Informal sector businesses and tax compliance in Ghana: A case study of bottled/sachet water producers in Goaso Municipality

Kumi, Georgina; Dzineku, Bismark Kojo Seyram

Informal sector businesses and tax compliance in Ghana: A case study of bottled/sachet water producers in Goaso Municipality

2024

Kumi, Georgina | Dzineku, Bismark Kojo Seyram

The study investigated the informal sector and tax compliance within the Goaso Municipality. The study focused on four core objectives: to explore the characteristics of economic activities of the informal sector operators, determine the drivers of tax noncompliance, analyse the extent to which features of the informal sector influence tax compliance and explore strategies the Ghana Revenue Authority (GRA) uses to ensure tax compliance and challenges it faces in collecting taxes from the informal sector. The study employed purposive and convenience sampling techniques to select 42 Ghana Revenue Authority team and 78 business operators respectively. For data collection, it blended questionnaire with structured interview. Data analysis was done using the Statistical Package for Social Sciences (SPSS) software. The Pearson Chi-Square result showed that the business and informal sector characteristics such as business type, business registration status, having Tax Identification Number (TIN), kind of tax and how often they issue VAT invoices were statistically significant. This implies that, business type, business registration, having Tax Identification Number (TIN), kind of tax and how often they issue VAT invoices influence the informal sector tax compliance. The study also found that majority of the businesses representing 53.8% does not pay their tax. The major challenge GRA faces in collecting tax includes lack of record keeping which makes assessment difficult. It is therefore that recommended that the GRA should improve customer service, simplify the returns forms and bringing tax offices to the homes or convenience of tax payers through online transactions.

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