Every year, thousands of Ghanaian small businesses pay more tax than they need to, in time and stress if not in cedis, because they assume proper tax means full accounts, detailed profit computations and long forms.
If you are a sole proprietor, trader or artisan, there is a simpler road: Ghana's Modified Taxation Scheme, often called presumptive tax. You pay 3% of your annual turnover. And since September 2026, it covers far more businesses than before.
Here is who qualifies, how it works, and whether it is right for you.
What presumptive tax is
Under the standard route, income tax is charged on your profit: sales minus expenses, computed carefully across the year. Presumptive tax works the other way. The tax authority presumes your income from your turnover and charges a flat 3% of it.
In exchange you skip the detailed profit computation. Your tax is settled with one number: what you sold.
How the scheme works:
You track your total sales for the year (your turnover).
You file a simple return based on that turnover.
You pay 3% of turnover as your income tax for the year.
What changed in September 2026
The Income Tax (Amendment) Act 2026 (Act 1178) raised the turnover ceiling from GHS 500,000 to GHS 750,000. Two consequences:
Thousands of businesses that sat above the old ceiling now qualify for the scheme for the first time.
The ceiling now matches the VAT registration threshold for goods suppliers, so the two regimes line up under one number.
For the full picture of what Act 1178 changed for employees and small businesses, see our article: The New Income Tax Amendment 2026: What It Means for Small Businesses
The eligibility checklist
You qualify if all four are true:
Check 1: You are an individual. Sole proprietor, trader, artisan, freelancer. Incorporated companies do not qualify; companies are taxed under the corporate rules.
Check 2: Your annual turnover is above GHS 20,000.
Check 3: Your annual turnover does not exceed GHS 750,000.
Check 4: You can show your turnover. Simple records are fine, but you need something that evidences your sales for the year.
Three worked examples
Example 1: A provision shop with GHS 180,000 in annual sales. Tax under the scheme: 3% of 180,000 = GHS 5,400 for the year. Predictable, settled.
Example 2: A spare parts dealer with GHS 600,000 in sales. She sat above the old GHS 500,000 ceiling and could not use the scheme. Under Act 1178 she qualifies: 3% of 600,000 = GHS 18,000 for the year, with no detailed profit computation.
Example 3: A salon with GHS 45,000 in turnover. Tax: 3% of 45,000 = GHS 1,350 for the year.
Is 3% of turnover actually better for you?
Honest answer: it depends on your margins.
The standard route taxes your profit, so the thinner your profit margin, the less the standard route charges relative to your sales. As a rough rule: if your margins are healthy, 3% of turnover usually beats the standard route comfortably. If your margins are very thin, compute both before choosing.
But compare the true cost, not just the cedis. The standard route carries accounting costs, more paperwork and more room for disputes. Many owners accept 3% precisely because it converts a tax season problem into one multiplication.
The withholding tax trap
If you supply companies or government, they may withhold tax from their payments to you. Keep every withholding certificate. Tax already withheld is credited against what you owe under the scheme; without the certificates you can end up paying twice and chasing a refund.
What to keep on record
A daily or weekly sales record, however simple (a notebook or sales software).
Bank and mobile money statements that match your recorded sales.
Purchase receipts. Not strictly required for the turnover computation, but they protect your pricing and your own margin decisions.
Where UPOS fits
The whole scheme runs on one number: your turnover. UPOS tracks your sales as they happen, so at any point in the year you can see whether you are comfortably inside the GHS 750,000 ceiling or approaching it, and your 3% is computed from real numbers instead of a December panic estimate. If you want your turnover question answered any day of the year, start here: UPOS
The takeaway
If you are self-employed with turnover between GHS 20,000 and GHS 750,000, the 3% scheme is likely the cheapest tax route you have, in money and in peace of mind. Check the four-point eligibility list, keep simple records, and file with confidence.
Thresholds and rates reflect the Income Tax (Amendment) Act 2026 (Act 1178), effective September 1, 2026. Confirm your specific position with GRA before acting; this article is general information, not tax advice.