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March 24, 2022 William Nartey No Comments

CREATING A WILL IN GHANA

Author: Barbara Ewoenam A. Kukah

Death is one of the few certainties in life. In light of this, it is understandable that people will want to make provision for how their self-acquired property should be distributed and used after their death. The law allows people to make wills to give legal backing to people’s wishes on what should happen after their death for continuity of their estate. This article provides a guide on the creation of wills in Ghana.

What Is a Will?

A will is a legal document in which a person (known as the testator), specifies how their property should be managed and distributed after their death. Some people leave instructions for their bodies, funerals and burial as well as for the care of their child(ren) in their will but the primary purpose of a will is to give instructions concerning the distribution of the testator’s property.

It is regulated by the Wills Act, 1971 (Act 360) and Order 66 of the High Court (Civil Procedure) Rules 2004 (C.I 47). Act 360 regulates the validity of a will (the manner in which it is to be made and the persons who have capacity to make a will) while Order 66 of CI 47 regulates the process of getting probate for a will.

What Should be the Contents of a Will?

“There is no doubt that each and every one has the unchallenged right to distribute his/her self-acquired property the way he/she wants subject to the provisions of section 13 (1) of Act 360 and article 22 (1) of the 1992 Constitution.” – Appau JSC, Marfoa v. Agyeiwaa (J4 42 of 2012) [2016] GHASC 84 (09 November 2016).

There are no limitations on what a person can write in their will. A person can bequeath any property in their will as long as the property lawfully belongs to them. Some properties that are commonly bequeathed in wills include land, buildings, farms, shares, cash, vehicles, royalties, jewellery, electronic equipment, books, furniture and clothing among others.

People also use their wills to give instructions concerning their burial, bodies, care of their children and general advice to their families.

A person is not accountable to anyone for how they choose to dispose of their property. In the case of Kofigah and Another Vrs Atanley and Another (J4 5 of 2019) [2020] GHASC 28 (22 January 2020), one of the reasons the testator’s children challenged his will was because of they felt some of the devises in the will could not have been made by their late father as they knew him well. The Supreme Court speaking through Pwamang JSC said in response “That cannot be a legal ground to challenge the validity of a Will. A testator is at liberty to give out her self acquired property in the manner she pleases without meeting the expectations of any person. As Knight Bruce said in Bird v Luckie (1850) 68 ER 373:

“No man is bound to make a will in such a manner as to deserve approbation from the prudent, the wise or the good. A testator is permitted to be capricious and improvident, and is more at liberty to conceal the circumstances and the motives by which he has been actuated in his dispositions. Many a testamentary provision may seem to the world arbitrary, capricious and eccentric, for which the testator, if he could be heard, might be able to answer most satisfactorily.”

Wills can incorporate other documents. However, those documents must be in existence at the time the will is being made and must be sufficiently identified in the will.

As long as the will was made in accordance with law, a testator can bequeath their property to anyone and in any manner they please and the courts will give effect to it whether or not they agree with its contents.

When Does a Will Come Into Effect?

A will only comes into effect upon the death of the testator. Justice Azu Crabbe in his book, Law of Wills in Ghana, at page 175, paragraph three wrote:

“It is now well established that a will made by a Ghanaian becomes operative and no more, as from the date of the testator’s death. His intention expressed in the will has no legal effect, until the will is admitted to probate”.

This means that if you make a will now, you are not restricted from using the property named in the will during your lifetime. You can dispose of the property by gifting or selling it off if you so wish. This can all be done without the consent or permission of the person listed in the will as beneficiaries.

You can also make a new will or amend the original one through the use of codicils. You can even revoke the will completely because as a testator, you are not bound by a will which does not yet have legal effect.

Requirements Of A Valid Will

When a testator dies, any will made by the testator has to be submitted to the court in order for probate to be granted. Before the court grants probate, it has to satisfy itself that the will is valid and complies with the requirements of the Wills Act. Formal validity relates to the form prescribed by the law for the execution and attestation of the will while essential validity is concerned with the mental element of the testator – whether the will was voluntarily made by a willing and capable person.

Written form

The law requires that wills must be in writing. but does not specify the form the writing should take (whether handwritten or typed and printed). However, a will cannot be valid unless it is written. The only exception to this rule is when the testator is in the armed forces. Under section 6 of the Wills Act, any member of the Armed Forces who is in active service may make a will in any of the following forms:

a. written and unattested, if the material provisions and signature are in the handwriting of the testator;

b. written (whether or not in the handwriting of the testator) and attested by one witness;

c. orally before two witnesses.

Such members of the armed forces are not required to reach the statutory age of eighteen in order to make a will under the section. In addition, the will continues to remain valid even after the person leaves the Armed Forces.

Execution

After the intended will has been put in writing, section 6 of the Wills Act requires that the will be signed by the testator. In the event that the testator cannot sign the will due to sickness or some other reason, the testator must appoint someone else to sign the will for the testator. This must however be done in the presence of the testator. For testators who are blind or illiterate, someone can read and explain the document to them so that they can sign (or thumbprint) it. The person must also declare in writing that they read and explained the document to the testator who seemed to perfectly understand the contents of the document before signing.

The signature of the testator signifies an end to the will. Any other provision or direction that comes after the signature of the testator will have no legal effect.

Witnesses

Section 2 of the Wills Act makes it mandatory for a testator to sign or acknowledge his signature in the presence of two witnesses. Where someone signs on behalf of the testator, the person must sign in the presence of the testator and the witnesses. The witnesses shall then attest and sign the will in the presence of the testator. The witnesses must be adults who are capable of entering into a contract. People who are named as beneficiaries in a will cannot act as witnesses. The only time a beneficiary can act as a witness is when there are two other non-beneficiary witnesses, or when the beneficiary is the testator’s creditor and the will directs that the debt be paid to the creditor. The witnesses are not required to see or know the contents of the will. What is necessary is that they see the testator signing the will or have him acknowledge his signature.

Essential Validity

Even when a will is in writing and has been properly executed by the testator in the presence of two attesting witnesses, it will not be valid unless the testator is capable of making the will, intended to make a will, and knew and understood what he was doing when making the will. Thus while formal validity deals with the document and the form it takes, essential validity deals with the person making the will.

For a will to have essential validity in Ghana, the testator must be at least eighteen (18) years old, must have the intention of making the will (animus testandi). If the testator is insane or has any infirmity of mind which prevents the testator from understanding the nature or effect of the will it will be invalid. In the same way, if the testator signs the will as result of fraud, undue influence, or duress, it will be invalid.

The requirements for the validity of a will can be summarised by the words of Pwamang JSC in the case of Kofigah and Another Vrs Atanley and Another (J4 5 of 2019) [2020] as follows:

“The settled position is that, in such a case the proponents of the Will have the burden to satisfy the court that the document presented as the Will and Testament of the deceased was freely made by her and was duly attested to by two witnesses who were present at the same time. The proponents are further to satisfy the court that the testator at the time she executed the Will was corpus mentis not suffering from any impairment of mind.”

Executors

These are the people who carry out the instructions given in a will and ensure that the will is given effect. They must be at least twenty-one years old. You need at least one but many people choose to name two executors in the will. It is advisable to select trustworthy people who will be willing to act as executors.

In the case of b Adamson ((1875) LR 3 P&D 253) the court defined the duties of an executor as follows:

a. To collect in the assets of the testator (deceased);

b. To pay his funeral expenses and (just) debts; and

c. To discharge the legacies.

Even though the usual practice is to expressly name executors in a will, in some circumstances, a testator may impose on someone the duty of an executor without expressly naming the person as an executor. This is known as appointment according to the tenure of the will.

Not every person who is appointed as an executor may be willing to accept the appointment. If an executor renounces or fails to take probate, the other executor(s) may go ahead to apply for probate. In the event that there is no other executor available, any person who is interested in the estate may apply for letters of administration with will annexed.

Residual clause

Sometimes a person may go on to acquire more properties after making a will. In other instances, a testator may fail to mention and make provision for all self-acquired properties when making a will. In both cases, when the person dies and the will takes effect, some of the testator’s property will not have any devisee in the will. Such properties are said to have fallen into residue. Letters of administration will have to be applied in respect of such residual (also referred to as residuary) property because that part of the estate has fallen into intestacy.

To prevent this from happening, it is advisable to have a residual clause (also called a residuary clause). This clause acts as a safety net that makes provision for all property currently owned or to be later acquired by the testator that have not been specifically mentioned in the will.

Circumstances In Which a Will Is Not Given Full Effect

The will of a deceased person is respected as much as possible. The courts do not concern themselves with the contents of a will but rather, whether it was validly made or not. In the case of Arthur (Deceased) Abakah and Another v. Attah-Hagan and Another [1972] 1 GLR 435, Archer JA (as he then was) said:

“What should be borne in mind is that whenever a will is granted, the court is not giving its blessing and support to all the contents of the will. The court is only expressing its satisfaction that the will has been validly executed and that the named executors are at liberty to administer the estate. The Court should be extraordinarily slow in interfering with the will of a deceased person because the will constitutes hallowed ground and no one should tread upon it. If the Court decides to interfere, it does not expunge anything from the will. If it decides to omit anything on the well-known grounds, the omission is made in the probate and not in the will itself. For instance, the court will exclude from a will any words introduced into the will by mistake without the instructions or knowledge of the testator. The court may exclude from the probate and from registration words of atrocious, offensive or libellous character and it will exclude words of a blasphemous character.”

Inasmuch as the wishes of a deceased person are respected, this may not always happen due to certain circumstances including the ones listed below.

Where the testator had debt

When a person dies leaving debt, the usual practice is to pay off the debts first and then distribute the remainder of the estate to the beneficiaries of the will. Thus happens even if the testator did not leave instructions for the payment of debts. If there is nothing left after the payment of debts, the estate is said to be insolvent. Even when beneficiaries receive property under the will after debts are paid, it may not necessarily be in the proportions or amounts stated by the testator.
When the properties mentioned in the will do not belong to the testator

A will is used to distribute property legally owned by a testator. Thus where a will purports to give property which was not owned by a testator, it will not be given full effect. This may happen when the testator attempts to give out property which the testator held in trust for another person, or held as a joint tenant with others, or where the property belonged to the testator but was disposed of by the testator before dying.
Where the Testator does not make reasonable provision for a dependent

Under section 13(1) of the Wills Act, if a parent, spouse of child under the age of eighteen was dependent on a testator who dies without making reasonable provision for such a person, the person can apply to the High Court within three years of the grant of probate asking for provision to be made for the person from the deceased’s estate.

The people who can make this application are the father, mother, spouse or child under 18 years of age of the testator. The High Court will review all relevant circumstances and grant the application if the following can be proved:

a) that the Applicant is a dependant on the testator

b) that the application has been brought within three years after the granting of the probate of the will

c) that the testator failed, either during his lifetime, or by his will, to make reasonable provision for the Appellant

d) that the Appellant is suffering, or likely to suffer hardship, and

e) that having regard to all the relevant circumstances the Appellant is entitled to support out of the estate of the testator.

In such a circumstance, it can be said that the will of the testator was not given full effect, especially if the grant of the application makes some changes to what beneficiaries of the will receive.

Revoking and Destroying Wills

For testators who want to revoke their wills, there are a number of ways to do it. The will can be physically destroyed, for example, by burning or tearing it in pieces. The testator can also make another will and in it state that the previous will has been revoked. It is actually common practice to state in each will that all prior wills have been revoked, whether or not any other will actually exists.

After the Will is Executed

After execution, the will is to be deposited at the registry of the High Court. If the testator dies without depositing the will in the High Court, section 12 of the Wills Act requires that any person who has the will or who discovers the will is required to deposit it in the High Court. This must be done within fourteen days of having knowledge of the testator’s death. A failure to do so is a crime which is punishable by law. Once this is done, when probate is being applied for, the Registrar will attach the will that has been deposited for the consideration of the court.

Probate

Probate is a legal document by which the court authorises the executors of an estate to deal with the instructions stated in a deceased person’s will in the manner prescribed by law. An application for probate may be made by the executors under order 66 of C.I 47. In Kofigah and Another Vrs Atanley and Another (J4 5 of 2019) [2020], Amegatcher JSC explained the process of applying for probate as follows:

“The role of the judge when a probate application comes before him is first to ensure that the Registrar has added to the application the Will deposited in court. Secondly, he is to examine the Will and satisfy himself that on the face of it all the formalities such as a testator’s signature, attestation clause, jurat clause (in the case of blind or illiterate persons) and two attesting witnesses have their signatures on the document. Thirdly, the judge is also to satisfy himself that there are no interlineations or other insertions which may arouse his suspicion. If on examining the Will deposited at the court he finds the document regular, then in the absence of any caveat or application seeking the Will to be proved in solemn form, probate must be granted by the court. In effect, if the signature of the testator was genuine and the evidence of the two attesting witnesses confirms this, then the requirements of the Wills Act, 1971, (Act 360) have been satisfied.”

When probate is granted, the executors can proceed to administer the estate according to the wishes of the deceased, thus bringing the process of preparing a will to a full circle.

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February 11, 2022 William Nartey No Comments

AN APPRAISAL OF THE MINING LAWS IN GHANA

INTRODUCTION

Ghana is endowed with substantial mineral resources and has a well-established mining sector, which has grown considerably in recent years to represent an important pillar of the Ghanaian economy. The mining sector plays an important role in the Ghanaian economy as it attracts more than half of all Foreign Direct Investment (FDI), generates more than one-third of all export revenues, is the largest tax-paying sector in the country and makes a significant contribution to Gross Domestic Product (GDP) and employment creation.

Mining investment, irrespective of the type or kind of mining being undertaken, is capital intensive. It is a high-risk as well as a high reward business for mining companies and communities. The historical importance of mining in the economic development of Ghana is considerable and well documented, with the country’s colonial name, Gold Coast, reflecting the importance of the mining sector, particularly, the gold trade to the country.

With 4.8 million ounces of gold produced in 2018, Ghana surpassed South Africa to become the continent’s leading gold producer and one of the world’s top ten gold producers. The country’s mining and quarrying activities revolve around gold. Other minerals found in Ghana include manganese, bauxite, iron ore, and diamonds. Mining and quarrying contributed US$4.2 billion to the country’s GDP in the first three quarters of 2019, representing a 13.3 percent increase over the same period in 2018. Following a wave of investments, the mining and quarrying sector saw its growth propelled by an average of 17.5 percent by the second quarter of 2019. In the same period, export proceeds from the sector as revealed by the ministry of lands and natural resources was US$ 3.3 billion compared to US$ 3 billion generated over the same period in 2018, making the mining sector a major foreign exchange earner for the country.

This article aims to highlight some relevant legislation in the mining sector, primarily because, as demonstrated above, the growth of the mining industry in Ghana has made it critical to understand the legal framework of the Mineral and Mining sector, which will provide a roadmap to both investors and potential investors.

This is an appraisal of the legal framework of the Mineral and Mining Industry in Ghana. It will focus on the ownership of the minerals in Ghana, ownership or authorization of mineral rights in Ghana, environmental regulations, and the mineral tax regime in Ghana among others.

OWNERSHIP OF MINERALS IN GHANA

Ownership of all minerals in Ghana is vested in the President who holds it in trust for the people of Ghana, (Article 257(6) of the 1992 Constitution of Ghana, Section 1 of Mineral and Mining Act 2006). This position was affirmed in Adjaye and Others v. Attorney General And Others Suit No. C144/94, 30th March 1994 (Unreported), where the Supreme Court in interpreting Article 257(6) referred to the case of Tito v. Waddell and others and held that the use of the word “trust” did not create a true trust enforceable by the courts (a trust in the lower sense) but might create a “trust in the higher sense” which is no more than governmental obligation not enforceable in the courts. Therefore, if a trust relates to governmental obligations relating to duties and functions of government, that trust relationship would be unenforceable. The Court further held that looking at Article 257(6) it was clear that what was held in trust was minerals in their natural state. However, looking at parts of the Constitution which relate to functions of Government the judge was inclined to share the view that generally speaking every exercise of powers of government- that is every function of government is carried out in the name of the people of Ghana and for their welfare.

Per section 43 of the Act 703, where a mineral right is for mining or exploration, the Government of Ghana shall be entitled to 10% free carried interest in the rights and obligations of the mineral operations in respect of which the government shall not make a financial contribution. The government is, however, not precluded from obtaining further participation in mineral operations that may be agreed with the holder.

LEGAL STRUCTURE

The principal laws governing mining in Ghana include the following.

Substantive legislation:

The 1992 Constitution of the Republic of Ghana;
The Minerals and Mining Act, 2006 (Act 703), as amended by the Minerals and Mining (Amendment) Act, 2015 (Act 900);
The Minerals Income Investment Fund Act, 2018 (Act 987); and
The Minerals Development Fund Act, 2016 (Act 900).

Regulations:

The Minerals and Mining (Licensing) Regulations, 2012 (LI 2176);
The Minerals and Mining (Explosives) Regulations, 2012 (LI 2177);
The Minerals and Mining (General) Regulations, 2012 (LI 2173);
The Minerals and Mining (Compensation and Resettlement) Regulations, 2012 (LI 2175);
The Minerals and Mining (Support Services) Regulations, 2012 (LI 2174); and
The Minerals and Mining (Health, Safety, and Technical) Regulations, 2012 (LI 2182).
The Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (LI 2483).

Other Legislations

The Companies Act, 2019 (Act 992);
The Environmental Protection Agency Act, 1994 (Act 490);
The Ghana Investment Promotion Centre Act, 2013 (Act 865);
The Income Tax Act, 2015 (Act 896);
The Forestry Commission Act, 1999 (Act 571);
The Water Resources Commission Act, 1996 (Act 522); and
The Ghana Geological Survey Authority Act, 2016 (Act 928)

MINING IN GHANA

Mining activity is supervised by the Ministry of Lands and Natural Resources and controlled by the Minerals Commission whose responsibilities include;

To formulate recommendations of national policy for exploration and exploitation of mineral resources with special reference to establishing national priorities having due regard to the national economy;
To monitor the operations of all bodies or establishments with responsibility for minerals and report to the Minister;
To secure a firm basis of comprehensive data collection on national mineral resources and the technologies of exploration and exploitation for national decision making;
To monitor the implementation of laid down Government policies on minerals and report on this to the Minister;

TYPES OF MINING LICENSES IN GHANA

A mineral right is needed to perform a search, reconnaissance, prospecting, exploration or mining for a mineral on any land in Ghana. Mineral rights are granted by the Minister on behalf of the President upon recommendation from the Minerals Commission. A mineral right could be a reconnaissance licence, a prospecting licence, a mining lease, a restricted reconnaissance licence, a restricted prospecting licence or a restricted mining lease.

These are further grouped broadly into exploration mineral rights and exploitation mineral rights depending on the activities permitted under the mineral right. Exploration mineral rights allow the holder to search (prospect) for minerals and gather data to determine the mineral potential of an area while exploitation mineral rights allow the holder to mine the mineral.

Reconnaissance License

Subject to Act 703 and the Subordinate Regulations as listed above, a reconnaissance license confers on the holder and a person authorized by the holder of the reconnaissance license in accordance with the Act, the exclusive right to carry on reconnaissance in the reconnaissance area for the minerals to which the license relates and to conduct other ancillary or incidental activity.

The Minister may, on an application made by a qualified person and on the recommendation of the Commission, grant a reconnaissance license in respect of all or a part of the area applied for and in respect of all or any of the minerals specified in the application. A reconnaissance license may be granted for an initial period not more than twelve months. Any holder of this right may, however, apply for an extension (Section 33 of Act 703). An applicant can also apply for restricted license, which is for 12 months.

For the purposes of exercising the right conferred under Section 31 of Act 703, a holder of a reconnaissance license and a person authorized by the holder of the license, may enter the reconnaissance area and erect camps or temporary buildings. A holder of a reconnaissance license shall not engage in drilling or excavation. The area of land in respect of which a reconnaissance license may be granted shall be a block or any number not more than five thousand contiguous blocks each having a side in common with at least one other block the subject of the application.

Prospecting License

This is a license that allows the holder to undertake the following activities on the land to which the license relates:

The holder of a prospecting permit may in the exercise of the rights under the license, enter upon the land to which the license relates to undertaking the following;

Prospect for minerals in respect of which the license is granted,
Make boreholes and excavations that may be necessary for the prospecting operations,
Erect camps and put up temporary buildings needed for the prospecting operations and conduct other activity ancillary or incidental to the prospecting.

Pursuant to Section 34, the Minister responsible for mines may, on an application duly made by a qualified person and on the recommendation of the Minerals Commission, grant prospecting license in respect of all or any minerals specified in the application. An applicant can apply for a restricted prospecting license, which is valid for three (3) years.

Mining Lease

This is the highest mining right under Act 703 as it allows the holder to mine, refine, smelt, transport the mineral and conduct other ancillary activities on the land the license relates to. Under section 39 of the Act, a holder of a reconnaissance license or a prospecting license may apply for one or more mining leases prior to the expiration of the license they hold. The application may be in respect of all or any of the minerals which are the subject of the current license and in respect of all or any one or more of the blocks which constitutes the reconnaissance or prospecting area. However, the blocks applied for shall form not more than three discrete areas, with each consisting of

a single block,
or a number of blocks each having a side in common with at least one other block in that area,

and each of which could be the subject of a separate mining lease application.

Section 40 allows a person to apply in the prescribed form for mining lease in respect of a mineral in a land over which the person does not currently hold any mineral right. Once the application is duly made, the Minister on the recommendation of the Commission, may grant the applicant a mining lease in respect of all or any of the land applied for and in respect of a mineral specified in the application on condition prescribed.

A mining lease shall be for an initial term of thirty years or for a lesser period that may be agreed with the applicant. The area in respect of which a mining lease may be granted shall not be less than one block or more than three hundred contiguous blocks each having a side in common with at least one other block the subject of the grant. A restricted mining lease can be granted for fifteen years as well.

FOREIGN OWNERSHIP

To create an enhanced, transparent and responsive environment for investment and develop the Ghanaian investment economy, foreigners are allowed to own and mine in Ghana under the Ghana Investment Promotion Centre Act, 2013 (Act 865). Foreign entities can hold mineral rights in Ghana by incorporating a company in Ghana with its object, among others being mining and exploration activities. The GIPC Act establishes the minimum capital threshold needed for non-Ghanaians to participate in several sectors of the economy, including mining.

Section 28 of the GIPC Act states that where a foreign investor has a Ghanaian partner, the capital invested must be at least TWO HUNDRED THOUSAND USD (US$200,000.00) in cash or capital goods relevant to the investment, or a combination of both, through equity participation, and the Ghanaian must hold at least 10% of the equity. This threshold entitles the company to a quota of one (1) expatriate employee.

Where the foreign investor owns the firm entirely, the law states that the investor must invest at least FIVE HUNDRED THOUSAND USD (US$500,000.00) to have the company formed and licensed by the Centre. The foreign investor who meets this threshold is entitled to three (3) expatriate quota.

Section 34 of the GIPC Act, Section 105 of Act 703 and the LI 2483 encourage the employment of Ghanaians over foreigners if the qualifications and experience of the Ghanaian and foreigner are comparable.

ENVIRONMENT

The Environmental Protection Agency (EPA) was established in 1994 by the Environmental Protection Agency Act (Act 490) and regulated by Environmental Assessment Regulations, 1999 (L.I. 1652). The EPA is in charge of, among other things, enforcing environmental legislation. Section 18 of Act 703 and the Environmental Assessment Regulations, 1999 (L.I. 1652) of the EPA requires a holder of a mineral right to get an environmental permit from the EPA before engaging in any mineral activity. The applicant is required to submit an application and pay the requisite fees after which the EPA will carry out an initial assessment and issue a screening report for purposes of determining whether the application is approved, objected to, requires submission of a Preliminary Environmental Report (PER) or requires the submission of an Environmental Impact Statement (EIS).

Where the EPA believes that the actions of any undertaking are likely to have a major adverse environmental impact, the applicant will be required to submit an EIS on the undertaking so that the environmental impact of the proposed undertaking can be examined. If an EIS is acceptable to the EPA, it will notify the applicant in writing and grant the environmental permit. Regulation 20 provides that the EPA should arrive at its decision within 90 days of the date of receipt of the application.

The holder of a mineral right who is granted an environmental permit is obligated to submit an annual environmental report to the Agency regarding the mineral operations. The EPA conducts frequent monitoring actions to ensure that mineral right holders are in compliance with the provisions of the environmental permit and with environmental regulations in general.

MINERAL TAX REGIME

According to Section 77 of the Income Tax Act of 2015, a mining income tax is payable on income derived by a person from mineral operations. For each year of assessment, the tax is computed by applying the rate of tax of thirty-five percent (35%) as indicated in the First Schedule to the chargeable income of that person from mineral operations. Section 1 of the Income Act states that chargeable income earned from activities other than mineral operations is taxable.

In ascertaining a person’s assessable income from mineral operations, the income derived from each separate mineral operation is treated as an independent business, and the tax payable for each year of assessment is calculated separately from each business as provided under section 77(4) of the Income Tax Act. An arrangement between a person’s separate mineral operation and any other activity must be conducted in accordance with the arm’s length principles outlined in Section 31 of the Income Act. The transfer of an asset to a separate mineral operation, or the transfer of an asset from a separate mineral operation, is treated as an acquisition or disposal of the asset, depending on the circumstances and therefore subject to capital gains assessment.

Section 78 provides that, a mineral operation performed in connection to a mine is considered a separate mineral operation. A mineral operation performed with a shared processing facility is also considered a separate mineral operation. When a holder of a reconnaissance license is later granted a prospecting license, a mineral operation undertaken prior to the award of the prospecting license is treated as conducted with respect to the prospecting to the same separate mineral operation. Furthermore, where the holder of a prospecting license obtains a mining lease and the area of that mining lease falls entirely within the prospecting license prior to the grant of the mining lease, the mining lease is treated as conducted with respect to the prospecting license and conducted with respect to the same separate operation.

Prior to the commencement of commercial production of a commercial find, person who incurs a revenue expenditure or a capital expenditure in the course of reconnaissance or prospecting operations shall consolidate all of such expenses into a single pool, and no revenue expenditure or capital allowance is allowed, and the expenditure is not included in the asset’s cost (section 79). Such expenses cannot be classified as either domestic or non-domestic.

Subject to any fiscal stability agreement, the mineral royalty rate is 5% of the total revenue earned from mining operations and is calculated for each year of assessment. A person’s income from separate mineral operations are taxed separately. A fee, royalty, or other payment due under the Mineral and Mining Act in relation of a mineral right or otherwise constitutes a debt owed to the Republic and is recoverable in court.

DISPUTE RESOLUTION

When it comes to the resolution of disputes under Ghana’s mineral and mining legislation, there are numerous regulations. The law encourages all mining industry participants to make every attempt to resolve all problems through mutual negotiations. (Section 27 of the Mineral and Mining Act).

However, where a dispute arises between a holder of a mineral right who is a citizen and the Republic over an issue expressly stated in Act 703, such a dispute shall be referred for resolution (Section 27(2) of Act 703). If the dispute is not resolved amicably within 30 days of the dispute arising, or within a longer period agreed upon by the parties, a party to the conflict may submit the difference to arbitration for resolution under the Alternative Dispute Resolution Act, 2010 (Act 798) or any other enactment of such nature that may be in place.

Where a dispute arises between a holder who is not a citizen and the Republic in respect of a matter expressly stated under Act 703, such a dispute or question shall be referred for resolution, and if the same is not resolved amicably within 30 days of the dispute arising or a more extended period as agreed between the parties, the difference may be resolved using any of the following mechanisms;

Under international machinery for the resolution of investment dispute as agreed to by the parties, or
If the parties do not reach an agreement under international machinery within 30 days or a more extended period as may be agreed between the parties, the matter may be submitted to arbitration under the following;

Firstly, the framework of a bilateral or multilateral agreement on investment protection to which the Republic and the country of which the holder of the mineral right is a national are parties, or
Secondly, if no agreement contemplated by subparagraph (i) exists, the rules of procedure for arbitration of the United Nations Commission on International Trade Law, UNCITRAL Rules.

BIBLIOGRAPHY

Legislations

The 1992 Constitution of the Republic of Ghana.
The Minerals and Mining Act (703/2006), as amended by the Minerals and Mining (Amendment) Act (900/2015).
The Environmental Protection Agency Act (490/1994).
The Income Tax Act (896/2015).
Ghana Investment Promotion Centre Act, 2013 (Act 865).

Regulations

The Minerals and Mining (Licensing) Regulations, 2012 (LI 2176).
The Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (LI 2483)

Case

Adjaye and Others V. Attorney General and Others Suit No.C144/94, 30th March 1994 (Unreported).

Articles

Agbesinyale, P. (2003). Ghana’s gold rush and regional development: The case of the Wassa west district of Ghana. SPRING Research Series, 44. University of Dortmund, Germany.
International Council on Mining and Metals, 2015, “Mining in Ghana –What future can we expect?” at page 5.
Kwesi Amponsah-Tawiah, Kwasi Dartey-Baah, “The Mining Industry in Ghana: A Blessing or a Curse” International Journal of Business and Social Science Vol. 2 No. 12; July 2011 at page 62.

Websites

12. https://sustainabledevelopment.un.org/content/documents/dsd/dsd_aofw_ni/ni_pdfs/NationalReports/ghana/Mining.pdf last visited on 27/01/2022.

https://gipc.gov.gh/mining/ lasted visited on 27/01/2022.
https://gra.gov.gh/portfolio/mineral-royalties-tax/ last visited on 8/02/2022.

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Article

December 13, 2021 William Nartey 2 Comments

THE TAX SYSTEM IN GHANA

In this world, nothing is certain but death and taxes. This statement, famously reported to have been said by Benjamin Franklin, certainly holds true in Ghana, as it does in other parts of the world. This article aims to shed light on the tax system in Ghana by explaining the role of the Ghana Revenue Authority (GRA) in the country’s tax regime as well as the various taxes that are levied and paid in Ghana.

Ghana Revenue Authority (GRA)

The GRA is the agency in charge of tax collection and assessment in the country. It is the first adjudicator between parties in the event of a disagreement, enforcing the terms of the tax legislation. The GRA is under the supervision of the Ministry of Finance and Economic Planning.

Taxation of Individuals

Income tax is the most common form of direct tax charged in Ghana. Income has its source in Ghana if the income is accrued or derived in Ghana. Generally, all income arising within the Ghanaian territory is liable to Ghanaian income tax regardless of the nationality of the recipient. The amount which is taxed and the rate at which it is taxed are generally determined by a person’s characteristics (i.e, individual or an entity (company, trust, or partnership)), residency status, and sources of income.

Under the Income Tax Act 2015 (Act 896), an individual is resident in Ghana for tax purposes if that individual is

present in Ghana for an aggregate period of 183 days of more in any 12-month period that commences or ends during the year
a citizen who is temporarily absent from Ghana for a period of not more than 365 continuous days where that citizen has a permanent home in Ghana; or
an employee of the Government of Ghana who has been posted abroad.

Assessable Income and Chargeable Income

Assessable Income is the income of a person from any employment, business or investment. A resident person’s assessable income is that person’s worldwide income from all sources. A non-resident person’s assessable income is that person’s income from Ghana. The assessable income of a non-resident person, who has a permanent establishment in Ghana is the income of the permanent establishment.

Chargeable Income on the other hand is made up of all income from employment, business, investment and other sources minus any allowable deduction. Chargeable income from each source of income is determined separately.

Rates of monthly taxation for Individuals

Tax rates are shown in the table below for the purpose of calculating monthly deductions.

	Chargeable income (Annual)	Rates	Tax
	Ghana Cedis (GHS)	%	(GHS)
First	3,828.00	Free	–
Next	1,200	5.0%	60.00
Next	1,440	10.0%	144.00
Next	36,000	17.5%	6,300.00
Next	197,532	25.0%	49,383.00
Exceeding	240,000	30.0%

Non-resident individuals are subject to a flat tax rate of 25% on their chargeable income.

Income from Employment

It is the responsibility of employers to file monthly tax returns on behalf of their employees. The employer must withhold and pay the employees’ taxes to the GRA. The withheld tax must be filed and paid by the 15th of the month which follows the month in which the tax is withheld.

At the end of the fiscal year, the employer must prepare an annual reconciliation of the taxes withheld on a monthly basis to determine whether there are any discrepancies. If there is a shortfall, the employer must pay the difference within 15 days of the end of the fiscal year (that is, on or before January 15).

Failure to settle the balance due on the return by the 15th of January attracts 125% of the statutory rate compounded monthly and applied to the amount owed at the beginning of the period.

Taxation of Companies

Companies and other corporate bodies, unlike individuals, are required to account for income and expenses on an accrual basis for each accounting year, rather than a calendar year. Most companies in Ghana are taxed at a rate of 25%, while those in the extractive sector are taxed at a rate of 35%. Companies should take advantage of different concessionary tax rates depending on the type of their firm, industry, and location.

A company is classified as resident if it is incorporated under the Companies Act, 2019 (Act 992), or if the management and control of the company is exercised in Ghana at any time during the year. A Ghanaian permanent establishment is treated as a resident company for the purposes of income taxation.

Each resident company must complete a self-assessment form in the third month of its financial year, indicating an estimate of taxes payable for the financial year. The estimated tax must then be paid to the GRA in quarterly installments, with the total amount paid eventually equaling at least 90% of the actual tax payable for the accounting year. Resident companies are also required to file corporate income tax returns no later than four months after the end of their financial year. Then, after deducting estimated taxes paid and taxes withheld during the year, they must pay any unpaid corporate income taxes.

Value-Added Tax (VAT)

VAT is a tax which is levied on a product at every point in its production where value is added – from the moment of manufacture to the point of sale. In contrast to income tax which is a direct tax, it is consumption-based tax and is the best known form of indirect tax.

VAT is levied on all goods and services supplied in the country, whether they are made in Ghana or imported from other countries. It forms part of the final price that consumers pay and is remitted to the GRA by VAT-registered suppliers of these goods and services. The standard VAT rate is 12.5%. However, for exported goods and services, the VAT rate is 0% (known as zero rated supplies). Taxable supplies made by wholesalers and retailers also receive a rate of 3%.

The VAT base for imported supplies is calculated by adding the duty-inclusive costs, insurance costs, and freight value.

VAT-registered suppliers must file monthly VAT returns and pay VAT to the GRA by the last working day of the month following month to which the returns relate. VAT-registered suppliers may deduct VAT incurred in their registered business activities when calculating the VAT payable for each month if certain conditions are met.

Withholding VAT

Designated VAT-registered entities are required to withhold VAT on standard-rated VAT supplies and remit the withheld VAT to the GRA by the 15th of the month following the month for which the VAT was withheld. The withheld VAT is calculated as 7% of the supply’s taxable value.

National Health Insurance Levy (NHIL) and Ghana Education Trust Fund Levy (GETFL)

The VAT base for local supplies used to be the total of the invoice value plus the National Health Insurance Levy (NHIL), the Ghana Education Trust Fund Levy (GETFL) and the COVID 19 Levy. This was however changed in August 2018 when the NHIL and GETFund components were separated from VAT as part of the 2018 Mid Year Budget.

The NHIL and GETFL, both of which are levied at 2.5% of the invoice value of supplies, are thus no longer deductible when calculating the monthly VAT payable by VAT-registered suppliers. Unlike VAT, the NHIL and GETFL apply to imported services regardless of whether the service is used in the taxable activity. VAT-registered suppliers must submit separate NHIL and GETFL returns by the same deadline as VAT (15th of the month which follows the month in which the tax is withheld).

COVID-19 Levy

The COVID-19 Health Recovery Levy, 2021 (Act 1068), was enacted by the Parliament of Ghana in April 2021 as a special levy on supply of goods and services and imports. Its purpose is to raise revenue to support COVID–19 expenditures and other related matters.

With the exception of exempt goods and services, the Levy is charged on the value of the taxable supply of all goods and services both made in and exported into Ghana.

The percentage of the levy is 1% and it is applied to the taxable supply after deducting the National Health Insurance Levy (NHIL), the Ghana Education Trust Fund Levy (GETFund Levy), and Value-Added Tax (VAT).

The 12.5 percent VAT is also calculated on the taxable supply’s value, which includes the NHIL, GETFund Levy, and COVID-19 Levy.

Exempted Goods and Services

The following goods and services are entirely exempt from VAT and other payments including the COVID 19 levy. They are found in the first schedule of the Value Added Tax Act 2013 (Act 870).

Agricultural and aquatic products that are produced in Ghana in a raw state such as maize, sorghum, millet, tubers, guinea corn, rice, fish, other than ornamental fish, crustaceans, mollusks, vegetables and fruits, nuts, coffee, cocoa, and edible meat of animals that have been slightly processed through smoking, salting or similar processes.
Live animals such as cattle, sheep, goats, swine and poultry bred or raised in Ghana. This excludes horses, asses, mules, hinnies, and other exotic animals.
Transportation that includes travel by bus and similar vehicles, as well as train, boat, and air.
Goods designed exclusively for use by persons with disability.
Machinery for use in agriculture, mining, railway and industry.
Crude oil and hydrocarbon products such as petrol, diesel, kerosene, liquefied petroleum gas, natural petroleum gas.
Postage stamps issued by the Ghana Post, other than for expedited services or for philatelist purposes.
Salt for human consumption, including table salt.
Mosquito nets, whether or not impregnated with chemicals.
Agricultural inputs such as seeds, bulbs, fertilizer, herbicides, veterinary drugs, feed and vaccines for domesticated animals.
Fishing gear such as boats, nets, twine, hooks, raw material imported for use in production of nets and twines.
Water, excluding water commonly supplied in bottles or other packaging suitable for supply to consumers.
Education services; laboratory and library equipment used to render education services; educational materials approved by the Ministry of Education such as textbooks, supplementary readers, newspapers, atlases, charts, maps and music.
Medical services, medical supplies, and pharmaceuticals.
Land for dwelling, agricultural purposes, and civil engineering and public works including roads and bridges. It excludes the sale of immovable property by an estate developer and hotel accommodation, warehousing and storage.
A supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units.

Applicable Laws

Income Tax Act, 2015 (Act 896)
Value Added Tax Act, 2013 (Act 870)
Income Tax (Amendment) Act 2016 (Act 907)
Income Tax Act (Amendment) Act 2018 (Act 973)
Covid 19 Health Levy Act 2021 (Act 1068)

Breakdown of VAT and Ancillary Payments as at October 2021

Value Added Tax (VAT) – Standard Rate	12.50%
National Health Insurance Levy (NHIL)	2.50%
Ghana Education Trust Fund (GFL)	2.50%
1% COVID-19 Levy	1.00%
(VAT) on NHIL and GFL and 1% COVID-19 Levy*	0.75%
Total VAT	19.25%

* (12.5%*(2.5%+2.5%+1.0%))

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October 19, 2021 William Nartey 4 Comments

Who Can Serve As Witness To A Power Of Attorney – The Case Of Luca & Another V. Samir And Others

Two women signing a document — Image by Gabrielle Henderson on Unsplash

Author: Barbara Ewoenam Kukah

A power of attorney is a written authorization that is given by one person (the “donor”) to another (the “donee”) to enable the donee to represent the donor and make decisions or take actions in the donor’s stead. It has also been defined by Hayfron-Benjamin JSC in the case of Hussey v. Edah [1992-93] Part 4, GBR 1703 at 1714, as a “formal document by which one person, usually called the principal or donor, divests to another, usually called the attorney or donee, authority to represent him or act in his stead or for certain purposes spelt out in the document.”

The primary law that regulates the creation and validity of powers of attorney in Ghana is the Power of Attorney Act (Act 549). Under this Act, in order to be valid, a power of attorney must be signed by the donor in the presence of a witness who must also sign to attest the document. In the event that the donor is unable to sign the document, another person can be authorised by the donor to sign on the donor’s behalf. In such a case, the person signing for the donor must sign it in the presence of the donor and two attesting witnesses. This requirement is what gives the power of attorney legal validity and without it, the document and any action carried out thereto is invalid.

In the case of Asante v. Maersk [2003-2005] 2 GLR 43 – 58, the Plaintiff who resided in Germany and wished to initiate a lawsuit in Ghana gave a power of attorney to her mother to prosecute the action on her behalf. The power of attorney was however prepared in Kumasi, Ghana, and signed by a witness before being sent to Germany to be signed by the Plaintiff/donor. Although the lawsuit was indeed commenced, the court held that the power of attorney was invalid because the witness did not witness the donor signing. This decision was based on the requirement by Act 549 that a witness must first witness the donor signing it and then attest the document. The power of attorney could therefore not be used by the Plaintiff’s mother as the basis of commencing the action.

The importance of a witness was once again emphasised in the case of Huseini v. Moru [2013-2014] 1 SCGLR 363. In this case, the Plaintiff through his lawful attorney had commenced an action and received judgment in his favour but the judgment was reversed on appeal when it was discovered that the power of attorney had not been signed by a witness. It was held to be invalid, meaning it was impossible for the Plaintiff’s attorney to have relied on it to commence the action. The entirety of the Plaintiff’s case was thus struck out.

It is important to note that even in situations where the power of attorney is signed by a witness who attests to the donor executing the document in the witness’ presence , the question of who can actually serve as a witness is one that has arisen and been the cause of much discourse. Act 549 for its part does not specify who qualifies as a witness. Section 1 of Act 549 provides as follows:

1) An instrument creating a power of attorney shall be signed by the donor of the power, or a person authorised by the donor in the presence of the donor.

(2) Where the instrument is signed by the donor of the power, one witness shall be present and shall attest the instrument.

(3) Where the instrument is signed by a person authorised by the donor, two witnesses shall be present and shall attest the instrument.

(4) This section applies in addition to a requirement under an enactment in respect of witnessing of an instrument creating a power of attorney including the rules relating to the execution of instruments by bodies corporate.

In the case of Asante-Appiah v. Amponsah (2009) SCGLR 90, the Plaintiff executed a power of attorney for his donee to initiate a suit on his behalf. The power of attorney was signed by the donor but not by a witness. It was however executed in the presence of a commissioner for oaths. When an objection was made as to its validity on the basis that it was not signed by a witness, the Plaintiff’s counsel argued that the commissioner for oaths doubled as the witness and the person before whom it was signed. This argument was however rejected by the Court of Appeal and subsequently the Supreme Court on the ground that there was no legal or statutory basis for that argument. Dotse JSC in that case stated that the Act was couched in imperative terms and that the document was invalid because it was not signed by a witness.

From the time it was decided, this case has been treated as the legal precedent on the issue of who may act as a witness. On the authority of this precedent, the consensus has been that whoever a witness may be, it cannot include a commissioner for oaths or notary public. Thus even though the document may be executed before either of them, there is still the need for a witness to sign separately.

This position of the law has however been changed by the recently decided case of Luca and Anor v. Samir and Others (J4/49/2020) [2021] GHASC 4 (21 April 2021). In this case, two brothers who are Italian nationals sued to recover possession of a house which their Italian mother owned when she lived in Ghana. They sued through an attorney who was given a power of attorney which was attested by a notary public but not by a witness. In the High Court, the trial judge struck out the action on an application made by the defendants that the plaintiffs lacked capacity to institute the action. This was reversed by the Court of Appeal which ordered that the suit be restored. The defendants appealed to the Supreme Court. The Supreme Court, speaking through Pwamang JSC, gave a groundbreaking judgment which will no doubt have an effect on the basis for which powers of attorney are accepted or rejected on the basis of validity.

The Supreme Court held that the meaning of the word “attest” as used by Act 549 in relation to a witness to a power of attorney means to affirm that indeed and in truth, the document was executed in the witness’s presence. The Court further stated that the Act neither gave a special criteria for a witness nor disqualified any group of people from acting as witnesses to a power of attorney. The intention of the legislator was simply that the witness see the donor sign the document and then sign to attest it. With that meaning and intention in mind, the Court held that commissioners for oaths, being appointed by the Chief Justice and given power to administer oaths and attest to same, are even better qualified to witness and attest powers of attorney than the ordinary person who may not be so easy to trace.

The conclusion of the Court was that the decision in the Asante-Appiah v. Amponsah was not only a narrow and literal interpretation of Act 549, but was also incorrectly decided. Thus, commissioners of oaths and notaries public can act as sole witnesses to powers of attorney, and the Plaintiffs had capacity to institute the action as their power of attorney was valid under Ghanaian law.

This judgment which is not only forward-thinking but also laudable, has toppled years of legal thinking on this subject. It helps to ease the strict requirements which have been used to disqualify powers of attorney and dismiss entire lawsuits over the years. It is hoped that this clarification of the Act will make it easier for donees of powers of attorney to act more efficiently on behalf of their donors.

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CREATING A WILL IN GHANA

AN APPRAISAL OF THE MINING LAWS IN GHANA

THE TAX SYSTEM IN GHANA

Who Can Serve As Witness To A Power Of Attorney – The Case Of Luca & Another V. Samir And Others

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