Simplification might be the solution to Ghana's tax woes

The number of complicated steps required to pay tax in Ghana might be the biggest barrier to compliance in the country, according to PwC Ghana Partner Abeiku Gyan-Quansah. He recommends halving the number of “tax bands” from six to three in order to encourage people to comply.

Revenue collection in Ghana has been a central topic for debate in recent years, with many criticising the current system for being ineffective and counter-productive. Last year, a senior tax executive at Big Four accounting and advisory firm KPMG indicated that the current taxation framework was stifling the budding business environment in the country.

In addition to being a barrier for business, the system is also inefficient, with the Ghana Revenue Authority (GRA) falling significantly short of its revenue collection targets year after year. Global management consultancy McKinsey & Company was brought on board in 2019 to help Ghana achieve its revenue targets.

Abeiku Gyan-Quansah is a Tax Partner at PwC Ghana, and has more than a decade of experience in tax consulting, tax preparation and other tax related services. According to him, revenue targets and compliance in general could be improved significantly by simplifying the tax collection process. 

“Our tax laws especially for the informal secto is unduly complicated. So for example, if I am from the informal sector and I have employed somebody, you are asking me to go through the tax bands; which are six currently, the person will give you every reason why they cannot go through. Can we reduce this to about three of them instead of the six we currently have?” said Gyan-Quansah.

“If we want people to comply and for us to raise the relevant taxes that we want in this country, we need to ensure the systems are adequately working. If I can actually get away with my wrongs, there is the motivation of getting away and doing the wrong thing, to what extent have we enforce our tax laws in the past,” he added.

Ghana’s tax-collection woes are reflected in other major economies across Africa at present, with countries like Nigeria also looking for ways to improve compliance and collection. Technology has been the answer for some, although most, like Gyan-Quansah, suggest structural reform to oust outdated tax practices.