Accra: The Ghana Revenue Authority (GRA) has announced a significant policy change, increasing the Value Added Tax (VAT) registration threshold from GHS200,000 to GHS750,000 per annum. This measure aims to alleviate the compliance burden on micro and small businesses, particularly those operating within the informal sector.
According to Ghana News Agency, Mr. David Lartey Quarcoopome, Chief Revenue Officer of the GRA and Projects Coordinator at the Domestic Tax Revenue Division (DTRD), highlighted that the previous VAT threshold had been static since 2013. He noted that it no longer aligned with current economic conditions, and had become impractically low, thus compelling very small businesses to navigate complex VAT obligations.
Quarcoopome elaborated that businesses falling below the newly adjusted threshold would be deregistered from VAT after verification. These businesses would then be transitioned to the Modified Tax Scheme (MTS), which presents simpler compliance options.
Mr. Thomas T. K. Agorsor, Head of the DTRD Free Zones Office, added that VAT is more effectively applied to medium and large businesses that maintain comprehensive accounting systems. He explained that data indicates over 90 percent of VAT revenue is contributed by top taxpayers. Therefore, excluding very small businesses from VAT does not significantly impact revenue but considerably enhances operational efficiency.
The Modified Tax Scheme offers small businesses flexible compliance choices, allowing them to select from a fixed quarterly payment, a three percent turnover tax, or a graduated tax based on simplified accounting methods.