As Ghana Revenue Authority (GRA) is preparing to roll out a reformed informal sector tax system aimed at improving tax compliance and revenue collection, the players have shown willingness to be compliant.
GRA announced last week that, starting July 2025, it will implement a new tax compliant framework targeting informal sector workers not currently registered with the GRA, but earning annual sales below GH₵ 20,000. Such employees will be required to pay a fixed quarterly tax between GH¢25 and GH¢45.
This forms part of government efforts to widen Ghana’s tax basket. Tax compliance within the informal economy has long been hindered by failure to apply the right policies and collection systems.
According to a new report titled “Ghana’s Untapped Economy: Analysis of Tax Compliance Behavior of Informal Sector Workers in the Greater Accra Region” published by BudgIT Ghana in collaboration with the Society for Women in Taxation Ghana and the International Budget Partnership (IBP), while many informal sector workers are willing to comply with tax obligations, systemic obstacles continue to block voluntary compliance and limit revenue mobilization.
“A major underlying issue is the widespread distrust in government institutions. Many informal workers believe tax revenues are either mismanaged or lost to corruption”, the report captured. “This perception has eroded confidence in the tax system and weakened the motivation to contribute. The lack of visible benefits such as improved infrastructure or essential services only deepens public skepticism.”
Beyond issues of governance, the report also identifies structural and economic factors impeding compliance. Income instability across the sector makes it difficult for many to make regular tax payments.
The tax system itself is often seen as complex and opaque, with bureaucratic registration processes that are difficult to navigate, particularly for those with limited formal education.
Women in the informal sector face additional challenges. The report finds that female entrepreneurs who make up a significant portion of the workforce are disproportionately burdened by indirect taxes and more frequent enforcement.
Many report experiences of harassment limited financial flexibility, and the pressure of balancing business operations with caregiving duties.
Despite these challenges, the study notes a strong willingness among informal workers to pay taxes if the system becomes more transparent, equitable, and attuned to their everyday realities.
To address these issues, BudgIT Ghana and its partners recommend targeted reforms, including simplified tax registration and payment processes through mobile and decentralized platforms. The report also calls for the expansion of mobile money and USSD-based payment options to make tax compliance more accessible.
Additionally, it advocates for gender-sensitive tax policies, such as flexible payment arrangements and anti-harassment enforcement protocols.
Meanwhile, the Assistant Commissioner for Research and Policy at GRA, Dr. Alex Kombat, while speaking at the launch of the report, explained that the revised system seeks to broaden Ghana’s tax base and promote fairness in revenue mobilization.
“We have developed a system called modified taxation. Those with turnover below GH₵ 20,000 will pay a fixed amount GH₵ 25, GH₵35, or GH₵ 45. For those with turnover between GH₵ 20,000 and GH₵ 500,000, we’ll apply a 3% tax on their turnover. This marks a shift from the traditional tax collection methods,” he stated.
Dr. Kombat added that the initiative is expected to launch by July 1 and appealed for public support, especially from the media, to ensure its successful implementation.
The Country Manager at BudgIT Ghana, Jennifer Moffatt, stressed the importance of collaboration between the GRA and local authorities to enhance tax collection in the informal sector.
“One of our key recommendations is for the GRA and Metropolitan, Municipal, and District Assemblies (MMDAs) to collaborate on tax collection. Many informal sector workers feel more comfortable paying levies to local authorities than to the GRA,” she noted.
Chairperson of the Society of Women in Taxation, Esi Sam endorsed the initiative, stating that it will simplify tax compliance for informal sector workers.
“When you understand something, it becomes easy to do because it’s straightforward. So, if the modified taxation system is being introduced, it’s a good move it will simplify the process and make it easier for people to understand,” she said.
