The Ghana Revenue Authority (GRA) proposes extending its Modified Taxation Scheme (MTS) to small limited liability companies with annual turnovers up to GHS 750,000. This move aims to simplify tax compliance for these businesses, fostering formalisation within Ghana's economy.
This significant policy shift seeks to make the tax system more responsive to the operational realities of small businesses. It will allow eligible companies, including those operating as individuals, sole proprietorships, partnerships, or limited liability companies, to benefit from a simplified tax regime. This avoids the more complex compliance requirements typically designed for larger corporate entities.
This proposal fits into Ghana's broader economic strategy to support small and medium-sized enterprises (SMEs), which are vital for job creation and economic growth. Many young people and women are encouraged to register businesses formally, often as limited liability companies, even with small operations. The current tax framework, however, often subjects these small corporate entities to the same stringent rules as large corporations, potentially discouraging formalisation. Data indicates that SMEs contribute significantly to Ghana's GDP, making their ease of operation a key policy focus.
Anthony Kwasi Sarpong, the Commissioner-General of the GRA, announced this policy direction. His Technical Advisor and Chairperson of the MTS Committee, Elsie Appau-Klu, delivered the announcement at an MTS stakeholder workshop in Accra on September 9. Madam Appau-Klu stated, “The MTS should not be limited to individuals and sole proprietors.” She emphasised the need for a tax system that does not penalise businesses for formalising their operations.
The proposed changes carry significant implications for Ghana's business landscape and tax administration. The GRA's Legal and Policy teams are now working with the Ministry of Finance to secure the necessary legislative amendments. This collaboration aims to explicitly include qualifying small companies in the simplified tax regime. The proposed GHS 750,000 threshold will also align the MTS with the registration threshold for goods under the Value Added Tax Act, 2025 (Act 1151). This alignment will create greater consistency across Ghana's tax framework, reducing confusion and administrative burden for businesses.
Excluding small businesses solely due to their legal status can undermine efforts by various institutions to promote formalisation. Organisations like the Youth Employment Agency (YEA), the Microfinance and Small Loans Centre (MASLOC), and the Ghana Enterprises Agency actively support business formalisation. This policy change will ensure that businesses such as salons, laundries, bakeries, carpentry shops, and provision stores, even if structured as limited liability companies, can access the simplified tax framework if their annual turnover remains below the proposed threshold. This will prevent small businesses from being inadvertently pushed into complex tax structures meant for much larger entities.
The GRA's roadmap for implementation includes immediate stakeholder engagement and administrative guidance. Legislative amendments are expected to be proposed by December 2026. In the longer term, the GRA plans to digitise the MTS, utilising mobile applications and USSD platforms. These digital tools will simplify registration, filing, and tax payments, potentially incorporating local-language interfaces to enhance accessibility. This digitisation effort will further streamline the tax process, making it easier for small businesses to comply. The overarching objective is to strengthen the link between business formalisation and tax compliance, ensuring entrepreneurs can choose corporate structures without losing access to simplified taxation. This proactive approach by the GRA is expected to foster a more inclusive and supportive environment for small businesses across Ghana.