Accra: The Ghana Revenue Authority (GRA) has announced an increase in the Value Added Tax (VAT) registration threshold from GHS200,000 to GHS750,000 per annum. The move aims to reduce the compliance burden on micro and small businesses operating within the informal sector.
According to Ghana Web, David Lartey Quarcoopome, Chief Revenue Officer of the GRA and Projects Coordinator at the Domestic Tax Revenue Division (DTRD), explained that the previous threshold had remained unchanged since 2013 and no longer reflected current economic realities. He noted that, in real terms, the old threshold had become too low, compelling very small businesses to comply with complex VAT obligations.
Quarcoopome further stated that businesses falling below the new threshold would be deregistered from VAT after verification and placed under the Modified Tax Scheme (MTS), which offers simpler compliance options. This adjustment is expected to streamline processes for small enterprises and ease their operational challenges.
Thomas TK Agorsor, Head of the DTRD Free Zones Office, emphasized that VAT is more effective for medium to large businesses that maintain proper accounting systems. He pointed out that data indicates over 90 percent of VAT revenue is generated by top taxpayers. Consequently, removing very small businesses from VAT does not significantly affect revenue but greatly enhances efficiency.
Under the Modified Tax Scheme, small businesses have the option to pay either a fixed quarterly amount, a three percent turnover tax, or a graduated tax based on simplified accounting. This provides flexibility and reduces the administrative burden on these enterprises, promoting a more conducive environment for their growth and sustainability.