For years, critics argued that Ghana’s value-added tax system was a case study in complexity. They argued that it stifled business growth and inflated consumer prices.
That changed on January 1, 2026.
With the implementation of the Value Added Tax Act, 2025 (Act 1151), the government has launched its most ambitious fiscal reform in a decade. The goal: simplify the tax code, lower the effective burden on households, and bring a massive informal economy into the light.
Here is the breakdown of the new regime and what it means for the bottom line.
1. The Effective Rate Cut
On paper, the headline VAT rate remains at 15%. However, the effective tax burden has dropped from 21.9% to 20%.
- The Abolition of the COVID Levy: The 1% COVID-19 Health Recovery Levy, a pandemic-era fixture, has been repealed.
- Decoupling is Dead: In a win for the private sector, the government “recoupled” the National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levy.
- Input Tax Credits: Previously, these levies were “straight-line” costs that businesses couldn’t reclaim. Now, they are fully deductible as input tax, preventing the “tax on tax” effect that previously drove up retail prices.
2. A Higher Bar for Small Business
In a move to shield micro-enterprises, the Ghana Revenue Authority (GRA) has more than tripled the VAT registration threshold.
- New Threshold: GHC 750,000 (approx. $45,000).
- Old Threshold: GHC 200,000.
- The Impact: Thousands of small traders are now exempt from the administrative nightmare of VAT filing, allowing the GRA to focus enforcement on higher-yield corporate taxpayers.
3. The End of the “Flat Rate”
The 3% VAT Flat Rate Scheme, once popular with retailers for its simplicity but criticized for creating price distortions, has been abolished.
All registered businesses now operate under a unified standard regime. This ensures “parity” across the market, though some smaller retailers may face a learning curve as they transition to the standard invoice-credit method.
4. Sector Winners and Losers
| Sector | Change | Impact |
| Mining | VAT on exploration removed | Aimed at reviving stalled prospecting projects. |
| Textiles | Zero-rating extended to 2028 | Protections for local manufacturers against cheap imports. |
| Insurance | 15% VAT on non-life premiums | Higher costs for fire/travel insurance (Motor insurance remains exempt). |
| E-Commerce | New digital collection tools | Tougher enforcement for cross-border digital services. |
The Bottom Line for Investors
The GRA estimates these reforms will return roughly GHC 6.5 billion to the pockets of consumers and businesses this year.
Early data from the first week of January shows retail prices at major Accra malls dipping by nearly 2% as computerized billing systems adjusted to the lower rate.
For the C-suite, the reform is a double-edged sword: while the lower effective rate and input credits improve cash flow, the GRA is simultaneously tightening the screws on compliance through the eVAT system, requiring real-time electronic invoicing for 2,000 of the country’s largest firms.
“This is a game-changer for revenue mobilization,” says GRA Commissioner-General Anthony Sarpong. “We are moving from a system of ‘nuisance’ taxes to one that rewards transparency.”
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This article was edited with AI and reviewed by human editors
