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Taxation of Digital Economy Entities and Revenue Mobilization in Ghana: Examining Direct, Mediating, and Moderating Effects

Drawing on Institutional, Technology Acceptance, and Tax Compliance theories, this study of 384 Ghanaian respondents reveals that taxpayer compliance behavior, tax authority digital readiness, and perceived system fairness directly drive revenue mobilization effectiveness from digital entities, a relationship further strengthened by a robust regulatory framework, thereby highlighting the critical need for capacity building and policy reform to optimize digital taxation in Ghana and similar emerging economies.

Original authors: Ibrahim Zubairu, Patrick Akeba Atiawin, Ahmed Jamal Idrissu

Published 2026-08-24

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CC BY 4.0

Original authors: Ibrahim Zubairu, Patrick Akeba Atiawin, Ahmed Jamal Idrissu

Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

In the modern world, a vast amount of commerce no longer happens in physical shops or on paper receipts. Instead, it flows through invisible digital channels: ride-hailing apps, online streaming services, digital money transfers, and global e-commerce platforms. This shift has created a new economic landscape where value is generated without a clear physical presence, challenging the traditional rules governments use to collect taxes. For nations like Ghana, which are rapidly adopting these technologies, the question is not just whether they can tax these digital activities, but how effectively they can do so. The core of this challenge lies in three areas: the willingness of businesses to follow the rules, the ability of the tax authority to use modern technology to track transactions, and the fairness of the system itself. When people believe a system is fair and the government has the tools to see what is happening, they are more likely to pay what they owe. This study explores how these factors interact to determine whether a country can successfully gather revenue from its digital economy.

Researchers from Accra Technical University set out to understand exactly how these pieces fit together in Ghana. They focused on the digital economy entities—companies that operate primarily online or through digital platforms—and the Ghana Revenue Authority, the government body responsible for collecting taxes. To get a clear picture, the team gathered information from 384 individuals, including registered digital service providers and senior officials within the tax authority. They asked these participants about their experiences with tax compliance, the technology they use, their views on the fairness of the tax system, and the strength of the laws governing digital transactions. Using a sophisticated method of analysis that looks for patterns in how different factors influence one another, the researchers tested several ideas about what drives successful revenue collection.

The study confirmed that the most powerful force behind effective revenue collection is the behavior of the taxpayers themselves. When digital businesses choose to comply with tax laws accurately and on time, the amount of money the government collects increases significantly. This finding suggests that the attitude and actions of the businesses are the primary engine of revenue, more so than other factors. The researchers also found that the tax authority's own readiness to use digital tools matters. When the Ghana Revenue Authority has the right technology and infrastructure to monitor digital transactions, revenue collection improves. However, this improvement is not automatic; it depends heavily on the legal environment. The study showed that the benefits of having advanced digital tools are much stronger when there is a clear, robust set of laws to support them. Without strong regulations to back up the technology, the tools alone do not yield the expected results.

Another key factor examined was whether people felt the tax system was fair. The data showed that when digital businesses perceive the tax system as fair, they are more likely to pay their taxes, which in turn helps the government collect more revenue. While this effect was real and positive, it was slightly less direct than the impact of actual compliance behavior or the authority's digital readiness. The researchers also investigated a specific idea: that the act of businesses adopting new technology might be the middle step that turns good behavior into more money for the government. They wondered if compliant businesses would naturally adopt better technology, and if that technology would then automatically lead to higher revenue. The study found that this specific chain of events did not hold up. While compliant businesses did tend to adopt technology, that technology adoption did not, on its own, significantly boost revenue collection in the way the researchers had hoped. This suggests that simply having technology is not enough; the technology must be part of a larger, well-supported system to be effective.

The researchers concluded that for Ghana to maximize its revenue from the digital economy, it must focus on a balanced approach. The most critical step is encouraging voluntary compliance through education and demonstrating that the tax system is fair and that the money collected is used for public good. At the same time, the government must continue to invest in its own digital capabilities, but these investments must happen alongside the strengthening of legal frameworks. The study highlighted that technology and law work best together; a high-tech tax system without clear laws to support it will not reach its full potential. The findings offer a clear path forward for policymakers: build trust with taxpayers, ensure the laws are clear and supportive, and equip the tax authority with the digital tools needed to operate effectively within that legal framework. By understanding these dynamics, Ghana and other developing nations can better navigate the complexities of taxing the digital world to fund their development goals.

Technical Summary: Taxation of Digital Economy Entities and Revenue Mobilization in Ghana

1. Problem Statement and Research Context
Despite significant digitalization efforts by the Ghana Revenue Authority (GRA), revenue mobilization from digital economy entities in Ghana remains suboptimal. This gap between policy intent and actual fiscal outcomes poses a critical challenge to Ghana's fiscal sustainability. While existing literature extensively covers OECD frameworks and developed economies, there is a scarcity of empirical, micro-level analysis regarding the behavioral, technological, and regulatory factors influencing digital taxation in the African context. Specifically, the mechanisms through which taxpayer compliance, tax authority digital readiness, and regulatory frameworks interact—via mediation and moderation—to influence revenue outcomes remain underexplored. This study addresses the need for empirical evidence to inform GRA policy and broader fiscal strategies in developing economies facing similar digital taxation challenges.

2. Methodology
The study employs a quantitative, positivist research philosophy using a cross-sectional survey design.

Data Collection: Data were gathered from 384 respondents, comprising registered digital service providers (e.g., e-commerce, ride-hailing, streaming, digital payment providers) and senior officials from the GRA's Corporate Tax Division. The sample included a diverse range of organizational types, with non-profit entities (44.5%) and public sector organizations (26.8%) representing the largest proportions, alongside private companies and self-employed individuals.
Sampling: A purposive sampling technique was used to ensure respondents met specific criteria regarding registration, operational history, and role in digital taxation.
Instrumentation: A structured questionnaire utilizing 5-point Likert scales was used to measure six constructs: Taxpayer Compliance Behavior, Tax Authority Digital Readiness, Perceived Fairness of the Tax System, Technology Adoption, Regulatory Framework, and Revenue Mobilization Effectiveness. Items were adapted from validated scales in tax compliance and institutional theory literature.
Analysis: The study utilized Partial Least Squares Structural Equation Modelling (PLS-SEM) via SmartPLS 4 software. The analysis included assessment of the measurement model (reliability, validity, discriminant validity via HTMT and Fornell-Larcker criteria) and the structural model (path coefficients, $R^2$ , effect sizes $f^2$ , and predictive relevance $Q^2$ ). Bootstrapping with 5,000 subsamples was used for hypothesis testing.

3. Key Contributions and Theoretical Framework
The study integrates Institutional Theory, the Technology Acceptance Model (TAM), and Tax Compliance Theory to construct a comprehensive framework for digital taxation in a developing economy.

Theoretical Extension: It extends TAM and Institutional Theory to the domain of digital taxation in Sub-Saharan Africa, testing their applicability in explaining how regulatory frameworks shape organizational behavior and how technology adoption influences compliance.
Mechanism Investigation: The research specifically investigates the mediating role of technology adoption and the moderating role of regulatory frameworks, addressing a gap in understanding how these factors interact to influence revenue mobilization.

4. Key Results and Findings
The structural model explained 47% of the variance in Revenue Mobilization Effectiveness ( $R^2 = 0.47$ ). The hypothesis testing yielded the following results:

Direct Effects (Supported):
- Taxpayer Compliance Behavior: Found to have the strongest positive direct effect on revenue mobilization effectiveness ( $\beta = 0.27, p < .001$ ).
- Tax Authority Digital Readiness: Significantly and positively affects revenue mobilization ( $\beta = 0.20, p = .01$ ), indicating that institutional capacity to deploy digital infrastructure is a key predictor.
- Perceived Fairness of the Tax System: Exerts a significant positive direct effect ( $\beta = 0.16, p = .04$ ), though it is the weakest of the three direct predictors.
Mediation Effect (Unsupported):
- Technology Adoption: The hypothesis that technology adoption mediates the relationship between compliance behavior and revenue mobilization was not supported ( $\beta = 0.06, p = .13$ ). While compliance behavior strongly predicts technology adoption, this adoption does not significantly translate into improved revenue mobilization effectiveness through the indirect path alone. The authors suggest this may be due to a lack of interoperability between taxpayer systems and GRA infrastructure or that technology adoption captures broad digital tool use rather than specific compliance-facilitating integration.
Moderation Effect (Supported):
- Regulatory Framework: Significantly moderates the relationship between Tax Authority Digital Readiness and Revenue Mobilization Effectiveness ( $\beta = 0.08, p = .02$ ). The positive impact of digital readiness is amplified when supported by a robust regulatory framework. This interaction term produced a large effect size ( $f^2 = 0.32$ ).

5. Significance and Implications
The paper claims immediate implications for the reform of the GRA, digital taxation policy, and tax administration capability in similar sub-Saharan African countries.

Policy Implications: The findings suggest that demand-side compliance promotion (education, transparency, fairness) should be a primary revenue lever. Crucially, the study posits that regulatory reform and digital infrastructure investment must proceed in parallel; investing in digital capacity without a supportive legal framework yields attenuated returns.
Practical Application: The study underscores the significance of taxpayer awareness, digital literacy, and capacity-building within the revenue authority to leverage the advantages of the digital economy for taxation. It notes that technologies such as the Electronic Tax Filing System and the Ghana Revenue Authority's official mobile applications for online payments are relevant tools for addressing challenges like the digital divide, infrastructure deficits, and policy gaps, though these were identified as contextual enablers rather than empirical results of the PLS-SEM analysis.
Contribution to Discourse: The research contributes to the ongoing discourse on digital economy taxation by providing insights for policymakers seeking to harness technology for tax optimization and sustainable revenue mobilization in emerging economies. It highlights that digital administrative capacity is most productive within a legally enabling institutional environment.

6. Limitations
The authors acknowledge three principal limitations: the cross-sectional design precludes causal inference; the non-random purposive sampling limits external generalizability; and the estimated model SRMR (0.11) suggests some structural constraints may not perfectly fit the data, indicating potential unmodeled pathways.

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