CIT, PIT and VAT account for 70% of tax revenues in Ghana.
Corporate Income Tax (CIT), Personal Income Tax (PIT) and Value Added Tax (VAT), approximately accounts for seventy (70) percent of all tax revenues mobilized by the statutory tax collection body, the Ghana Revenue Authority (GRA).
This according to a report by the Foreign, Commonwealth and Development Office (FCDO) and the Institute for Fiscal Studies (IFS), London in partnership with the Ministry of Finance and the GRA.
The current percentage points share of the aforementioned taxes in the country’s total tax revenues according to the report, is up by some 13 percentage points from the year 2000 – CIT, PIT and VAT accounted for 57 percent of all tax revenues collected in 2000.
According to the report, Ghana’s total tax revenues as a percentage of Gross Domestic Product (GDP), over the last 9 years has increased by 5 percentage points from 8 percent in 2000 to 13 percent in 2019, with CIT, PIT and VAT mainly being responsible for the growth in tax revenues.
The report however, noted that tax revenues as a percentage of GDP has stagnated at 13 percent since 2017 largely due to similar stagnation in revenue growth of PIT and VAT.
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The decline in tax revenues from VAT for instance, has been admitted by the Deputy Commissioner in Charge of Strategy, Research, Policy and Programmes at the Ghana Revenue Authority (GRA), Dr Charles Addae, who noted at a dialogue series recently held by the PFM Tax Africa Network that, VAT contribution to GDP was 6.2 percent in 2004, rising by 41 percent in 2008 but then declined to 27.2 percent in 2020.
Adding that, VAT has now been overtaken by Corporate Income Tax (CIT) as the country’s largest tax handle.
The report further notes that tax collections on imported goods have become far less important in the country’s revenue mix, though they remain significant.
Thirty percent (30%) of overall tax revenues, the report titled A Survey of the Ghanaian System, were collected on imported goods in 2019 (including VAT on imported products), compared with the 54 percent in 2000.
Adding the total contribution of import duties to total tax revenue has declined from 18 percent in 2000 to 12 percent in 2019.
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The report by the IFS and FCDO follows an analysis of some tax policy issues in the country aimed at building long term analytical capacity in evaluating the impacts of tax policies.
The research conducted on the country’s tax policies falls under broader work being undertaken at the FCDO-funded Centre for Tax Analysis in Developing Countries (TAXDEV).
The aim of the Centre is to generate new research, analysis and in-country analytical capacity in the area of tax and benefit policy and administration in DFID-priority countries such as Ghana.
The report is also intended as a repository of key information for researchers, policymakers and the public, as well as highlighting aggregate patterns of note as a first step for identifying challenges and areas for reform.
