Analysts Call for Review of Ghana’s 3% Flat Tax for Small Businesses Amid New Tax Scheme Rollout

Tax analysts in Ghana are urging the Ghana Revenue Authority (GRA) to reconsider the 3% flat tax rate applied to small businesses with annual sales of GH¢20,000 and above. They argue that the income threshold for this tax is too low and may unfairly burden micro-enterprises. This call comes as the GRA officially implements the Modified Taxation Scheme, which aims to bring more informal sector workers into the tax net, starting July 1, 2025.

Tax analyst Francis Timore Boi, speaking to Citi Business News, acknowledged the importance of the new tax structure but highlighted flaws in its current format. He noted that GH¢600 (3% of GH¢20,000) is a minimal contribution, suggesting the threshold should be increased to protect very small businesses from unnecessary financial strain. He believes that adjusting the threshold upward would better target businesses with a stronger capacity to pay.

Despite his critique, Timore Boi commended the Modified Taxation Scheme for its long-term potential. He emphasized that broadening the tax base could eventually lead to a reduction in overall tax rates. According to him, a narrow tax base has historically pushed the government toward imposing higher and more frequent consumption-based taxes, which affects everyone.

However, he criticized the timing of the scheme’s rollout, citing its mid-year launch as problematic. With only six months left in the year, he warned that many small business owners may not have adequate time to comply with the new requirements. He also expressed concern over insufficient sensitization efforts, predicting resistance from first-time taxpayers in the informal sector.

Timore Boi recommended that future rollouts begin at the start of a calendar year to allow businesses time to adjust and the government to collect full-year revenue. He also emphasized the need for broader public education campaigns. The new scheme categorizes businesses into three tiers by income: very small businesses (below GH¢20,000), small businesses (GH¢20,000–GH¢500,000), and larger enterprises (above GH¢500,000), each with distinct tax obligations and payment methods, including mobile money and USSD codes.

Source: Citi newsroom