A new study by the Private Enterprises Federation (PEF) has indicated that the cost of tax compliance by the micro, small and medium enterprises (MSMEs) is too high.
That imposes an extra cost on some of these small businesses which are still trying to find their feet.
Speaking in an interview on the sidelines of a dialogue meeting on the current tax regime in the country with some members of the Finance Committee in Parliament, Dr Isaac Nyame, who led the study said looking at the nature of their businesses, there was the need for the authorities to simplify their tax regime for easy understanding and compliance.
We noticed a complete lack of education about the various taxes that affect their businesses and they are at a loss as to who they should approach to get the necessary education,” he stated.
He therefore urged the Ghana Revenue Authority to intensify its education on taxes at the MSME level.
“Some of them have had little or no interaction with the GRA so although they expressed the willingness to comply with the various taxes, they don’t even know where to start from.
Tiered tax system
Dr Nyame also reiterated the need to implement a tiered tax system for the MSME sector.
He said the study highlighted that the 25 per cent corporate tax charged across board was too much for MSMEs.
“The tax rate that applies to them appeared to be much higher than they should be. As small enterprises, the same tax rate should not apply across the spectrum.
He said the country should consider a turnover tiered tax system where businesses would be taxed based on how much profit they made.
Empowering private sector
Earlier, the Chief Executive Officer of Private Enterprises Federation, Nana Osei Bonsu, in his welcome address, said PEF undertook the two-year research in a bid to empower the private sector in the country.
“We want to empower the domestic private sector by creating the enablers for them to be able to grow, create jobs and compete globally.
He said the country needed a new tax system that would allow the private sector to grow and expand.
Improving tax system
The Chairman of the Finance Committee in Parliament, Kwaku Kwarteng, said tax compliance was a huge challenge for the country, and therefore, any research that aimed to address the challenges was a step in the right direction.
“Tax compliance is one of the challenges of revenue administration, therefore any effort to get into that to see how changes could be made to the regime to improve compliance is welcomed.
We will pay attention to the outcomes and hopefully come up with some suggestions that will improve the system,” he stated.