The Potential of Digital ID Systems for Tax Administration: The Case of Ghana

Digital identification systems (DIS) have great potential for strengthening tax administration. This paper examines the practical implications of integrating DIS with tax administration in Ghana. Studying system integration and data sharing between the Ghana Revenue Authority and the National Identification Agency, we evaluate the impact of replacing taxpayer identification numbers (TINs) with personal identification numbers (PINs) linked to a Ghana Card. By analysing administrative data and surveying 1,000 businesses in Accra, the study investigates registration patterns, tax perceptions and outcomes, and assesses improvements in data quality post-integration.

The findings reveal a significant increase in the number registered for tax following system integration, particularly female and younger taxpayers. The impact on revenue is uncertain, and there is mixed compliance observed for PIN-based registrations. Those registered for tax for the first time after integration perform much worse than taxpayers who were migrated from TIN to PIN. Tax payment significantly improves for PIN-based registrations, mainly due to the technical design of the e-payment platform. While integration improves data on taxpayers' addresses, it worsens that on the economic sector. The study also shows that there is no significant improvement in taxpayers’ attitudes and perceptions, despite simplified registration processes.

The paper offers policy recommendations, emphasising the need for targeted strategies and investment in administrative capacity to maximise the potential of digital ID systems to shape taxpayer attitudes and enhance tax compliance.