News Guide Africa

Tag: Tax compliance

  • 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.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Gov’t advised to leverage financial institutions to boost tax compliance

     

     

    “Boosting tax compliance through financial institutions.”Prof Williams Coffie said .

     

     

    Adnan Adams Mohammed

     

     

    A finance expert has advised government to leverage on financial institutions to encourage tax compliance among small businesses.

     

    Prof. William Coffie believes that existing financial institutions, such as microfinance agencies, the Ghana Enterprise Agency (GEA), and the yet-to-be-established Women’s Bank, could serve as avenues to promote tax compliance among small businesses.

     

    Although, he acknowledged the challenges of formalizing the informal sector, he emphasized the need for a strategic approach to integrating the informal sector into the tax system.

     

    “With the proposal to establish the Women’s Development Bank, we can use this and other small medium, and micro firms to comply with tax payment”, Head of the Department of Accounting at the University of Ghana Business School (UGBS), Prof. William Coffie pointed when speaking at a post-budget discussion organised by Lima Partners, last week.

     

    “We have a number of these microfinance institutions and agencies such as the GEA, MASLOC, and now the Women’s Bank. Why don’t we use these avenues to encourage micro and small businesses to comply with the reporting and record-keeping of their taxes? And say that if a small business or a micro firm could produce your account for three years and continuously show that you are paying your taxes, we are going to support you with a micro-credit as a way to support them.

     

    “I believe that once these small business owners know that there is support for them just by good behaviour, they may comply,” he stated.

     

    Meanwhile, the Minister for Finance, Dr Cassiel Ato Forson, last week gave his assurance to heads of commercial banks that, the government remains committed to responsible economic management and will not repeat the financial instability experienced in 2022.

     

    He explained that lessons learnt from past economic challenges, are guiding the government to implement measures that promote stability and growth.

     

    “Reckless financial decisions would not be tolerated, as the government aims to restore confidence in the banking sector and the broader economy”, Dr Forson noted while speaking to the Managing Directors of commercial banks operating in Ghana last week.

     

    The Finance Minister stressed that a coordinated policy approach would be essential in ensuring sustainable growth and protecting the financial system from future crises.

     

    He urged banks to collaborate closely with the government in implementing strategies that enhance liquidity, encourage investment, and strengthen economic resilience.

     

    Dr Forson reiterated that the government’s priority is to create a stable economic environment that benefits both financial institutions and the general public.

     

    “Policies would be carefully designed to support long-term stability, ensuring that Ghana’s financial sector remains strong and capable of driving national development.”