GRA to impose 3% tax on startups, informal businesses from Nov 5

The Ghana Revenue Authority (GRA) is set to introduce a 3 per cent modified taxation model on small businesses, effective November 5, as part of efforts to expand the country’s tax net.

The initiative aims to simplify the process for informal and online businesses, including start-ups, enabling greater revenue mobilisation in line with existing laws.

Commissioner-General Anthony Sarpong disclosed this during a visit by Minister of State for Public Sector Reforms, Lydia Lamisi Akanvariba, to the GRA headquarters.

He underscored the significance of the informal sector, which contributes over 30 per cent to Ghana’s Gross Domestic Product (GDP) but accounts for around 70 per cent of all businesses in the country.

Mr Sarpong explained: “If you take about USD30 million, and I have been saying 50 per cent are in the informal sector, that is huge.”

He noted that the new tax system will target the informal sector with a focus on convenience and simplicity.

Under the proposed scheme, self-employed individuals, sole proprietors, or small business owners who earn not more than GHS500,000 annually will be required to pay a flat tax rate of 3 per cent on their income.

For example, someone earning GHS200,000 per year will pay GHS 6,000 in tax under this system.

The Commissioner-General emphasised the affordability of the tax and its potential to encourage voluntary compliance.

“If the government popularises this and gets people to understand that whatever you are earning, you can pay something on it, we believe that GHS 6,000 a year for an individual earning 200,000 cedis is affordable.

“This will bring more people on board to contribute. Though it looks small, it adds up to a huge amount,” he said.

Mr Sarpong further projected that the informal sector could include up to 10 million taxpayers, representing a major revenue potential for the government.