Six in ten Ghanaian businesses dodge VAT compliance, GRA warns of revenue leakage

The Ghana Revenue Authority has sounded an alarm over a critical weakness in the country's tax system: six out of every ten businesses in Ghana are either not registering for VAT or are collecting the tax from customers without remitting it to government. The revelation, made by GRA Commissioner-General Anthony Kwasi Sarpong at the 14th Annual International Tax Conference in 2026, exposes a significant drain on the nation's domestic revenue mobilisation efforts.

According to Mr Sarpong, only four in ten businesses are properly accounting for VAT—a finding that underscores the scale of non-compliance plaguing Ghana's informal and formal business sectors. This gap represents lost revenue that could otherwise fund critical public services, infrastructure and development programmes.

Technology and enforcement: GRA's dual approach

Rather than relying on traditional audit methods, the GRA is deploying a two-pronged strategy combining digital innovation with stricter enforcement. The implementation of the Fiscal Electronic Devices Act is central to this plan. Under the scheme, most businesses will be required to conduct transactions through government-approved devices that feed real-time data to the GRA, dramatically improving the Authority's visibility over economic activity.

This technological shift would allow tax officials to monitor sales transactions as they occur and reconcile VAT amounts due at month-end, reducing opportunities for underreporting or non-payment. However, Mr Sarpong acknowledged that technology alone will not solve the problem. Early pilot programmes have already revealed attempts by some traders to circumvent the system—switching devices off when tax officers leave their premises.

"The pilot we are undertaking is telling us that when our officers are on the field, the machine is working. As soon as we leave the shop, the machine stops working," Mr Sarpong explained. This reality has prompted the GRA to pair technological controls with rigorous compliance measures and field enforcement to ensure genuine behavioural change among businesses.

Why it matters for Ghana

VAT is a crucial revenue stream for Ghana's government budget. The VAT compliance gap directly impacts funding for healthcare, education, roads and other essential services. A 40 percent failure rate is particularly concerning given Ghana's ongoing fiscal pressures and the need to reduce reliance on external borrowing.

The problem cuts across both formal enterprises and the large informal sector. Many small traders—from market vendors to transport operators—either avoid VAT registration entirely or register but pocket collections without passing funds to the state. This creates an uneven playing field where compliant businesses shoulder a heavier tax burden than their non-compliant peers.

For business owners, the GRA's shift toward electronic devices and tighter monitoring carries important implications. Compliance will become harder to avoid, potentially raising operational costs for some traders in the short term. However, improved tax collection could also strengthen public finances, potentially reducing pressure for future tax rate increases and supporting economic stability that benefits all businesses.

The broader challenge for the GRA is cultural and systemic. Without sustained enforcement, penalties for non-compliance and consistent messaging about VAT obligations, even electronic devices can be circumvented. The Authority's acknowledgement of pilot weaknesses suggests it is aware of this challenge and is adjusting its approach accordingly.