Tax analyst urges GRA to raise 3% threshold for small businesses
By Rebecca Okine
Tax analyst Francis Timore Boi has urged the Ghana Revenue Authority (GRA) to reconsider the 3 percent flat tax rate for small businesses under the new Modified Taxation Scheme, which was scheduled to take effect from July 1, 2025.
The scheme, part of broader reforms to widen the country’s tax net, targets informal sector workers and categorizes businesses into three brackets based on annual income. Businesses earning below GHS20,000 will pay a fixed quarterly amount of up to GHS45. Those earning between GHS20,000 and GHS500,000 will pay a flat rate of 3 percent on total sales, while businesses with revenue above GHS500,000 will be taxed using graduated rates and permitted to deduct expenses.
Speaking in a media interview, Mr. Boi acknowledged the initiative’s simplicity and potential to enhance compliance but cautioned that the flat rate threshold is too low and could impose undue pressure on microenterprises.
“The GHS20,000 threshold may seem modest, but for very small businesses, even that figure represents a significant turnover,” he said.
Mr. Boi explained that slightly increasing the threshold could help protect microenterprises from unintended hardship while still achieving the policy’s broader goals.
“A marginal adjustment would exempt the most vulnerable players and enable the tax system to function more equitably without placing unnecessary strain on those already operating on thin margins,” he stressed.
The tax analyst also acknowledged the GRA’s efforts in implementing the scheme, but expressed concern about its mid-year rollout. With only six months remaining in the year, he warned that many small businesses may struggle to adjust in time.
“There hasn’t been enough sensitization. Many of these businesses are being taxed for the first time. Some resistance is expected,” he noted.
Mr. Boi urged the GRA to intensify public education efforts to help business owners understand their responsibilities under the scheme and proposed that future tax initiatives be implemented at the beginning of the calendar year.
“Starting in January gives everyone time to prepare, both the GRA and taxpayers. A well-informed rollout leads to better compliance and results,” he added.
Despite these concerns, Mr. Boi remains optimistic. He believes the Modified Taxation Scheme, if executed effectively, has the potential to significantly broaden Ghana’s tax base, ease pressure on formal sector workers, and eventually lower overall tax rates.
