If you run a business as a sole proprietor in Ghana, the tax rules are different from those of employees and companies. You file as an individual, but you report business income. The GRA has also introduced a simplified scheme for small businesses that makes compliance far easier than many owners realize.
Who Is a Sole Proprietor?
A sole proprietor is a business owned and run by one person. In Ghana, the business is not a separate legal entity from the owner. This means the business income is taxed as the owner’s personal income, and the owner is personally liable for any tax obligations.
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The GRA requires all businesses registered by the Registrar General’s Department—including sole proprietors—to file tax returns .
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What Tax Does a Sole Proprietor Pay?
Sole proprietors pay Personal Income Tax (PIT) on their business profits. The GRA states that you must pay income tax if you are “a sole proprietor or a person in partnership and you earn income above GH¢490 per month” .
Your business income is calculated as the gains and profits from the business during the year. This includes service fees, consideration received for trading stock, and any gains from the realization of business assets .
At the end of the year, all your income—from business, employment, and investment—is put together and taxed as one .
The Modified Taxation Scheme: A Simpler Path
The GRA has introduced the Modified Taxation Scheme (MTS) specifically to make tax compliance easier for informal sector workers and small businesses, including many sole proprietors .
Who Qualifies?
You qualify for the MTS if you are a resident of Ghana, earn income only from your business (not employment), earn income only from sources within Ghana, and are not registered for VAT .
The scheme covers plumbers, electricians, hairdressers, seamstresses, tailors, mechanics, food vendors, and similar small-scale operators .
The Three Categories
The MTS has three tiers based on your annual turnover:
| Category | Turnover Threshold | How Tax Is Calculated |
|---|---|---|
| Presumptive Tax Based on Instalment (PTI) | Average annual sales not exceeding GH¢20,000 over three consecutive years | Fixed tax amount based on income level and business activity |
| Presumptive Tax Based on Turnover (PTT) | Annual sales more than GH¢20,000 but not exceeding GH¢500,000 | Flat rate of 3% on total annual sales (turnover) |
| Modified Cash Basis (MCB) | For those who do not qualify for PTI or PTT, or choose this method | Tax on profit—earnings after deducting allowable business expenses |
Important: Professionals with formal qualifications (lawyers, engineers, accountants), owners of multiple businesses, and partners in registered partnerships cannot use the presumptive categories. They must register under the Modified Cash Basis or standard taxation .
Do You Still File a Return?
Yes. Even under the MTS, you must file a simplified return at the end of the year declaring your actual sales for the year. This guides the GRA in assessing you fairly .
What Records Must You Keep?
You are legally required to maintain proper records. This includes :
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Books of accounts
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Sales and expense invoices
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Payroll records (if you have employees)
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VAT records (if applicable)
Failure to keep proper records is an offence.
Filing Deadlines
The deadline for filing Personal Income Tax returns—which applies to sole proprietors—is 30th April each year .
For the 2025 tax year, the GRA extended the deadline to 31st May 2026. The extension applied to all individuals, including sole proprietors and employees, with no penalties for those who filed within the extended period .
Penalties for Non-Compliance
If you fail to file your return on time, the GRA imposes :
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A penalty of 500 currency points (GH¢500) for failing to file
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A further penalty of 10 currency points (GH¢10) for each day the failure continues
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If the failure continues for four months after the penalty is imposed, the Commissioner-General may prosecute to compel submission
For late payment, a penalty is calculated at 125% of the statutory rate, compounded monthly, and applied to the outstanding amount .
How to Register and Pay
Registration Options
You can register for the Modified Taxation Scheme through :
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MTS Mobile App – Download from the App Store or Google Play Store
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GRA Offices – Visit your nearest Taxpayer Service Centre
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Field Officer – Get registered directly by a GRA field agent
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Trade Associations – Register through your union or association
Documents you need: Ghana Card (National ID), GhanaPost GPS digital address, phone number, basic sales information, and business registration or permit (if available) .
Payment Options
You can pay your taxes through :
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*USSD Code 880# – A dedicated short code for mobile tax payments
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MTS Taxpayer App – Pay directly using your Mobile Money wallet
For standard returns, you can also pay via bank deposit at GRA-approved banks, mobile money (MTN MoMo, Vodafone Cash), or online through the GRA portal.
Quick Facts
| Topic | Details |
|---|---|
| Tax Type | Personal Income Tax (PIT) |
| Filing Deadline | 30th April annually (extended to 31st May 2026) |
| MTS Turnover Threshold | Up to GH¢500,000 |
| PTT Tax Rate | 3% of annual turnover |
| MTS Registration | Mobile App, GRA office, field officer, or trade association |
| Payment Channels | USSD *880#, MTS App, mobile money, bank |
| Late Filing Penalty | GH¢500 + GH¢10 per day |
| Late Payment Penalty | 125% of statutory rate, compounded monthly |
| Records Required | Books of accounts, sales/expense invoices |
Frequently Asked Questions
1. Do sole proprietors in Ghana need to file tax returns?
Yes. The GRA requires all businesses registered by the Registrar General’s Department, including sole proprietors, to file tax returns .
2. What tax do sole proprietors pay in Ghana?
Sole proprietors pay Personal Income Tax (PIT) on their business profits. You must pay if you earn income above GH¢490 per month .
3. What is the Modified Taxation Scheme?
It is a simplified tax scheme for informal sector workers and small businesses with annual turnover not exceeding GH¢500,000. It offers fixed tax amounts, a 3% turnover rate, or profit-based taxation .
4. What is the deadline for filing Personal Income Tax in Ghana?
The deadline is 30th April each year. For the 2025 tax year, the GRA extended it to 31st May 2026 .
5. What happens if a sole proprietor files late in Ghana?
A penalty of GH¢500 plus GH¢10 per day applies for late filing. For late payment, a penalty of 125% of the statutory rate is compounded monthly .
6. How does a sole proprietor register for the Modified Taxation Scheme?
You can register through the MTS Mobile App, at a GRA office, through a field officer, or via your trade association. You need your Ghana Card, GhanaPost GPS address, and basic sales information.
7. Can a sole proprietor pay taxes via mobile money in Ghana?
Yes. You can pay through the USSD code *880# or the MTS Taxpayer App using your Mobile Money wallet .
8. Do sole proprietors under the Modified Taxation Scheme still file annual returns?
Yes. Even under the MTS, you must file a simplified return declaring your actual sales for the year
Source: Accra Street Journal
Last Updated on October 10, 2026 by Samuel Kwame Boadu
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Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.
