Finance Minister Dr. Cassiel Ato Forson has announced reforms to the country’s Value Added Tax (VAT) system, a move expected to inject GH¢5.7 billion back into the economy next year while reducing the cost of doing business by about 5 percent.
Presenting the reforms as part of the 2026 Budget Statement, Dr. Forson said the overhaul marks a decisive shift toward a fairer, simpler, and more efficient tax regime designed to support both fiscal stability and business growth.
“We pledged to remove distortions, address cascading effects inherent in the current VAT system, strengthen compliance, and create a tax regime that supports both business growth and fiscal stability,” Dr. Forson told Parliament. “Today, I am proud to report that we have delivered on that promise.”
Key VAT Reforms
The new VAT reform package, submitted to Parliament for approval, includes the following policy measures:
• Abolition of the COVID-19 Health Recovery Levy, putting GH¢3.7 billion back into the pockets of individuals and businesses in 2026 alone.
• Abolition of the decoupling of GETFund and NHIL levies from the VAT tax base, allowing both to qualify for input tax deductions.
• Abolition of VAT on mineral exploration and reconnaissance, to attract new investment in Ghana’s mining sector.
• Reduction of the effective VAT rate from 21.9 percent to 20 percent.
• Increase in the VAT registration threshold from GH¢200,000 to GH¢750,000, easing compliance for small enterprises.
• Extension of VAT zero-rating on locally manufactured textiles to December 2028.
“By abolishing the COVID-19 levy, government is putting GH¢3.7 billion in the pockets of individuals and businesses in 2026 alone,” the Minister said. “These reforms will make Ghana a more business-friendly economy and create the opportunity for business expansion and more jobs.”
Relief for Small and Medium Enterprises
Dr. Forson explained that the increase in the VAT registration threshold would help ease pressure on small and micro businesses that have been unfairly drawn into the VAT net due to inflation and currency depreciation.
“The VAT threshold has declined in real terms from GH¢200,000 in 2015 to approximately GH¢48,000 today,” he said. “This means small and micro businesses that were exempt in 2015 are now compelled to register and charge VAT. The increase will make VAT administration simpler and easier to implement.”
Boosting Investment and Industry
On the mining sector, the Minister said eliminating VAT on mineral exploration would “revive investor confidence, stimulate greenfield activity, and ensure the long-term sustainability of the country’s mining sector.”
He added that this measure would also promote responsible mining practices and help curb unregulated prospecting that harms the environment.
Dr. Forson also reaffirmed government’s support for the domestic textile industry, confirming the extension of VAT zero-rating for locally produced textiles for another three years.
“Government is resolute in supporting the domestic textile industry,” he said. “This decision protects over 2,000 direct jobs and supports expansion under the Ghana Textile and Garment Policy.”
Digital Tax Administration
As part of efforts to modernise tax collection and improve compliance, the government will deploy digital tools to strengthen VAT administration. These include:
• Digital solutions for monitoring VAT on cross-border e-commerce transactions.
• Fiscal Electronic Devices (FED) to track taxable sales in real time.
• A VAT reward scheme encouraging consumers to collect receipts and report non-compliance.
“We are not only seeking to change the policy and legal framework of the VAT regime,” Dr. Forson said. “We are also deploying electronic and digital solutions to improve VAT administration.”
Building a Fairer, More Predictable System
The Minister described the reforms as a landmark step toward a more equitable and transparent economy, balancing fiscal responsibility with business competitiveness.
“This is not just a tax reform,” he said. “It is a step toward a more just, predictable and business-friendly economy. It honours our pledge to lighten the load on honest taxpayers while building a stronger, fairer foundation for national development.”
