
A worked example
Take an employee on GHS 4,000 gross per month. First deduct their 5.5% SSNIT contribution (GHS 220), leaving GHS 3,780 chargeable. That amount is then run through the bands: the free slice pays nothing, the next slices pay 5% and 10%, and the remainder falls into 17.5%. The band amounts are summed to give the month’s PAYE, and net pay is gross minus SSNIT minus PAYE.
Nobicel performs this per employee on every run, shows the split on the payslip, and totals it into your monthly GRA return automatically.
Employer duties and deadlines
Employers must file the monthly PAYE return and pay the withheld tax to GRA by the 15th of the following month. Late filing attracts penalties and interest, and directors can be personally pursued for unremitted PAYE — which is why automating it is worth it.
This guide is general information for Ghanaian employers, not legal or tax advice. Rates and rules change, so check current guidance from GRA and SSNIT before acting on it.