TaxLawGHby MSL Business School
MSL Business SchoolGhana informal-sector tax authority guide
Modified taxation in Ghana
A guide to Ghana’s simplified income-tax system for qualifying resident individuals in the informal sector: eligibility, three categories, turnover thresholds, exclusions, registration, payment and annual filing.
Published and prepared by MSL Business School through TaxLawGH, its tax and fiscal policy education platform.
MSL Business School modified taxation at a glance
MSL Business School Controlling framework
Modified taxation is simplified personal income tax—not a separate new tax.
The scheme has three routes: presumptive tax by instalment, 3% presumptive tax on turnover, and the modified cash basis.
The route depends on residence, income sources, VAT status, turnover, business structure and whether the person is excluded from presumptive taxation.
Who qualifies
PTI and PTT require a resident individual with qualifying Ghana-source business income.
The taxpayer must be resident in Ghana under the Income Tax Act. A company does not use the individual modified-taxation scheme.
For PTI and PTT, chargeable income must consist exclusively of business income.
For PTI and PTT, the qualifying income must come exclusively from sources within Ghana.
For PTT, the individual must not be required to register for VAT. Merely remaining unregistered does not satisfy this condition.
Test every condition: Falling below GHS 750,000 turnover is not enough if the person fails the residence, source, income-type, VAT or exclusion tests.
MCB has separate conditions: Paragraph 6 of the Second Schedule addresses resident individuals whose business income from all their businesses is exclusively Ghana-source, subject to its turnover limit and computation rules. The PTI/PTT exclusions do not automatically establish MCB eligibility.
Three modified-taxation categories
Thresholds and computation
PTT from 1 September 2026: GRA’s September 2026 implementation notice states a range above GHS 20,000 and not exceeding GHS 750,000 at 3%. Its older general scheme pages still show GHS 500,000. Use the later notice for this PTT update.
| Category | Turnover or qualification | How tax is determined |
|---|---|---|
| Presumptive Tax Based on Instalment (PTI) | Average turnover for three consecutive years ending in the assessment year does not exceed GHS 20,000 | Fixed instalment determined by income level and business activity |
| Presumptive Tax Based on Turnover (PTT) | Annual turnover above GHS 20,000 but not exceeding GHS 750,000 | 3% of annual turnover |
| Modified Cash Basis (MCB) | Separate eligibility under paragraph 6 of the Second Schedule; exclusion from PTI/PTT or an election alone is insufficient | Tax on earnings after allowable business expenses |
Where the three-year turnover information is unavailable, the Commissioner-General determines how turnover is calculated. GRA’s guidance allows one or two years of data.
Who cannot use PTI or PTT
Specified individuals are excluded from PTI and PTT. MCB applies only if its separate conditions are met; otherwise the applicable standard income-tax rules govern.
| Excluded from presumptive PTI/PTT | Required direction | Reason |
|---|---|---|
| Professional with formal qualification | MCB or standard taxation | The exclusion applies to an individual who has a professional qualification |
| Individual in a business prescribed by regulations as having a high profit-to-turnover ratio | MCB or standard taxation, if applicable | Prescribed-business exclusion under paragraph 3(1)(b) of the Second Schedule |
| Individual with more than one business or a business with more than one outlet | MCB or standard taxation | Presumptive simplification is not available |
| Individual in a partnership | Partnership and applicable individual framework | Partnership structure is excluded |
| Individual who elects out of presumptive taxation | MCB or standard taxation | The election disapplies PTI and PTT for that assessment year and the following five assessment years |
Examples of professionals: The current administrative guidance identifies lawyers, engineers and accountants as examples; the exclusion is not limited to those three professions.
Turnover tax versus cash basis
The two computations answer different questions.
Confirm MCB eligibility before using it: Act 1071 expressly set a GHS 500,000 MCB turnover ceiling. GRA’s September 2026 notice describes the higher GHS 750,000 limit for PTT only. Confirm the currently applicable MCB limit with GRA before relying on MCB; the PTT ceiling is not automatic evidence of MCB eligibility.
Total annual sales or turnover. Business expenses do not reduce the 3% base.
Business earnings after deducting expenses allowed under the income-tax rules. Personal spending and disallowed costs remain excluded.
Sales records remain essential because the tax is a percentage of turnover.
Both sales and qualifying expense evidence are required because the tax is profit-based.
Not a complete liability: The MCB illustration stops at the profit bridge. Apply the Income Tax Act’s allowable-deduction, capital-allowance, relief and rate rules to determine the final tax.
Registration and payment
The current scheme is designed for mobile and assisted access.
-
01
Prepare identification
Use the Ghana Card PIN, phone number and GhanaPost GPS digital address.
-
02
Compile sales information
Bring turnover records and the available business registration or permit.
-
03
Select the correct route
Register through the MTS Taxpayer App, a GRA office or field officer, or an approved trade-association channel.
-
04
Pay through an approved channel
The current public channels include the MTS app and USSD code *880#.
-
05
Keep receipts
Reconcile every instalment or payment to the taxpayer account and relevant period.
-
06
Update changed facts
A new outlet, employment income, VAT registration or higher turnover can change eligibility.
Annual return and reconciliation
Simplified tax still requires an annual declaration.
GRA’s scheme guidance requires a simplified annual return declaring actual sales for the year. Confirm the applicable filing date and any formally authorised extension with GRA for the taxpayer’s category. Paying instalments does not remove the annual-return requirement described in that guidance.
Report actual activity and turnover against fixed instalments paid.
Compare actual annual turnover and 3% liability with payments made.
Support receipts, allowable expenses, tax adjustments, reliefs and payments.
Where eligibility changes, document the date and move to MCB, standard income tax or VAT registration as required.
Payment is not the return: Paying through USSD or the app does not by itself replace the required annual filing.
Minimum record system
Simplification works only when turnover can be verified.
Record cash, mobile-money, bank, credit and non-cash sales each day.
For MCB, retain supplier invoices, receipts, payment evidence and business purpose.
Keep location, outlet, permit, activity, employees and asset information current.
Retain registration, category, returns, tax bills, receipts and correspondence.
Frequently asked questions
Modified taxation in Ghana questions
What is modified taxation in Ghana?
It is a simplified form of personal income tax for qualifying resident individuals in the informal sector, not a separate new tax.
What are the three modified-tax categories?
Presumptive tax based on instalment, presumptive tax based on turnover, and modified cash basis.
What is the PTT rate?
The presumptive tax based on turnover is 3% of annual turnover.
What is the PTI threshold?
Average annual turnover for three consecutive years ending in the assessment year must not exceed GHS 20,000. Where that information is unavailable, the Commissioner-General determines how to calculate the average; GRA’s guidance allows one or two years of data.
What is the PTT turnover range?
GRA’s September 2026 implementation notice states that annual turnover must be more than GHS 20,000 but not exceed GHS 750,000, with implementation from 1 September 2026. Other PTT eligibility conditions still apply.
Can a lawyer or accountant use the 3% turnover tax?
An individual who has a professional qualification is excluded from PTI and PTT. MCB may apply only if its separate conditions are met; otherwise use the applicable standard income-tax rules.
Does being unregistered for VAT make me eligible for PTT?
No. For PTT, you must not be required to register for VAT and must meet the other eligibility conditions. Being unregistered is insufficient if the law requires you to register.
Must a modified-tax taxpayer file an annual return?
Yes. A simplified annual return declares actual sales and reconciles the year’s tax and payments.
MSL Business School legal reference map
Primary authority and operative framework
- Income Tax Act, 2015 (Act 896), as amendedPersonal business income, residence, source, allowable deductions and modified taxation.
- Second Schedule to Act 896, as amendedPresumptive taxation, modified cash basis, thresholds, rates and exclusions.
- GRA’s September 2026 Act 1178 implementation noticeGRA states that PTT applies at 3% where turnover exceeds GHS 20,000 but does not exceed GHS 750,000, with implementation from 1 September 2026. The notice does not state an MCB ceiling change. Read GRA’s implementation notice
- Income Tax (Amendment) (No. 2) Act, 2021 (Act 1071)Section 2(b) set the PTT ceiling at GHS 500,000; section 2(c) separately set the MCB ceiling at GHS 500,000. The later GRA notice expressly updates PTT, so do not assume that its GHS 750,000 ceiling also applies to MCB.
- GRA’s modified-taxation scheme guidanceAdministrative registration, payment channels and simplified annual returns. Its older PTT threshold is superseded by GRA’s September 2026 implementation notice.Read GRA’s scheme guidance
- Revenue Administration Act, 2016 (Act 915), as amendedRegistration, electronic filing, payment, records, interest, penalties and corrections.
Authority hierarchy: The legislation controls the tax result. Administrative guidance and the online portal explain current procedure; they do not create a rate, exemption, deduction or deadline.
Institutional publisher
TaxLawGH is MSL Business School's Ghana tax education platform.
This guide forms part of MSL Business School's public tax and fiscal policy education work. MSL publishes TaxLawGH to make Ghana's tax law accurate, understandable and useful to taxpayers, employers, practitioners, students and policy professionals.
Explore MSL Business School →