Ghana has introduced major Value Added Tax (VAT) reforms in its 2026 budget. The reforms aim to simplify the tax system, reduce compliance burdens, and boost economic growth. These changes take effect from January 1, 2026 and represent one of the biggest updates to the country’s VAT framework.
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Key VAT Reforms in Ghana
Rate Reduction and Simplification
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The standard VAT rate is reduced from 21.9% to 20%.
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The GETFund and NHIL levies are removed from the VAT base.
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The COVID-19 Levy is abolished.
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The flat-rate VAT system is replaced by a single, unified rate of 20%. This makes VAT simpler and more transparent.
VAT Registration Threshold
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The VAT registration threshold rises from GH¢200,000 to GH¢750,000.
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Small and medium enterprises (SMEs) benefit from reduced compliance burdens.
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Businesses below the threshold are no longer required to register for VAT.
Sector-Specific Changes
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Mining: VAT on mineral reconnaissance and exploration is abolished to attract new investments.
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Textiles: Zero-rating for locally manufactured textiles is extended until 2028 to support the domestic industry.
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Automotive: Zero-rating for locally assembled vehicles under the Ghana Automotive Development Programme expires on December 31, 2025.
Impact of the VAT Reforms
Consumers
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Price stability is expected as the COVID-19 Levy is removed and businesses can reclaim NHIL and GETFund.
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The unified VAT rate improves tax transparency for consumers.
Businesses
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Compliance is simplified for SMEs due to the higher registration threshold.
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Businesses can now claim input tax credits for NHIL and GETFund.
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Some businesses may face market distortions between GH¢500,000 and GH¢750,000 turnover and need to manage sales carefully.
Economy
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Revenue collection is expected to improve under the Ghana Revenue Authority (GRA).
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Reducing the tax burden on consumers and businesses may stimulate economic growth.
