Ghana’s Value Added Tax (VAT) system is set for a significant overhaul, with the effective rate expected to drop from 22 percent to 20 percent starting in 2026, according to Ghana Revenue Authority (GRA) Commissioner-General Anthony Kwasi Sarpong.
The reduction is part of broader reforms aimed at simplifying VAT, easing business costs, and modernizing tax administration across the country.
The anticipated changes were disclosed during JoyNews’ PM Express Business Edition, a discussion closely followed by the High Street Journal. The Commissioner-General explained that the current VAT system, despite a standard rate of 15 percent, has become complicated due to additional levies, including the National Health Insurance Levy (NHIL), the Ghana Education Trust Fund (GETFund) levy, and the COVID-19 Health Recovery Levy (COVID-19 HRL).
These overlapping charges have pushed the effective VAT rate to around 22 percent, creating distortions in pricing, increasing business costs, and complicating compliance.
Sarpong emphasized that the government is committed to reducing this burden. He explained that the ongoing reforms will decouple these levies and consolidate VAT calculations to simplify the system.
“The new VAT bill should be ready by September this year and that should help the Finance Minister lay it before the end of 2025,” he noted, signaling that implementation could begin at the start of 2026.
Breaking down the current VAT structure, the standard VAT rate stands at 15 percent, with NHIL and GETFund levies each at 2.5 percent, and the COVID-19 HRL at 1 percent. These charges are calculated on the taxable value of goods and services, adding to the final cost borne by consumers and businesses. The planned reforms aim to remove overlapping levies and reduce the effective rate to a simplified 20 percent, which includes the standard VAT plus mandatory contributions.
The Commissioner-General stressed that the reforms go beyond merely adjusting percentages. They are part of a holistic modernization effort that combines policy, legal, administrative, and technological measures. “We are currently at the last phase of engagement, and everything should be finalized by September this year,” he said. “We have also come very far in removing the COVID-19 Levy as well.”
Sarpong also addressed concerns that a 20 percent effective VAT rate might still be high. He dismissed the notion, highlighting that improved compliance and streamlined administration could pave the way for further reductions in the future. “We are working very hard to improve compliance and that could see government reduce the rate further going forward,” he added.
A key component of the reforms is technology. The 2016 Fiscal Electronic Devices Act, designed to digitize VAT transactions, is yet to be fully implemented. Once deployed, the system will allow real-time monitoring of VAT payments, help expand the taxpayer base, and block loopholes, reducing administrative burdens for businesses.
These reforms are aligned with broader economic goals: creating a stable, predictable, and business-friendly tax environment, encouraging investment, and strengthening domestic revenue mobilization. The Finance Minister, Dr. Ato Forson, is expected to present the revised VAT bill, including the removal of the COVID-19 levy, to parliament later this year, with full implementation anticipated in 2026.
The simplified VAT system, he explained, is designed to make taxation fairer, more transparent, and more predictable, ultimately benefiting businesses, consumers, and the Ghanaian economy at large.