Ghana is facing a significant fiscal challenge as recent data reveals that a staggering 61% of its Value Added Tax (VAT) remains uncollected.
This has resulted in the country collecting only about 39 per cent of its potential tax revenue.
This alarming shortfall is deepening the country’s already precarious revenue situation and threatening to derail government efforts to finance development through domestic resource mobilisation.
The Deputy Minister of Finance, Thomas Nyarko Ampem, disclosed that for the country to address the issue of tax evasion and tax avoidance, efforts are underway to collaborate with the Ghana Revenue Authority (GRA) to seal loopholes and maximise revenue collection.
He said addressing revenue leaks could potentially eliminate the need for introducing new taxes or relying heavily on borrowing.
According to him, “I keep saying that we don’t need to introduce more taxes to collect more revenue. We have a number of taxes that we are not collecting enough.”
Speaking during a Sustainable Development Goals (SDGs) Financing for Development Dialogue organised by the United Nations Development Programme (UNDP) Ghana in Accra on Tuesday, June 17, 2025, under the theme “Advancing Ghana’s Financial Sustainability with an Integrated National Financing Framework (INFF)”, which was aimed at forging stronger collaborations, sharing expertise, and collectively designing a strategic roadmap that would advance the country’s financial sustainability, the Deputy Finance Minister stated that improved economic management has led to enhanced credit ratings, with Fitch upgrading the country’s rating.
He stated that sustaining such progress could lead to lower borrowing costs, enabling the country to access more competitive loan rates and get back on track towards economic development.
“Due to the proper management of our economy, we are receiving enhanced ratings from our credit agents. Fitch has upgraded us, and if we are able to sustain this, our cost of borrowing is going to go down,” he said.
VAT, a consumption tax levied on the sale of goods and services, has long been a central pillar of Ghana’s domestic revenue mobilisation strategy.
Yet, experts argued that weak enforcement, poor taxpayer compliance, and extensive informal sector activity have left the system porous. According to fiscal analysts, Ghana’s actual VAT collection rate—at just 39%—is far below the global average for developing economies.
A key driver of the VAT gap is the predominance of the informal sector, which constitutes over 70% of Ghana’s economy. Many businesses operate without formal registration, evading the VAT net altogether.
Even among registered entities, under-reporting and fraudulent invoicing are common, often with minimal consequences.