The Ghana Revenue Authority (GRA) has officially confirmed that the Value Added Tax Act, 2025 (Act 1151), will take effect on January 1, 2026.
This lead time is a deliberate move by the government to allow businesses, accountants, and the general public to transition smoothly into what is being described as a “sweeping reform” of the country’s consumption tax regime.
If you are a business owner, a tax professional, or a consumer, here is everything you need to know about the upcoming changes.
1. A New Standard VAT Rate
In a move to simplify the tax structure and ease the financial burden on households, the standard VAT rate has been adjusted to 20%.
While the headline figure is central to the reform, the GRA emphasizes that this change is part of a broader strategy to create a more transparent and equitable system for all players in the economy.
2. Higher Registration Thresholds
Small and micro-enterprises are among the biggest winners of Act 1151. The mandatory VAT registration threshold for businesses dealing in goods has seen a massive upward revision—moving from GH¢200,000 to GH¢750,000.
By exempting smaller players from the VAT net, the government aims to reduce the administrative and compliance costs that often stifle the growth of budding enterprises. This allows small businesses to focus on scaling rather than complex tax reporting.
3. The Return of Input Tax Credits (Re-coupling)
Perhaps the most significant technical change is the “re-coupling” of the National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levies.
Previously, these were “straight-line” levies that businesses could not claim back. Under the new Act, these levies will be integrated in a way that allows businesses to claim input tax credits.
This is a major relief for the private sector, as it prevents “tax on tax” (cascading) and improves the cash flow of VAT-registered entities.
4. The End of the COVID-19 Levy and Flat Rate Scheme
As the global economy moves further away from the pandemic era, the GRA has announced the abolition of the COVID-19 Health Recovery Levy. This removes an additional layer of tax that consumers have paid for several years.
Furthermore, the VAT Flat Rate Scheme has been abolished. The removal of the flat rate is intended to create a unified system where all registered taxpayers operate under the same standard credit-invoice mechanism, promoting transparency and fairness.
5. Transition and Preparation: The 2025 Window
The Authority is urging the following stakeholders to begin studying the new Act immediately:
- Employers and Business Owners: To update accounting software and pricing models.
- Accountants and Auditors: To understand the new credit-claim mechanisms.
- Importers, Exporters, and Clearing Agents: To adjust to the new documentation requirements at the ports.
Why the Change?
According to the GRA, the primary objectives of Act 1151 are efficiency, equity, and compliance. By simplifying the rules and removing “nuisance” layers of taxation, the government hopes to encourage more businesses to comply voluntarily.
This article was edited with AI and reviewed by human editors
