Ghana’s tax system has all the right components in place, solid regulatory frameworks and an administrative mechanism that is above the lower middle-income country average. However, report by IMANI Ghana reveals a concerning gap between the country’s tax rules and their actual on-the-ground implementation.
While Ghana scores relatively high in terms of the quality of its tax regulations (50.50) and the efficiency of its tax administration (60.94), the practical execution of these measures falls short of expectations.
With an implementation score of just 58.90, the report highlights that the tax system continues to face challenges, such as inefficiencies and higher compliance burdens, which are preventing the full potential of the system from being realized.
Despite the framework’s strengths on paper, businesses are finding it difficult to navigate the complexity of tax administration, leading to delays, confusion, and, in some cases, additional costs. This not only affects businesses’ ability to thrive but also hinders the government’s capacity to generate more revenue through formal channels.
These gaps according to IMANI are contributing to the persistence of an informal economy, as many businesses continue to operate outside the tax system to avoid these challenges.
However, IMANI indicated that there are signs of progress, as the country performs above the lower middle-income average in tax regulation and administration. Continued efforts in digitalization and streamlining tax processes could further ease the burden on businesses and encourage formalization, leading to a broader tax base and more government revenue for infrastructure and social programs.
