A Guide to Identifying Business Entities for Widening the Tax Net and Enforcing Tax Compliance in Ghana

Domestic Resource Mobilisation (DRM) remains imperative for any developing nation, including Ghana. This mechanism wields enormous potential to finance multiple infrastructural and social projects for the benefit of citizens.  In Ghana, tax revenues account for about 80% of the total national revenue, making it an essential source of development funding. Thus, inadequate tax revenue mobilisation would contribute to significant budget deficits and increased appetite for borrowing, expanding the country’s debt portfolio.

Ghana’s fiscal deficit is primarily contributed by lower revenue mobilisation. The trend in income and expenditure shows that the country’s real expenditure growth surpasses its real income growth by about 13 percentage points in pre-pandemic periods, increasing to about 15 percentage points post the Covid 19 pandemic.

Embedded in the challenge of low domestic revenue mobilisation is the difficulty in collecting significant revenues from the informal sector, which forms a larger proportion of employees in the country. Again, digital platforms provide additional levels of informality which compounds the challenges for business identification and subsequent revenue tracking.  Thus, Ghana Revenue Authority must consider more practical approaches toward bringing the informal sector and businesses operating on digital platforms into the tax net. ACEP believes that the output of this study will be vital for designing and planning to sufficiently enhance GRA’s ability to collect more revenue to meet the government of Ghana’s revenue generation targets.

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The Africa Centre for Energy Policy (ACEP) was established in 2010 to contribute to development of alternative and innovative policy interventions through high-quality research, analysis and advocacy in the energy and extractives sector in Africa.

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