TaxLawGHby MSL Business School
MSL Business SchoolGhana informal-sector tax authority guide
Modified taxation in Ghana
The definitive 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
The core scheme is for a resident individual earning 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.
The qualifying profile earns income from business rather than also earning employment income.
The individual earns income only from sources in Ghana.
A VAT-registered person does not qualify for the modified scheme on the stated terms.
Test every condition: Falling below GHS 500,000 turnover is not enough if the person fails the residence, source, income-type, VAT or exclusion tests.
Three modified-taxation categories
Current thresholds and computation
| Category | Turnover or qualification | How tax is determined |
|---|---|---|
| Presumptive Tax Based on Instalment (PTI) | Average turnover for three consecutive years 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 500,000 | 3% of annual turnover |
| Modified Cash Basis (MCB) | Person does not qualify for presumptive tax, opts out, or falls within the applicable MCB route | Tax on earnings after allowable business expenses |
Where three-year turnover information is unavailable, the Commissioner-General may use one or two years to establish the PTI average.
Who cannot use PTI or PTT
Specified individuals move to MCB or standard taxation.
| Excluded from presumptive PTI/PTT | Required direction | Reason |
|---|---|---|
| Professional with formal qualification | MCB or standard taxation | Professional income is excluded from presumptive routes |
| Owner of multiple businesses or business outlets | MCB or standard taxation | Presumptive simplification is not available |
| Partner in a registered business partnership | Partnership and applicable individual framework | Partnership structure is excluded |
| Individual who voluntarily opts out | MCB or standard taxation | Election removes presumptive treatment |
Examples of formal 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.
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.
- 01Prepare identification
Use the Ghana Card PIN, phone number and GhanaPost GPS digital address.
- 02Compile sales information
Bring turnover records and the available business registration or permit.
- 03Select the correct route
Register through the MTS Taxpayer App, a GRA office or field officer, or an approved trade-association channel.
- 04Pay through an approved channel
The current public channels include the MTS app and USSD code *880#.
- 05Keep receipts
Reconcile every instalment or payment to the taxpayer account and relevant period.
- 06Update 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.
At year end, the taxpayer files the prescribed simplified return declaring actual sales for the year. For a calendar-year individual, the general annual personal-income-tax filing deadline is four months after year end—30 April—unless a different statutory or formally announced rule applies.
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 must not exceed GHS 20,000. Where three-year data is unavailable, one or two years may be used.
What is the PTT turnover range?
Annual turnover must be more than GHS 20,000 but not exceed GHS 500,000.
Can a lawyer or accountant use the 3% turnover tax?
A professional with formal qualifications is excluded from PTI and PTT and must use MCB or standard taxation as applicable.
Can a VAT-registered person use modified taxation?
No. The stated eligibility conditions require the individual not to be registered for VAT.
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.
- Income Tax (Amendment) (No. 2) Act, 2021 (Act 1071)Increase of the presumptive-tax maximum turnover to GHS 500,000.
- Income Tax Regulations, 2016 (L.I. 2244), as amendedInstalments, categories, records and administration.
- 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.
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