The Ministry of Finance (MoF) has revealed its partnership with the Ghana Revenue Authority (GRA) and the UK Foreign, Commonwealth, and Development Office (FCDO) to analyze various tax policy issues and enhance long-term analytical skills for evaluating tax policy impacts in collaboration with the Institute for Fiscal Studies (IFS) in the UK.
The researchers from the IFS are working alongside MoF and GRA as part of the FCDO-supported Centre for Tax Analysis in Developing Countries (TaxDev).
This Tax System Survey represents a segment of this ongoing collaboration that commenced in 2016 and will continue until 2030.
The MoF issued this statement following the release of an updated Survey of the Ghanaian Tax System, developed in partnership with TaxDev researchers from the IFS.
The Survey, providing insights into Ghana’s tax system as of January 2024, serves as a vital resource for researchers, policymakers, and the public, updating the previous version published in 2021.
In addition to detailing the main characteristics of the various taxes in Ghana, it analyzes recent policy trends, administration, revenue, and benchmarks tax rates and revenues against those of other countries.
The key findings of the report include:
At 13.8% in 2022, Ghana’s tax-to-GDP ratio remains below the government’s target of 18-20% by 2027. Though this ratio is almost 6 percentage points higher than in 2000, it continues to fluctuate and has made minimal gains since 2017.
Much of the growth in Ghana’s tax revenues since 2000 has come from increased corporate and personal income tax takes, and VAT and similar taxes, though revenue growth from the PIT and VAT-type taxes has stagnated more recently. These three types of tax made up nearly 70% of total collections in 2022 – up from 57% in 2000.
Tax collections from international trade have become far less important in the revenue mix, though they remain significant: 33% of overall tax revenues were collected on imported goods in 2022 (including VAT on imported products), compared with 54% in 2000. The contribution of import duties specifically to total tax revenue declined from 18% in 2000 to 13% in 2022.
Ghana’s tax-to-GDP ratio is fairly typical of countries in sub-Saharan Africa. However, considering countries of a similar income level across the world, Ghana’s tax revenue collections are slightly below average: out of 28 lower middle-income countries with available data, Ghana ranked 16th in 2022.
Analysis of tax rates and revenues across countries suggests differences in relative revenue mobilisation by tax type in Ghana. While recent growth in corporate income tax revenues means that they exceed revenues in other countries using similar tax rates, personal income tax and general sales tax revenues are lower than would be expected, all else being equal.
In a statement, the Finance Ministry said that “The Government of Ghana is committed to both evidence-based and transparent tax policymaking, with the Survey of the Tax System, alongside the Medium-Term Revenue Strategy, being a key part of this approach.”
It added “The Ministry of Finance and the Ghana Revenue Authority with the support of the UK Foreign, Commonwealth and Development Office (FCDO) have been collaborating with the Institute for Fiscal Studies (IFS) UK to jointly conduct analysis of some tax policy issues and build long term analytical capacity in evaluating the impacts of tax policies. The work the researchers from the IFS undertake with the team from MoF and GRA falls under broader work being undertaken at the FCDO-funded Centre for Tax Analysis in Developing Countries (TaxDev). This Survey of the Tax System is just one part of this collaborative programme of work, which began in 2016 and is set to continue until 2030.”