By default sharepoint has an hierarchy when tags are used. Is there a way we can make it as a flat taxonomy.

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SharePoint has by default a flat tagging system, if you mean in the sense of allowing user to add their own keyword to a document or a page. All of these keywords end up in the Managed Metadata Service Application’s System > Keywords Term Set. All user added keyword will end up in that specific Term Set.

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As for Organization controlled metadata such as organization tags, document type tags, project tags and everything else which is governed by Dedicated Super Users or Admins, they too can be in a flat non-hierarchical structure. It wouldn’t be very useful since your mixing projects with organizations and processes in a very un-useful way. As an example, you may want to use organizational tags for support of navigation. But it can be done in a flat manner, if you wish.

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