Ghana will implement a new Value Added Tax (VAT) system from January 1, 2026, which officials describe as a “novelty” aimed at simplifying compliance for businesses and boosting government revenue.
Dominic Naab, Acting Head of Strategy and Research at the Ghana Revenue Authority (GRA), said: “Some businesses are not able to calculate it [current VAT regime] and creates problem with tax compliance so this new VAT we are going to start from January 1, 2026 is a novelty. It has looked at the challenges of this one and has improved upon it,” he added.
The new VAT system is intended to make it easier for businesses to comply, reduce errors, and improve overall revenue collection. Many small and medium-sized enterprises have previously struggled with complicated calculations under the old framework, leading to delays and non-compliance.
Finance Minister Dr. Cassiel Ato Forson, during the 2026 Budget presentation, announced accompanying measures, including the reduction of the effective VAT rate from 21.9% to 20%, raising the VAT registration threshold from GH₵200,000 to GH₵750,000, and extending VAT zero-rating on locally manufactured textiles to 2028. He also confirmed the abolition of the COVID-19 levy, which will return GH₵3.7 billion to households and businesses.
However, the Ghana Union of Traders’ Association (GUTA) has raised concerns about the reforms. The group warned that the sudden shift under the new VAT system could “cripple SMEs,” highlighting that many small traders have operated under simpler flat-rate VAT schemes and may struggle to adjust to the new calculations.
GUTA also argued that the uneven application of the VAT rules could create unfair competition in the retail sector, as some traders may be exempt due to the raised threshold while others are required to charge full VAT. The association warned that this could lead to distorted market dynamics, higher operational costs, and potentially higher prices for consumers.
In addition, GUTA cautioned that many small businesses may be pushed further into the informal economy to avoid compliance, undermining the government’s objective of expanding the tax base. The group called for more education, training, and support for traders to ensure smooth implementation and prevent market disruptions.
Notwithstanding GUTA’s concerns, officials say the reforms are expected to encourage more businesses to formalize, improve compliance, and expand the tax base.
By simplifying VAT obligations, companies previously struggling with the system can now meet requirements more easily, helping the government strengthen domestic revenue.
Businesses are being urged to familiarize themselves with the new VAT system ahead of January 1, 2026, to ensure smooth compliance from day one.
