Ghana’s economy has weathered significant challenges since 2022, including high inflation, heavy debt, and fiscal consolidation under an IMF program. Inflation peaked above 50% in late 2022 but fell to around 18–20% by mid-2025.
Public debt now exceeds 90% of the country’s GDP, and the 2022 fiscal deficit reached approximately 12% of GDP. In this context, the government has pursued aggressive revenue measures to stabilise the budget.
Yet, these measures have coincided with a fragile growth outlook: real GDP growth was only about 3.1% in 2023 (up from 1.1% in 2022) and is projected to be around 5–6% in 2024 before slowing again.
Private-sector stakeholders are wondering whether recent tax hikes, including new levies and rate increases, are straining businesses and hindering job creation. Ghana’s tax-to-GDP ratio has been stuck around mid-teens (13.8% in 2022 and approximately 14.1% in 2023), which is well below the government’s target of 18–20%.
This article examines the major tax policy changes since 2022 and their impact on busineses, jobs, and investment, drawing on government data and business surveys.
Recent Tax Reforms (2022–2025)
In the wake of the pandemic and economic shocks, Ghana introduced several new taxes and raised existing ones. In March 2021, a COVID-19 Health Recovery Levy was enacted on wages and goods. In early 2022, the government imposed a 1.5% electronic transactions levy (E-levy) on mobile money and other digital payments, generating large receipts by 2023.
The 2023 Budget added more measures: a new top personal income tax bracket at 35%, stricter ring‑fencing of tax losses, a 1% to 5% Growth & Sustainability Levy (GSL) on most company revenues (expanding the old National Fiscal Stabilisation Levy beyond banks), and a proposal to raise VAT on imports from 12.5% to 15%. The net effect by the end of 2023 was a significantly higher tax burden on businesses and consumers, despite the government reducing some levies; for example, the E-levy rate was lowered to 1.0% from 1.5%.
In 2024, additional fiscal plans were proposed, including a higher VAT flat rate on commercial property (from 15% to 5%) and targeted VAT exemptions for local value chains. Some contentious measures were later withdrawn – notably, a proposed 15% tax on electricity consumption was suspended after fierce backlash from trade unions and business owners.
Finally, the new government’s 2025 budget (delivered March 2025) reversed many of the prior hikes. It repealed the 1% E‑levy, scrapped the 10% betting and gaming tax and other small levies, and removed the controversial 1.5% withholding tax on unprocessed gold. As a result, some tax relief is now in place even as other special levies remain.
Impact on Private-Sector Growth and Productivity
Ghana’s private economy has shown modest growth but faces headwinds. Despite fiscal tightening, the economy grew 5.7% in 2024, driven by mining, construction, and services, after expanding by just 3.1% in 2023. However, high inflation and lending rates continue to restrain businesses.
Firms report that heavier tax payments have narrowed profit margins and reduced reinvestment. For example, corporate income tax remains 25% for most companies (35% for mining), but the addition of special levies and broader VAT regime has effectively lifted their overall tax rate. Ghana’s businesses now face a cost structure that firms in competing countries do not.
Data show that tax revenues have surged in nominal terms, with total tax collections increasing from GH₵57.4 billion in 2021 to GH₵75.7 billion in 2022 and then to GH₵113.1 billion in 2023 (see Table 1 below), followed by a further increase to GH₵153.6 billion in 2024. Much of this rise reflects inflation and exchange-rate effects, as well as the expanded tax base.
Table 1: Ghana’s total tax revenue (GH₵ billions)
| Year | Total Tax Revenue (GH₵ billion) | Annual Growth Rate | Budget Target (GH₵ billion) | Performance vs Target | Revised Target (GH₵ billion) | Performance vs Revised Target |
| 2021 | 57.43 | – | – | – | – | – |
| 2022 | 75.71 | +31.8% | 80.31 | -5.7% (shortfall) | 71.95 | +5.3% (exceeded) |
| 2023 | 113.3* | +49.7%* | – | – | – | – |
| 2024 | 153.6 | +35.6% | 143.0 | +7.4% (exceeded) | – | – |
* The Annual Tax Revenue Performance Report: 2022-2024, shows that Ghana’s total tax revenue (GH₵ billions) has roughly tripled since 2021 as new levies and higher rates took effect
Yet the real burden on industry has increased. A Ministry of Finance survey notes that Ghana’s tax effort (tax/GDP) “has made minimal gains” since 2017 and is below the level of peer countries. At the same time, businesses face non‑tax constraints.
Industry groups note that high interest rates (lending benchmarks above 30–35%), currency volatility, and energy shortages exacerbate the pressure from taxes. The Ghana National Chamber of Commerce & Industry (GNCCI) has warned that even small firms are struggling to survive under the combined weight of “multiple taxes, high lending rates and currency depreciation”. Productivity gains in the private sector are stalled when profit after tax is thin.
Overall, the evidence suggests that while public revenues have indeed climbed, growth in the private sector has not accelerated proportionally. Ghana’s composite index of economic activity still showed year‑over‑year contractions into early 2023, and by mid‑2025, growth was only just reaching pre‑pandemic trends.
(The World Bank notes that Ghana must “broaden the tax base” and improve compliance, but it also stresses the need for “private sector development and FDI” to sustain higher growth.) In short, the revenue windfalls have not yet translated into a new boom in business output or productivity.
Job Creation Under Pressure: Labour Market Responses
Higher taxes have also affected the labour market. Unemployment in Ghana remains stubbornly high. The Ghana Statistical Service (GSS) reports a national jobless rate of about 14.7% in 2023 – a level well above pre-crisis norms.
Youth and urban unemployment are especially severe. While many factors drive this (automation, education mismatches, inflation), businesses cite tax policy as one contributor. For example, companies expanding their payrolls face larger PAYE and National Insurance obligations as the government seeks to raise revenue.
Industry surveys reflect anxiety over jobs. The GNCCI noted that several large firms (e.g. consumer goods and logistics companies) have downsized or shut local operations, in part citing Ghana’s tax costs as a competitive disadvantage.
In an August 2024 address, the GNCCI President said that new taxes and levies had “affected job creation and had a prominent effect on GDP and tax revenues”. A rush of cost-push pressures – from wages, utilities and taxes – meant that some planned projects were postponed and hiring was tempered.
That said, not all job trends are negative. The government’s infrastructure program and social stimulus (some of which were partly funded by higher taxes) have created some construction and public-sector roles.
But on net, private-sector employment growth appears weak: surveys by international agencies report that few Ghanaians see improved job prospects in late 2023.
Employers citing Ghana’s higher tax burden as a factor in cautious hiring is consistent with broader data: Ghana’s labour force participation has been flat, and informality remains above 60%. The prevailing sentiment is that taxation has added to the uncertainty for businesses planning expansions.
Investor Sentiment and FDI Trends
Foreign and domestic investors have increasingly voiced concern over Ghana’s tax regime. Ghana’s ability to attract foreign direct investment (FDI) declined sharply, as approved FDI fell from approximately US$1.35 billion in 2022 to roughly 0.66–0.63 billion in 2023–24 (Figure below).
Many planned projects were delayed or downsized due to macro-fiscal uncertainty. A recent survey by Ghana’s Netherlands Business & Culture Council noted that foreign investors are urging the government to “review tax frameworks to minimise duplicative levies and reduce the tax burden,” warning that high taxes make Ghana less competitive regionally.
Figure 1: Ghana’s official FDI inflows (US$ billions) fell sharply after 2022. Investment commitments dropped over 50% from 2022 to 2023, reflecting caution among international investors.
International observers have echoed these warnings. A U.S. State Department investment climate report (2024) noted that “major international investors in Ghana have registered concern about increasingly aggressive tax collection policies”.
Indeed, Ghana has implemented some of the highest transaction taxes in the region (e.g., the E-levy and multiple excise duties), which have been cited as a drag on investor confidence. In 2023, a Ghanaian CEO told African Business magazine that “many businesses closed for good as the pendulum had swung too far in the wrong direction,” making investment “not economically sensible” amid rising taxes and costs.
Government data confirm the slowdown: Ghana Investment Promotion Centre (GIPC) reports show approved foreign investment projects dropping in 2023, especially in high-tax sectors. Consequently, FDI per capita in 2024 remains far below that of neighbouring countries. The loss of foreign capital carries long-term implications for jobs and growth, as sectors like manufacturing and services struggle to expand without outside investment.
Voices from the Business Community: Key Concerns
Business associations and companies have been vocal about tax reforms. The GNCCI and other groups have listed the cumulative burden of new levies as a top concern. In late 2024, they recommended abolishing “inefficient” taxes (such as the COVID-19 levy) and overhauling the VAT system to avoid cascading taxes. Traders and small manufacturers point out that many of the taxes are effectively passed on to consumers or absorbed by firms, leaving little room for price cuts or wage increases.
Several Ghanaian business leaders also highlight the unpredictability factor. For instance, the scheduled introduction (and then reversal) of a 15% electricity tax in early 2024 created uncertainty for energy-intensive firms. Local business federations note that frequent tax changes – some passed late night in Parliament or via executive action – increase compliance costs (requiring constant updates to accounting systems) and hinder long-term planning.
On the positive side, some firms acknowledge that higher taxes have been partly offset by cuts in subsidies and deficits (helping stabilise the currency and lower inflation). But most analysts say the business community’s reaction is cautious: they welcome the 2025 tax rollbacks as a welcome relief, but warn that Ghana will need to find new efficiencies in government spending to avoid rising deficits again. In sum, the consensus among Ghanaian businesses is that while moderate taxation is necessary, the recent string of increases has felt “excessive” and has strained confidence.
Fiscal Data at a Glance
To illustrate the fiscal trends:
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- Tax Revenue Trends: Ghana’s total tax collection has risen sharply (Figure 1 above). Revenues grew 32% in 2022, ~49% in 2023, and ~36% in 2024 compared to the prior year. Corporate and VAT revenues both reached record highs, driven by inflation and increased compliance measures.
- Tax‑to‑GDP Ratio: Despite higher absolute collections, the tax-to-GDP ratio remains relatively low – about 13.8% in 2022 and ~14.1% in 2023. This partly reflects the large informal sector and still-slow GDP growth.
- Corporate Tax Rates: Ghana’s statutory corporate tax rate has stayed at 25% (35% for mining companies). (The main changes were in levy rates and VAT, not the headline corporate rate.)
- Business Closures and Registrations: Official data on business closures is sparse, but trade associations report a rise in insolvencies and relocations since 2022, especially among exporters and manufacturers facing tight margins.
- FDI Inflows: New foreign investment commitments collapsed from about $1.35 billion in 2022 to roughly $0.65 billion in 2023, with only ~$0.63 billion recorded in 2024 (Figure 1 above). This pullback underscores investors’ caution amid Ghana’s aggressive tax regime and economic volatility.
Figure 2: Summary of Tax Policy Impacts – Higher revenue vs. business strain. Recent tax hikes have boosted government coffers but squeezed corporate margins, dampened consumer spending and job creation, and shaken investor confidence. Some measures were eased in 2025 (e.g., the repeal of the E-levy), but the cumulative burden over 2022–2024 has been a major concern for Ghana’s private sector.
Conclusion
Ghana’s experience (2022–2025) illustrates the tension between generating necessary tax revenue and maintaining a vibrant private sector. On one hand, the government’s efforts have succeeded in raising record revenues, a key goal given debt constraints. On the other hand, business groups and investors warn that the pace and breadth of tax increases have been counterproductive, risking slower growth and fewer jobs in the medium term.
The balanced view is that Ghana needed to shore up its finances, but going forward, the challenge will be to do so efficiently. Many analysts recommend broadening the tax base (bringing more firms into the formal system and reducing exemptions) and improving compliance, rather than continually raising rates. The 2025 reforms (cutting levies like the E‑levy, betting taxes) indicate that the new government is sensitive to these concerns.
Looking ahead, the key will be crafting a tax policy that supports fiscal targets without stifling entrepreneurship. Continuing dialogue with the business community, as well as implementing transparent, data-driven tax reform, will be crucial. If Ghana can streamline taxes and reduce distortions (for example, by phasing out multiple overlapping levies and rationalising current VAT regime), it may regain competitiveness and investor confidence. In the meantime, firms and investors will watch closely whether Ghana Revenue Authority hold the line on revenue targets or give more room for private-sector recovery.
The writer is a Chartered Accountant and Tax Practitioner with over a decade of experience in tax and management consulting, and auditing. He has advised several local and multinational clients on complex financial and tax matters, providing strategic insightful solutions, enhancing compliance and optimizing tax outcomes. He is a member in good standing of the Chartered Institute of Taxation, Ghana, and the Institute of Chartered Accountants, Ghana.
He can be reached via:
Mobile: 0248 887 053
Email: shmishiwo@abcoffie.com
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