GRA announces major policy proposal under Modified Taxation Scheme initiative

The Ghana Revenue Authority (GRA) is proposing to broaden the Modified Taxation Scheme (MTS) to encompass qualifying small limited liability companies with annual revenues of up to GH¢750,000. This major policy shift seeks to create a more tailored tax system for small businesses. Under the proposed reform, eligible businesses, regardless of their legal structure, could benefit from a simplified tax regime instead of facing the standard compliance requirements intended for larger corporations.

GRA Commissioner-General Anthony Kwasi Sarpong unveiled this policy during a September 9th stakeholder workshop in Accra, organized by Eban Capital, the Association of Small Scale Industries (ASSI), the Microfinance and Small Loans Centre (MASLOC), the Youth Employment Agency (YEA), and the GRA. The workshop was presided over by GRA Technical Advisor and MTS Committee Chairperson Elsie Appau-Klu.

Appau-Klu explained that the proposed extension was crucial because many young people and women are encouraged to formally register their businesses as limited liability companies, even if their operations remain modest. Currently, the MTS predominantly applies to individuals and sole proprietors. The GRA contends that this could discourage formalization and impose undue burdens on businesses with low turnover.

"The MTS should not be limited to individuals and sole proprietors", Appau-Klu declared, announcing the Authority's stance that small businesses with annual turnover not exceeding GH¢750,000 should be eligible for the simplified regime. The Authority's Legal and Policy teams have been directed by the Commissioner-General to collaborate with the Ministry of Finance to enact the necessary legislative changes.

The proposed GH¢750,000 limit is also intended to harmonize the MTS with the goods registration threshold under the Value Added Tax Act, 2025 (Act 1151), fostering consistency across the tax framework. The GRA asserts that excluding small businesses due to their legal status could impede efforts by organizations such as YEA, MASLOC, the Ghana Enterprises Agency, and others in promoting formalization.

According to Appau-Klu, the policy would enable small businesses like salons, laundries, bakeries, carpentry shops, and provision stores, operating as limited liability companies with annual turnover below the proposed threshold, to eventually access the simplified tax framework. The Authority's immediate plans involve stakeholder engagement and administrative guidance, followed by legislative amendment proposals by December 2026.

In the longer term, the GRA aims to digitize the MTS through mobile applications, USSD platforms, and other digital channels to streamline registration, filing, and tax payments, including the potential implementation of local-language interfaces. Appau-Klu emphasized that the primary goal was to prevent small businesses from facing penalties for formalizing their operations.

"We want a Ghana where a small business is not penalized for becoming formal," she affirmed. She further urged enhanced collaboration among business associations, enterprise-support agencies, and the GRA to assist small businesses in growing while progressively adjusting their tax obligations as their operations expand. This proposed reform is anticipated to strengthen the connection between business formalization and tax compliance by allowing entrepreneurs to choose corporate structures without automatically forfeiting access to simplified taxation.