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    Kwahu Summit to focus on Africa’s economic transformation under AfCFTA – APN

    World Trade Centre Accra Accra announces partnership with Altkom Akademia to offer professional education in Africa

    Ghana has the 4th cheapest average cost of internet in Africa – Statista

    Africa’s internet economy to cross $180 billion by 2025: Report

    Gov’t likely to scrap E-Levy if its revenue stays low – Tax analyst

    E-Levy is an overhyped revenue generation measure – Seth Terkper

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    E-Levy is an overhyped revenue generation measure – Seth Terkper

    Leverage crises to improve fortunes of continent – Ofosu-Dorte

    Unilever Ghana PLC remains upbeat about future growth prospects

    Citi Business Festival enters final week; forum on agribusiness comes off today

    BoG must enforce regulations on informal forex trading – Prof. Quartey

    DBG will mirror KfW’s successful banking model to benefit SMEs

    Cedi Summit comes off today at Alisa Hotel

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    BoG, CSA deepen collaboration to fight cyber threats

    Dr. Bawumia unveils Ghana’s first Tier IV data centre

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    Introduction of GhanaPay complements efforts to capture the unbanked into digital payments ecosystem – Veep

    #CitiBusinessFestival: How the country can take advantage of the “Ghana Opportunity”

    Chamber of Telecommunications calls for more investment into Technology to improve livelihoods

    Citi Business Festival: Address lack of financial data challenges using MoMo – Rufai Abdul Majeed

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    Gulf central banks, Bank of England raise policy rates after Fed hike

    US Fed meets inflation surge with 75bp hike

    As Nigeria’s inflation rate accelerates to 17.71%, the World Bank warns millions could face extreme poverty

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MSMEs contribute only 4% to total domestic tax revenue – PEF Research

byNerteley Nettey
October 16, 2020
in Local Economy, Top Stories
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Findings by the Private Enterprise Federation (PEF) in collaboration with the Open Society Initiative for West Africa (OSIWA) Project have revealed that Micro, Small and Medium Enterprises (MSMEs) in the country contribute only 4 percent to total domestic tax revenue despite making up about 92 percent of registered companies in the country.

According to them, the situation can be attributed to the many intricacies in the country’s tax administration system.

Already, the Ghana Revenue Authority (GRA) has revealed it is implementing effective and efficient strategies and systems in order to exceed the revised tax revenue target set by government in the 2020 mid-year budget.

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This comes after it missed its half-year target by 6.9%, resulting mainly from shortfalls in oil revenue, customs receipts and non-oil Non-Tax revenues.

Also, total revenue and grants for the period amounted to GH¢22 billion compared to a target of GH¢29.7 billion.

The PEF/OSIWA research also noted that the tax administration system implemented for MSMEs makes it hard for these businesses to comply as they are forced to pay the same Company Income Tax rate of 25 percent, Value Added Tax, Customs and Excise Tax obligations paid by large and profitable businesses.

The research also found out that tax education is below par among MSMEs as many of the businesses say they do not understand what is expected of them by the tax laws and related administrative requirements.

These MSMEs say the tax system is so complex that it requires hiring a tax consultant, as the big corporations do, but they cannot afford the additional cost of hiring such professionals.

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As a result, the Private Enterprise Federation (PEF), has asked government to adopt a tiered tax system to reduce the tax burden on MSMEs.

According to PEF, this will help government generate adequate revenue, encourage voluntary tax compliance and reduce the cost of tax administration in the country.

It also recommended that even though Ghana’s Presumptive Tax modified cash accounting system as contained in the Income Tax Act, 2015 (Act 896) is yet to be fully operational, it should be streamlined to include entities that qualify for the tax and subject them to withholding tax.

According to PEF and OSIWA, this will ensure that these small businesses have access to all their funds for operating their businesses instead of resorting to bank borrowing which comes at extra cost and limit their ability to grow and create jobs and wealth.

The PEF/OSIWA research also stated that it is important for tax rates applicable to MSMEs to be reduced in addition to massive tax education by the Ghana Revenue Authority for taxpayers.

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Kwahu Summit to focus on Africa’s economic transformation under AfCFTA – APN

Ghana has the 4th cheapest average cost of internet in Africa – Statista

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