Ghana Union of Traders Association (GUTA) is asking the government to give tax incentives to compliant individuals and businesses.

Members say it will eliminate or, at least, minimize tax evasion by unregistered and non-compliant members.

Statistics show only two percent of 75 percent informal sector businesses contribute to Ghana’s tax revenue

Traders are worried a few tax compliant businesses are, as a result, over-burdened with huge tax obligations.

“What is happening is that those of us paying regularly are those most targeted because the tax net is not wide open. We want them to devise some specific incentives that will go to the taxpayer those who are doing well rather than we being punished”, GUTA President, Dr Joseph Obeng, says.

He believes some incentives through tax rebates and tax holidays can make a difference.

“So what we seek is that we can be given tax rebates, and sometimes those of us who are choking financially may be due to inactivity of their business for specific times can be given some tax holidays so we should reach a point that they can offset some of our indebtedness," he adds.

Dr Obeng revealed some businesses are compelled to under-declare their taxes because often tax assessments of those complying are increased by 100 or sometimes 200 folds unreasonably subsequently.

“As soon as you pay more tax the following year they increase the tax assessment  by 100 or 200 folds. That is so punitive for us. They are disincentives. It makes people under-declare their taxes”.

Tax collection in the informal sector presents challenges to the Ghana Revenue Authority (GRA).

Officials of the GRA have described as too low Ghana’s tax revenue to Gross Domestic Product which stands at 16.7 percent as against the sub-regional target of between 20 to 25 percent.

Industry players attribute the situation to Ghana’s low tax compliance.

“The tax compliance is very low that is why we are in the situation.The potential taxpayers and those paying are less than 25 percent of the expected taxpayers. All the taxes we get basically walk to us. So by going out there and reaching out to the taxpayers, we will be able to improve the tax compliance system,” said Commissioner-General, Emmanuel Kofi Nti. 

He tells Luv Biz talks about steps to capture small and medium taxpayers into GRA database and improve voluntary tax compliance are on-going.

He acknowledges collecting taxes from the informal sector is a challenge which the authority is working to deal with it.

A lot of the economic activities take place in the central business districts of Accra and Kumasi, and Mr. Nti believes tax collection must function naturally in these areas.

It is, therefore, strengthening its taxpayer offices in the regions.

“So we want to deepen our relationship with them so that one-by-one we know those who are not paying their taxes and those transacting their business there. There are situations where people change their locations but as for these two areas they hardly change their location”, he added.