Interview: Ammishaddai Owusu-Amoah
How has the digitalisation of tax collection contributed to revenue mobilisation?
AMMISHADDAI OWUSU-AMOAH: The impact of technology and digitalisation on Ghana’s tax administration has been significant, improving efficiency in both tax collection and revenue generation. About 50 companies participated in phase one of the new electronic tax invoice system, which lasted from October 2022 to June 2023, with a full-scale rollout scheduled for 2024. Additionally, modern technology is being deployed to enhance convenience in tax compliance. Previously, taxpayers had to physically visit tax offices to file their returns; however, that obligation can now be fulfilled digitally as a result of the deployment of an online tax portal. Furthermore, the introduction of the electronic tax clearance certificate makes it easier for businesses to obtain the necessary documentation to bid for government contracts without having to be physically present at tax offices. This streamlined approach makes collection more efficient while also increasing revenue. Through automation and digital transactions, issues of fraud have been curtailed. Additionally, the automation of withholding tax processes has simplified payments and receipts, encouraging businesses to be tax-compliant.
Fast-tracking the digital transformation of the tax administration system will require advanced technology and robust infrastructure. For example, a key component of such a digital transformation is the implementation of an electronic certified invoice system that tracks sales and allows the tax authority to monitor value-added tax (VAT) collections more efficiently. Moreover, the integration of third-party systems such as mobile money services, vehicle registration, electricity payments and a professional bodies database will facilitate tax revenue collection by covering prospective taxpayers’ economic activities more comprehensively. The implementation of these processes can utilise home-grown technology, which will in turn provide exciting business opportunities for local entrepreneurs.
What is your assessment of the competitiveness of Ghana’s tax regime in West Africa?
OWUSU-AMOAH: Ghana offers a competitive tax regime compared to many other countries in the region. For instance, the corporate income tax rate averages around 25%, compared to some countries that impose rates averaging up to 35%. Interestingly, corporate income tax contributes significantly to tax revenue in Ghana, surpassing many other West African countries.
The VAT system is still evolving. In advanced economies, VAT accounts for a large chunk of their total tax revenue, whereas in Ghana it is approximately 20%. This discrepancy arises from a reliance on manual VAT collection systems, which can be slower and create disparities in pricing. To address this, the tax administration system is transitioning to an electronic certified invoice management system, which will level the playing field for businesses and bolster revenue collection.
In what ways can domestic and cross-border tax compliance and revenue collection be improved?
OWUSU-AMOAH: On a national level, the informal sector poses a significant challenge in tax compliance. However, tax authorities are currently initiating collaborations with government service providers and seeking to propose a bill that will require individuals to be tax-compliant before obtaining certain services, such as driver’s licences, national IDs and passports. This multifaceted approach will help bringing more eligible taxpayers into the tax net.
Cross-border tax compliance and revenue collection, meanwhile, require improved systems for transparency and effectiveness, as well as international collaboration. To address tax avoidance, authorities across the region need to improve their respective systems to provide real-time information on cross-border transactions. Regional information sharing will discourage tax evasion and create a fairer business environment, boosting tax income to help meet public funding requirements.
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