News Guide Africa

Tag: INFORMAL SECTOR

  • GRA rolls out reformed informal sector tax system …as new report shows they are willing to tax compliant

    Adnan Adams Mohammed

    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 GHc 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 Behaviour 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 mobilisation.

    “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 scepticism.”

    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 decentralised 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 GHc 20,000 will pay a fixed amount—GHc 25, GHc 35, or GHc 45. For those with turnover between GHc 20,000 and GHc 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.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • SSNIT to pursue aggressive membership drive from the informal sector

    SSNIT to pursue aggressive membership drive from the informal sector

    Adnan Adams Mohammed

    The Social Security and National Insurance Trust (SSNIT) has indicated plans to rollout an aggressive membership drive to rope in about one million contributors from the informal sector by next year.

    This, will be about two-quarters or more of the existing membership of SSNIT mostly from the formal sectors of the economy. SSNIT, is however, confident of achieving the target while changing the existing narrative.

    Currently, out of the over 11 million workers in the country, less than 2 million of them are active SSNIT contributors, leaving about nine million workers not registered on any pension scheme. Indicating that, the informal sector dominates the yet to be registered fraction.

    “From our own data you find out that out of all the people that are in the informal sector who could have enrolled on our pension scheme, there’s only about some 14,000 who have signed up, which is very, very minimal. So, the terrain is wide open and this program that we are embarking on, my hope is that maybe a year after we have rolled out this campaign, we can get as much as about a million people”, Director-General of SSNIT, Dr Ofori Tenkorang said when he spoke to the media on the sidelines of a stakeholder engagement on the national pension scheme provider’s planned campaign to extend coverage to the informal sector.

    He added that “I know it’s a very aggressive target because people need to buy into the idea that they too can join this scheme. People need to disabuse themselves of the notion that giving your money to SSNIT is a waste, especially people in the informal sector who feel that they need the money now, not for some time later, which for them sometimes they think will never come.”