Ghana’s quest for fiscal independence and reduced reliance on external borrowing hinges on a dramatic improvement in domestic tax mobilisation, senior officials at the Ghana Revenue Authority (GRA) have stressed. Speaking at a high-level business forum, the Acting Commissioner of the Domestic Tax Revenue Division revealed that Ghana currently collects only one-third of the income tax it is owed, leaving a tax compliance gap of 67 percent a situation that significantly weakens the government’s ability to finance public services and development from internal resources alone.
Underlining the magnitude of the problem, the Acting Commissioner explained that the current level of tax compliance means that for every GH¢100 owed in income tax, the state collects just GH¢33. A similarly stark gap exists in Value Added Tax (VAT) collections, with compliance hovering around 39 percent implying that more than six out of every ten VAT-related payments that should be collected are not. These shortfalls represent vast amounts of potential revenue slipping through the cracks every year.
Officials argue that narrowing this compliance gap is not merely a technical exercise but a fundamental requirement for long-term economic stability. At present, Ghana’s fiscal architecture remains heavily dependent on external support from institutions such as the International Monetary Fund (IMF) and recurrent borrowing to bridge budget deficits. By contrast, a robust domestic revenue base would strengthen the government’s ability to fund infrastructure, healthcare, education, and social services without recourse to external creditors.
According to the government’s 2026 budget projections, total revenue and grants are expected to rise significantly compared with the previous year, with non-oil tax revenue alone forecast to account for more than 80 percent of total receipts. This underscores the central role that improved tax compliance must play if Ghana is to achieve those ambitions.
Reforms to support compliance
To address these challenges, GRA has rolled out a suite of reforms aimed at simplifying the tax regime and making compliance easier and more efficient for taxpayers. One of the most consequential adjustments came with the introduction of the VAT Act 1151, which increased the VAT registration threshold from GH¢200,000 to GH¢750,000. This change effectively exempted many smaller businesses from mandatory VAT registration and filing, reducing administrative burdens and lowering transaction costs. Officials believe this will not only streamline compliance for small enterprises but also benefit consumers by reducing the price of goods.
In addition to legislative reform, GRA has accelerated the deployment of digital technologies to overhaul tax administration. The introduction of e-invoicing systems and electronic fiscal devices has replaced manual transaction records, helping businesses manage their operations more effectively while enabling the tax authority to monitor economic activity in real time. These tools are expected to reduce human error, curb revenue leakages, and create a more transparent and responsive tax ecosystem.
Recognising that compliance is as much about knowledge as enforcement, GRA is also launching a three-year nationwide tax education programme. This initiative aims to reach both registered and unregistered businesses with information on tax obligations, taxpayer rights, and the long-term benefits of compliance. Complementing this will be the establishment of a National Compliance and Enforcement Team, tasked with ensuring that eligible businesses register and pay taxes, thereby strengthening parity across the revenue system.
Broader review of Tax Laws
Officials have also indicated plans to review and modernise key domestic tax legislation within the year. Laws such as the Income Tax Act, Excise Tax Act, and Customs Act are set to be examined for opportunities to simplify compliance, eliminate ambiguities, and adapt to evolving economic realities. Part of this effort is aimed at creating a more business-friendly tax environment that supports enterprise growth while ensuring that all sectors contribute fairly to national development.
Improving voluntary compliance, particularly among informal sector businesses, remains a critical challenge. Small and medium–sized enterprises (SMEs) and self-employed individuals frequently operate outside the formal tax net, either due to lack of awareness or perceived bureaucratic barriers. Strengthening tax education, leveraging digital systems to ease filing burdens, and building trust between taxpayers and the revenue authority are all viewed as essential to bringing more economic actors into full compliance.
Compliance as competitive advantage
Business leaders at the forum emphasised that tax compliance should be viewed less as a regulatory burden and more as a strategic competitive advantage. Companies that pay their taxes diligently tend to possess stronger governance structures, greater institutional discipline, and increased credibility in the eyes of customers and investors. By contrast, non-compliant firms often struggle with limited access to formal markets, difficulty attracting capital, and constrained growth prospects.
For Ghana to truly expand its tax base, reform efforts must therefore transcend enforcement and encompass broader economic incentives. This means aligning tax policy with business growth, ensuring that compliance is simple, predictable, and beneficial.
The path ahead
Closing Ghana’s 67 percent tax gap is a complex but essential endeavour. It calls for sustained political will, continued digital transformation, and a unified commitment from citizens and businesses alike. With the right combination of education, technology, and enforcement, the government hopes to mobilise enough domestic resources to reduce reliance on external support, strengthen fiscal independence, and build a more resilient economy for the future.