News Guide Africa

Tag: tax

  • Analysts urge GRA to review 3% flat tax rate for small businesses

    Some tax analysts are calling on the, Ghana Revenue Authority (GRA) to review the 3% flat rate applied to businesses with annual sales of GH¢20,000 and above, arguing that the threshold is too low.

    The call comes amid the rollout of several new tax policies, including the Modified Taxation Scheme, which took effect on July 1, 2025. The scheme targets informal sector workers across the country.

    Speaking to Citi Business News, tax analyst Francis Timore Boi acknowledged the GRA’s efforts in implementing the scheme but emphasized the need to revisit the flat rate threshold.

    “The threshold of GH¢20,000 is quite low. It should be increased slightly to exempt only very small businesses. Imagine 3% of GH¢20,000—that’s just GH¢600 for the entire year. That’s very little. A higher threshold would make more sense,” he said.

    Despite his concerns, he praised the broader initiative, noting its potential to expand the tax base and reduce the overall tax burden in the long term.

    “If we’re able to broaden the tax base, you’ll see that the current tax rates can actually come down. The reason government keeps introducing higher rates and consumption taxes is because too few people are in the tax net.”

    Mr. Timore Boi also expressed concern over the scheme’s mid-year rollout, highlighting the limited time available for businesses to adjust and comply.

    “We have just six months left in the year, and it seems there hasn’t been enough sensitization. Initially, we’re likely to see resistance from small businesses—especially since many of them are being taxed for the first time.”

    He stressed the need for more intensive public education campaigns and suggested that future rollouts begin at the start of the calendar year.

    “More sensitization is key. Ideally, implementation should begin in January to give government a full year to collect revenue and give businesses time to adapt. Still, it’s better late than never. If executed well, this scheme could significantly broaden the tax base and, over time, reduce rates on other tax categories.”

    The Modified Taxation Scheme applies to different categories of businesses based on their annual income:

    Small businesses earning less than GH¢20,000 a year

    → Will pay a fixed amount every quarter (up to GH¢45).

    Businesses earning between GH¢20,000 and GH¢500,000 a year

    → Will pay a flat tax rate of 3% on their total annual sales.

    Businesses earning above GH¢500,000 a year

    → Will be taxed using graduated rates and allowed to make deductions based on their expenses.

    Tax payments can be made through mobile money, USSD (*222#), or at the bank.

    Business owners can register for the scheme at any GRA office or through the GRA mobile app.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • 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.