Ghana Raises VAT Registration Threshold, Cuts Rates Under Sweeping Tax Reforms
Ghana is rolling out major reforms to its Value Added Tax (VAT) regime from January 1, 2026, in a move aimed at easing the tax burden on businesses and households while simplifying compliance, the Ghana Revenue Authority (GRA) has announced.
The reforms follow the passage of the Value Added Tax Act, 2025 (Act 1151), which introduces structural changes to how VAT is administered and collected across the economy.
One of the most significant changes is the increase in the VAT registration threshold for goods-based businesses, which has been raised from GH¢200,000 to GH¢750,000 in annual turnover. The move is expected to reduce compliance costs for small and micro-enterprises by removing many from the VAT net.
In addition, the government has abolished the COVID-19 Health Recovery Levy, ending a temporary tax measure introduced during the pandemic period.
The reforms also address long-standing concerns around VAT credits. Under the new framework, the National Health Insurance Levy (NHIL) and the GETFund levy have been re-coupled, allowing businesses to claim input tax credits on these components. Both levies will now be treated as input tax deductions, improving cash flow for VAT-registered firms.
To further ease the tax burden, the VAT rate has been reduced to 20 percent, a measure authorities say is intended to support consumption, improve business margins, and stimulate economic activity.
In a major structural shift, the VAT Flat Rate Scheme (VFRS) has been abolished, paving the way for a unified and more transparent VAT system. The GRA says the change will simplify administration, reduce distortions, and improve equity across sectors.
According to the Authority, the reforms are designed to simplify the VAT system, enhance administrative efficiency, and encourage voluntary compliance, particularly among small and medium-sized enterprises.
The GRA has urged VAT-registered taxpayers, employers, accountants, auditors, importers, exporters, clearing agents, and tax consultants to familiarise themselves with the new provisions ahead of implementation.
The Authority says it will continue stakeholder engagement and taxpayer education to ensure a smooth transition as the new VAT framework takes effect in 2026.
