The Medium-Term Revenue Strategy 2024-2027 report by the Ministry of Finance has revealed a significant shortfall in Ghana's tax collection from its gold mining industry.

Over the past 10 years, only 13.4% of the total gold produced and exported by large-scale mining operators contributed to direct tax revenue for the government, highlighting inefficiencies in the country’s fiscal regime governing the extractive sector.

Data from 2015 to 2020 by the Minerals Commission of Ghana show that government revenues from the mining sector—encompassing corporate taxes, mineral royalties, and other contributions—have increased over time.

For example, corporate tax collections rose from GH₵ 320,948,380 in 2015 to GH₵ 1,462,137,984 by 2020. Similarly, mineral royalties surged from GH₵ 485,632,657 in 2015 to GH₵ 1,426,846,096 in 2020, signaling growth in mining activities and government collections.

Despite these gains, the total revenue accrued from mining still falls short of expectations. The mining sector’s contribution to Ghana’s economy—measured as a percentage of Gross Domestic Product (GDP)—hovered between 13.6% and 14.9% from 2013 to 2019.

Gold, the leading commodity in this sector, contributed only 6.2% to 7.3% over the same period. Given the country’s abundant gold resources, the relatively small tax revenue suggests that significant potential remains untapped.

The data highlights a growing gap between gold production and the government’s revenue share. In 2018, Ghana’s gold production peaked at 148,336 kilograms, making it one of the world’s top gold producers. The nominal value of mining and quarryingactivities increased from GHȻ8.813 billion in 2017 to GHȻ13.095 billion in 2018, according to the Ghana Chamber of Mines.

However, even with an increase in production, the direct tax revenues have not matched up. For instance, while gold production in 2020 was recorded at 125,552 kilograms, the government's tax collections from the sector remained disproportionately low.

This discrepancy, the Ministry of Finance, has attributed to loopholes in Ghana’s legal framework.

"The relatively low tax revenue mobilisation from the extractive sector is driven in part by loopholes in current legislation. For example, Section 49 of the Minerals and Mining Act, 2006 (Act 703) provides for the granting of a Development Agreement based on an investment threshold resulting in the granting of excessive fiscal concessions as well as a fragmented fiscal regime," a part of the report reads.

On the way forward, the Ministry of Finance has recognized the need to reform the fiscal regime in the extractive sector to address these revenue shortfalls.

The government plans to introduce the Extractive Industries Fiscal Regime Law (EIFRL), aimed at consolidating all fiscal statutes affecting the mining and petroleum industries. This new law will standardize key provisions such as corporate income tax rates, royalty rates, and the introduction of a windfall profit tax mechanism.

By streamlining the fiscal framework, the government hopes to create a more transparent and balanced system that ensures a fair share of revenues while maintaining investor confidence. The push for reform comes at a crucial time, as gold exports have continued to play a vital role in Ghana’s economy.

In the second quarter of 2023, gold exports were valued at approximately $1.71 billion, while full-year 2022 exports amounted to around $6.6 billion. Despite the strong performance in exports, the relatively low tax revenue collected from the mining sector highlights the urgency for legislative changes.

Ghana’s gold export is expected to hit about US$10 billion by the end of the year, the Minerals Commission has said. According to the Chief Executive Officer of the Minerals Commission, Martin Ayisi, gold exports jumped to a record in the first half of 2024.

Mr Ayisi said out of the total exports of US$9.2 billion for the first-half of 2024, gold alone accounted for 54% of the total exports which amounted to US$5 billion. This was because of the surge in gold prices especially in the second quarter of 2024 and increase in production from both small- and large-scale operations.

Ghana Medium Term Revenue Strategy (MTRS) 2024-2027_v2Download