The Ghana Revenue Authority (GRA) has ruled that allowances paid to District Assembly Members are taxable income, ending years of confusion over whether such payments should attract withholding tax.
In a letter dated September 23, 2025, and addressed to the Ministry of Local Government, Chieftaincy and Religious Affairs, the GRA clarified that assembly members’ allowances fall under the definition of employment income as provided in Section 133 of the Income Tax Act, 2015 (Act 896).
According to the ruling signed by Deputy Commissioner of Operations I, Daniel Edisi, the fact that assembly members may not hold appointment letters does not exempt them from taxation, since the law recognises public office allowances as taxable income.
“The mere fact that one is not given an employment letter does not necessarily mean that one is not in employment. By the definition of the tax law, what the assembly members are doing and the allowances being given to them amounts to employment under Section 133 of the Income Tax Act, 2015, hence, falls squarely under employment income,” the letter stated.
The GRA explained that:
• Elected Assembly Members: Their allowances will be taxed at graduated rates, in the same manner as salaries, wages, and commissions under Schedule 1 of Act 896.
• Appointed Assembly Members with other jobs: Their allowances will attract a 10% withholding tax at source. At the end of the year, they must add these allowances to their main employment income when filing annual tax returns, and any tax already withheld will be credited
“Those assembly members would have to add the allowances received from the part-time (secondary employment) to their primary employment and file their returns at the end of the year. They would then be credited with the withholding taxes that they have suffered from both employments,” the Authority explained.
The ruling follows months of debate and confusion regarding the tax status of assembly members’ allowances.
In July 2025, government released GH¢25 million to pay assembly members allowances of GH¢1,300 each covering April and May. At the time, the Ministry of Local Government described the payment as a non-taxable allowance. However, reports soon surfaced that different Metropolitan, Municipal and District Assemblies (MMDAs) were applying inconsistent deductions some withholding as much as 20 percent, others 10 percent, while some made no deductions at all.
The President of the Ghana Association of Assembly Members (GAAM), Frank Ackah Nelson, expressed concern over the lack of uniformity and called for clarity. He urged government to ensure that the allowances were either clearly exempt or taxed in a transparent and consistent manner.
The Ministry of Local Government subsequently sought an official administrative ruling from the GRA, which has now confirmed that the allowances are indeed taxable employment income.
The GRA’s ruling takes immediate effect, and all Metropolitan, Municipal and District Assemblies (MMDAs) have been directed to comply accordingly.
Source: Starrfm.com.gh
