Ghana’s tax system and administrative procedures are crippling small and medium-sized enterprises (SMEs), according to Emmanuel Acquah, co-founder of the Africa Centre for Entrepreneurship and Empowerment (ACEYE).
Speaking at the presentation of the 2024 Regional Entrepreneurship Freedom (REF) Index Mr. Acquah criticized the country’s tax regime and bureaucratic processes, which he described as highly unfriendly to entrepreneurs.
He shared concerns from several entrepreneurs who have struggled with the cumbersome processes required to certify their businesses or products. One entrepreneur, referred to as Kojo for confidentiality, lamented the time-consuming bureaucracy, saying, “It’s kind of tough for me. It looks like if you don’t know anybody, you may be [led] up and down.”
Mr. Acquah further noted that Ghana’s tax system pushes many entrepreneurs into the informal sector. He recalled that during a survey across all 16 regions of Ghana, “there was no entrepreneur who, for instance, did not lament the taxes.” He quoted another entrepreneur, Ama, who expressed frustration, stating that the heavy tax burden forces businesses to remain informal, avoiding the legal recognition that would expose them to these taxes.
Acquah criticized the disproportionate tax assessments, arguing that “taxes are calculated disproportionately to the business earnings,” with tax officials often setting fixed amounts regardless of a business’s profit or loss. He described Ghana’s tax collection process as corrupt, with tax officials sometimes applying undue pressure and threats of business closure.
“The tax system is burdensome, unfair, and harsh on entrepreneurs,” Acquah emphasized, noting that many entrepreneurs opt to stay informal to avoid these challenges. He added that the oppressive tax system not only discourages innovation but also forces entrepreneurs to falsify records, making it difficult for them to access credit facilities.
The 2024 REF Index, presented during the event, revealed that the Savannah Region is currently the freest place to do business in Ghana, following the Eastern Region, which topped the 2023 rankings.
