Tax compliance necessary for development

This month, the Ghana Revenue Authority (GRA) has intensified its nationwide campaign for the filing of income tax returns.

The Tax and Good Governance Month is to encourage all eligible individuals and businesses to meet the end-of-month deadline.

This means that taxpayers, including individuals and businesses across the country, are expected to file their income tax returns by the end of April this year.

The revenue collection agency explained that filing returns was a legal obligation for all income earners, serving as a statutory declaration of a person’s income from business, employment or investment, as well as the tax payable.

The measure, which is already codified, is expected to lead to all eligible taxpayers filing returns voluntarily as pertains in all advanced countries.

The GRA makes us understand that only about half of eligible taxpayers comply with the mandatory requirement, but the authority wants to move that figure to 80 per cent as soon as possible.

Achieving that goal would be significant towards domestic tax mobilisation which currently stands at about 15 per cent of the value of all goods and services produced within the country, otherwise known as Gross Domestic Product (GDP). Ghana’s Tax-to-GDP ratio is well below the sub-Saharan African average and far short of the 20 per cent threshold many economists link to sustainable development financing.

Paying taxes has many advantages. It enables the state to undertake development projects beneficial to the citizenry.

Again, if all come into the tax payment bracket, it can lower every eligible taxpayer’s obligation. By this, the government will not be increasing tax rates or be expanding coverage to the extent that it becomes either a nuisance, double or even multiple taxation of the same revenue line.

This is why the Daily Graphic commends KGL Group’s payment of GH¢153.21 million in corporate income tax to the GRA, and agrees that the act is more than a routine financial transaction, but an emphatic statement about responsibility, leadership and the future of Ghana’s economic independence.

At a time when domestic revenue mobilisation remains a pressing national concern, such voluntary compliance by a major indigenous company offers both a practical contribution and a powerful example.

For years, the country has grappled with the challenge of widening its tax net, while reducing reliance on external financing.

Governments have introduced reforms, improved systems and intensified enforcement, yet the missing link has often been a culture of willing compliance, particularly among large corporate actors. 

KGL’s action signals a shift from obligation to ownership — a recognition that taxation is not merely a legal requirement but a cornerstone of nation-building.

The significance of this contribution lies not only in its size but also in its intent. By presenting the payment as part of a broader philosophy of responsible corporate citizenship, KGL is redefining what it means to operate successfully in Ghana’s private sector.

As its Executive Chairman, Alex Apau Dadey, put it at the cheque presentation ceremony yesterday, the company was not interested in extracting value and returning “leftovers,” but in creating and sharing value responsibly (see story on front page).

This distinction is critical.

It reframes business success from profit maximisation alone to inclusive growth and shared prosperity.

Yet, voluntary compliance cannot thrive in a vacuum. It must be supported by a tax system that is transparent, efficient and fair.

Businesses are more likely to comply willingly when they trust that their contributions are being used judiciously and when the process itself is straightforward and predictable. 

The GRA’s commitment to simplifying tax procedures and enhancing accessibility is, therefore, a necessary complement to the call for increased compliance.

The GRA’s digitalisation agenda should culminate in one portal that works on a basic smartphone in English and major Ghanaian languages.

Let the taxpayer, especially traders, see their obligations, deadlines and benefits in plain Twi or Hausa as much as it is in English.

Reminders should also be automated via SMS and WhatsApp.

The GRA should also reward compliance instead of only punishing evasion.

Compliant SMEs should move to the front of the queue for government contracts, government loans and new initiatives.

Financial institutions can also offer lower rates to businesses with clean tax records.

The Daily Graphic believes that ultimately, the path to a self-sustaining economy lies in collective action.

The government must create an enabling environment, the private sector must act responsibly, and citizens must recognise their role in supporting national development.

The message is clear: sustainable growth begins at home, and it is funded, in no small part by those who benefit most from the system.