The Government of Ghana has introduced a simplified tax regime aimed at improving compliance and expanding the country’s tax base, particularly within the informal sector.
The Modified Taxation Scheme (MTS), developed by the Ghana Revenue Authority (GRA), is designed to make tax payment easier and more flexible for resident individuals operating small businesses across the country.
Not a New Tax
Authorities have clarified that the MTS is not a new tax. Rather, it is a simplified form of Personal Income Tax structured to reflect the size and nature of informal businesses.
The scheme is expected to encourage voluntary compliance, promote fairness, and bring more small-scale businesses into the formal tax system.
Three Flexible Options
Under the MTS, taxpayers can choose from three categories based on their turnover levels:
- Presumptive Tax Based on Instalment (PTI): Fixed tax amounts determined by income levels and type of business.
- Presumptive Tax Based on Turnover (PTT): A flat rate of three percent applied to annual sales.
- Modified Cash Basis (MCB): Tax calculated on income after deducting allowable business expenses.
The PTI category applies to businesses with an average turnover not exceeding GH¢20,000 over three consecutive years. The PTT and MCB categories apply to businesses with turnover above GH¢20,000 but not exceeding GH¢500,000.
Who Qualifies?
To qualify under the scheme, an individual must:
- Be a resident of Ghana
- Earn income solely from business activities within Ghana
- Not be registered for VAT
However, certain groups do not qualify for the presumptive categories. These include professionals such as lawyers, engineers and accountants, owners of multiple businesses, and partners in registered partnerships. Such individuals are required to register under the Modified Cash Basis or standard taxation, depending on their circumstances.
Simple Registration and Payment
Registration requires basic documentation, including a Ghana Card, digital address, phone number and business details.
Taxpayers can register through:
- The MTS Mobile App
- GRA offices nationwide
- Field officers
- Trade associations and unions
Payment options include the USSD code *880#, mobile money through the MTS app, and in-person payments at GRA offices.
At the end of each year, taxpayers are required to file a simplified return declaring their actual sales to ensure fair assessment.
Broadening the Tax Net
The introduction of the Modified Taxation Scheme forms part of broader efforts to formalize Ghana’s informal economy and strengthen domestic revenue mobilisation. By simplifying compliance procedures and leveraging digital platforms, authorities hope to improve participation while reducing the burden on small business operators.
The GRA says the initiative reflects government’s commitment to fairness, flexibility and improved tax administration across the country.
Documentation compiled by:
Agbogbloshie TSC
Georgina Ago-Notey (Client Service Supervisor)
Joseph Amankona (Compliance Officer)
Prince Amao (Compliance Officer)
Story by: Doe Benjamin Kofi Lawson