VAT, Income & Corporate Taxes Account for 70% of Ghana’s Total Tax Revenue – Report

Ghana’s tax revenues heavily rely on Corporate Tax, Personal Income Tax, and VAT, raising concerns about sustainability and the need for broader tax reforms to diversify revenue sources

It has emerged that Ghana’s tax revenues are heavily dependent on Corporate Tax, Personal Income Tax (PIT), and Value Added Tax (VAT), raising questions about the narrow nature of the country’s tax system.

A survey on Ghana’s tax system conducted by the Ministry of Finance, the Ghana Revenue Authority (GRA), and the UK’s Institute of Fiscal Studies (IFS) with support from the UK Foreign, Commonwealth and Development Office (FCDO) has revealed that the growth in the tax revenue of Ghana since 2000 has been largely driven by corporate taxes, income taxes, and VAT.

As of 2022, these three taxes accounted for about 70% of the country’s total tax revenue collections. This is a significant increase from 57% in the year 2000.

“Much of the growth in Ghana’s tax revenues since 2000 has come from increased corporate and personal income tax takes, and VAT and similar taxes, though revenue growth from the PIT and VAT-type taxes has stagnated more recently,” a statement released by the Ministry of Finance read.

The Ministry further confirmed that, “these three types of tax made up nearly 70% of total collections in 2022 – up from 57% in 2000.”

The outcome of the survey reveals that these three taxes are the backbone of Ghana’s tax revenue although Personal Income Tax and VAT have experienced a stagnation recently.

Experts are raising concerns about the long-term sustainability of Ghana’s tax revenue given the overreliance on just three forms of taxes.

This dependence on corporate, income, and VAT-type taxes puts the country at risk of revenue shortfalls if growth in these areas continues to slow.

This situation calls for attention to the need for broader tax reforms to diversify Ghana’s revenue sources. Such reforms would not only improve the stability of tax revenues but also ensure a fairer distribution of the tax burden across all segments of the economy.