The Ghana Revenue Authority (GRA) is proposing changes to the Modified Taxation Scheme (MTS) that could allow qualifying limited liability companies with annual turnover of up to GH¢750,000 to benefit from the simplified tax system.
The proposal is aimed at easing the tax and compliance burden on small businesses that choose to formalise by incorporating as limited liability companies.
Currently, incorporation can move a small business into the standard corporate tax system, exposing it to accounting, filing and other compliance requirements that may be difficult and costly for businesses operating on a small scale.
Speaking at an MTS stakeholder workshop in Accra on September 9, Elsie Appau-Klu, Technical Advisor to the Commissioner-General and Chairperson of the MTS Committee, said the Authority wants the scheme to cover qualifying small companies, rather than limiting it mainly to individuals and sole proprietors.
“The MTS should not be limited to individuals and sole proprietors,” she said, explaining that businesses with annual turnover of no more than GH¢750,000 should eventually be able to benefit from the simplified framework.
The proposed change is based on the view that the size and turnover of a business should play a greater role in determining its tax obligations, rather than its legal structure alone.
For many small businesses, incorporation offers several advantages, including limited liability, improved credibility, easier access to finance and a stronger foundation for future growth. However, the additional tax and administrative requirements that come with incorporation can discourage some entrepreneurs from formalising their operations.
“We want a Ghana where a small business is not punished for becoming formal,” Ms Appau-Klu said.
The GRA believes that simplifying taxation for smaller incorporated businesses could also support government’s broader efforts to increase business formalisation and expand the domestic tax base.
The proposed GH¢750,000 threshold is expected to be aligned with the goods registration threshold under the Value Added Tax Act, 2025 (Act 1151). The move is intended to create greater consistency in how small businesses are classified across different tax requirements.
The reform could also benefit young entrepreneurs and women-owned businesses, particularly as institutions such as the Youth Employment Agency, MASLOC and the Ghana Enterprises Agency continue to encourage business registration and formalisation.
However, the proposal is not yet in effect. The GRA’s Legal and Policy teams are expected to work with the Ministry of Finance on the necessary legislative amendments, with the proposals targeted for December 2026.
Until Parliament approves the changes, qualifying limited liability companies cannot automatically access the Modified Taxation Scheme under the proposed arrangement.
The GRA is also planning to digitise the scheme through mobile applications, USSD platforms and potentially local-language interfaces to make tax registration, filing and payment easier for small businesses.
The broader objective is to make formalisation less burdensome for small enterprises while encouraging more businesses to enter the tax net.
If implemented, the reform could give small companies greater room to formalise and grow without immediately facing tax compliance requirements designed for much larger businesses, while helping government widen the country’s domestic revenue base.
