GRA Targets Informal Sector With Modified Tax Scheme
The Ghana Revenue Authority is pressing ahead with a modified taxation scheme designed to bring operators in the country’s vast informal economy into the tax net, a move that could significantly broaden the government’s revenue base but one that will test the authority’s capacity to administer taxes among millions of small-scale earners.
Dr. Dominic Naab, the GRA’s Acting Deputy Commissioner for Strategy and Research and Head of VAT Administration, explained that the scheme targets individuals whose annual turnover falls below the standard VAT registration threshold — primarily sole proprietors who do not file accounts with the Registrar of Companies.
"They are making income, but they have to be taxed anyway," Naab said, framing the initiative as a matter of fiscal equity rather than punitive enforcement.
Who Falls Under the Scheme
The modified taxation framework applies exclusively to individuals. Registered companies remain subject to the regular corporate tax regime and are not affected by the new arrangement. The distinction is significant: Ghana’s informal sector accounts for a substantial share of economic activity, yet most participants — market traders, artisans, transport operators, and small-scale farmers among them — have historically operated outside the formal tax system.
The GRA’s challenge is not new. Successive governments have struggled to widen the tax net without alienating a population that is already sceptical of how public revenues are spent. What distinguishes the current approach is its explicit recognition that the informal economy cannot simply be ignored, even if taxing it requires a different set of tools than those applied to corporate entities.
The GRA’s Institutional History
The Revenue Authority was established in 2009 under Act 791 of Parliament, merging three previously separate agencies: the Internal Revenue Service, the VAT Service, and the Customs and Excise Preventive Service. The consolidation was intended to create operational synergy, eliminate duplicated services, and end what officials described as "subtle competition" among the predecessor bodies.
That merger gave the GRA a unified mandate, but the task of reaching informal-sector operators has remained elusive. The modified taxation scheme represents the latest attempt to close the gap between the authority’s statutory reach and its practical capacity.
Balancing Revenue and Burden
The policy raises legitimate questions about compliance costs and enforcement. Small-scale operators who already navigate thin margins may find even modest tax obligations difficult to absorb. The GRA will need to demonstrate that the scheme is administered fairly and that the revenues collected are visibly reinvested in the public goods — roads, sanitation, security — that informal-sector workers depend on.
For now, the authority appears focused on registration and awareness rather than aggressive enforcement. The success of the scheme will ultimately depend on whether the GRA can build enough trust to make voluntary compliance the norm, rather than relying on punitive measures that could drive economic activity further underground.
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