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– A Review of the Vehicle Income Tax Paid by Commercial Vehicles

"Taxes are what we pay for civilized society.'' — Oliver Wendell Holmes, Jr.


YES, there is a price to pay in every civilized society, but there is imbalance and unfair distribution of the tax burden when people in equal paying ability do not pay their fair share in society.

The informal sector is the largest employer in Ghana, even though it is composed of small units in a very disorganized way, ranging from tabletop sellers to artisans, taxis and commercial “trotro” vehicles. These sectors do not require any special regulation so entry and exit into the sector is easy.

At the national level, the widespread of the informal sector raises general concern as to what appropriate tax system can address the sector to make them pay their fair share of taxes to society. This undoubtedly makes domestic revenue mobilization in Ghana a challenge. There are potential larger taxpayers in the informal sector than the formal sector


Over the years, successive governments have introduced several strategies in an attempt to tax the informal sector and to broaden the tax base but these have failed to bring it to the required level. About 86% of Ghana’s workforce is in the informal sector. The GRA has over the years expressed difficulty in taxing the informal sector. Currently, the informal sector contributes 1% of the total tax revenue according to the GRA statistics in 2018 and because the informal sector does not get taxed, the overall tax burden is very unevenly distributed across the economy. These inequities under our current tax system are unfair to all those in the formal sector. When considering the general equilibrium effect of tax reforms, the business community is likely to be hostile when the tax policy is not adequately balanced in its implementation. In an effort to improve the contribution of informal sector to national tax development, the vehicle income tax was introduced for commercial vehicles.


The Vehicle Income Tax (VIT) started as a standard tax assessment under the Income Tax Decree 1975 (SMCD 5). Under section 44 of the SMCD 5, the Commissioner for Finance was empowered to make legislative instruments to specify person or class of persons who will be subject to fixed standard assessment of income of those identifiable groups.

The Internal Revenue Regulation 2001 (LI 1675) maintained this standard assessment. Regulations 25 provided tax installments payable by members of certain tax categories including the GPRTU and other transport unions who operates in lorry parks, taxi ranks or similar places. Under this arrangement, owners of specified vehicles were required to pay a flat rate per week ranging between GHS 0.05 and GHS 0.20. The leadership of these unions were collecting the taxes on behalf of the GRA and paying it over to the GRA at the end of each week.

In 2003, the system where union leaders were collecting the taxes from their members was replaced by the VIT stickers under LI 1729, 2003. The key features of the VIT were that

1. The stickers were mandatory for all commercial vehicles and owners required to purchase the stickers quarterly in advance and the stickers are valid for that quarter only

2. The stickers are to be displayed on the windscreen of the commercial vehicles just like the insurance and road worthy certificates.

3. The Ghana Police Service MTTU enforces compliance on behalf of GRA

The 2016 Income Tax Regulations revised the taxes and below are the current taxes payable by commercial vehicles, depending on the type of vehicle.


Regulation 22 of the Income Tax Regulations, 2016 (L.I 2244), provides as follows:

1. This regulation applies to the owner of a commercial vehicle of the description specified in the second column of the Second Schedule.

2. A person who owns a vehicle of a description specified in the second column of the Second Schedule shall, for each year of assessment, pay as tax the amount fixed in relation to that type of vehicle in the fourth column of that Schedule.

3. Payment of tax under sub regulation (2) shall be by quarterly installment on or before the fifteenth of January, April, July and October of each year of assessment.

4. The Commissioner General shall, upon payment of the tax at any office of the Ghana Revenue Authority issue a sticker in acknowledgement of the payment.

Below are the taxes payable by some commercial vehicles (quarterly and annual basis)


The amount of tax paid for the Stickers are supposed to be advance payment by installment and as such at the end of the year, a return of income is required to be filed where the total income of the owner is declared to the GRA and any additional taxes paid.

Regulations 22 (10) of L.I 2244 provides that, “ tax paid under this regulation by a person does not relief that person from the obligation to file a return of income under section 124 of the Act but shall be credited against tax assessed to the person in accordance with the Act”


Where an owner of a vehicle fails to file annual tax returns, the penalty is provided under section 73 of the Revenue Administration Act, 2016 (Act 915).

Under section 73 of Act 915, “A person who fails to file a tax return as required by a tax law is liable to pay a penalty of GHS 500 and a further penalty of GHS 10 for each day that the failure continues”.


Technology redefined the commercial transport sector with the emergence of Uber, Bolt and the likes which are gradually taking over the traditional taxi business.

Uber for instance provides easy and secured way of requesting for transportation via the uber app and anybody with a private vehicle can register and begin to provide commercial transport without the need to brand the vehicle as “TAXI”. In the end, Uber charges a maximum of 30%, whiles the owner keeps a minimum of 70%. The commission of 30% paid to Uber can go as low as 5% if a certain number of trips are made by the drivers over a specified period, implying that, a driver’s share of the fare can go up to 95%. The average sales that drivers make to owners of the vehicle is GHS 400 per week (GHS 1,600 per month or GHS 4,800 per quarter). A typical driver makes more sales to cover for his share as well as fuel for the week.


Critics say the informal sector in Ghana is a Tax Haven because the tax system operated by the GRA does not reflect the actual income tax they are supposed to pay. Many commercial vehicle owners do not file tax returns to declare the actual income earned. What they pay is only the quarterly taxes which is clearly inadequate and does not reflect the reality with regards to the income they earn, inferring from the transport fairs passengers pay.

Uber operators do not acquire VIT stickers because anyone can use his private vehicle for Uber operations. The drivers of the commercial vehicles do not pay taxes on their income. For instance, Trotro (up to 15 persons) paying GHS 16 per quarter (GHS 4 per month) clearly does not reflect the income tax properly so charged. Critics could be right if these are the amount of taxes paid by commercial car operators. The amount paid for transport fares and hiring cars do not reflect the taxes paid.


1. The GRA should revise the taxes paid on quarterly basis to reflect the reality in Ghana

2. Tax returns should be demanded before Stickers are issued

3. The GRA should tax drivers by giving them tax cards. The police should enforce this.

4. Drivers of Uber and the like should be taxed. Uber should make the payment for VIT Stickers a requirement.

In the end, "Taxes are what we pay for civilized society.'' — Oliver Wendell Holmes, Jr.

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