There is a fresh concern over the new Value Added Tax (VAT) reforms identified by IMANI Africa, which can create an escape route for some businesses.
IMANI’s analysis, written by Sitsofe Mensah, a technology policy enthusiast and a writer for the IMANI Centre for Science, Technology and Innovation Policy (CSTI), may have accidentally created a loophole big enough for some businesses to slip through untouched.
The latest analysis points to what it calls a “missing middle,” a gap that sits right between the two main tax categories the government has announced.
IMANI reveals that on one end, very small businesses making up to GH¢500,000 a year pay a simple 3% tax on their sales. On the other hand, bigger firms earning more than GH¢750,000 must charge the standard 20% VAT.
The challenge, IMANI says, is about the businesses in between; those earning between GH¢500,000 and GH¢750,000?
The think tank says right now, there is no clear rule for them. They are too large for the small-business tax but too small to qualify for VAT.
That means a supermarket making GH¢520,000 or a hardware shop earning GH¢700,000 could legally end up paying no consumption tax at all.
“What happens to businesses earning between GH¢500,000 and GH¢750,000? Currently, there is no clear tax instrument for this specific band. They are too big for the small-business tax but too small for VAT,” the analysis indicated.
IMANI warns that this is not just a technical oversight; it creates real unfairness in the marketplace. Two businesses selling the same goods could be taxed completely differently simply because of where they fall on the turnover ladder.
Even more worrying, some businesses might be tempted to intentionally limit their sales or under-report revenue just to stay in this “sweet spot.”
According to IMANI, this loophole could cost the country significant revenue and distort fair competition among small and medium-sized businesses. They are calling on the government to quickly clarify or adjust the rules to ensure every bracket is covered, no gaps, no confusion, and no incentives to hide true sales.
“Unless rectified, this creates a ‘tax-free zone’ for consumption taxes, which could encourage businesses to artificially suppress their sales figures to stay in this sweet spot,” the think tank feared.
For a reform meant to simplify taxes and make things fairer, the missing middle could become the one flaw that undermines the entire effort unless policymakers act fast.
