Ghana’s New VAT and Tax Reforms: What Businesses Need to Know Ahead of 2026

Ghana is set to undergo one of its most significant tax overhauls in years following the announcement of sweeping VAT and tax reforms by Finance Minister Dr. Cassiel Ato Forson. As part of the government’s broader strategy to simplify taxation, ease the burden on businesses, and stimulate economic activity, these changes are expected to take effect from January 1, 2026, pending parliamentary approval.

The reforms were incorporated into the 2026 Budget and the accompanying new VAT Bill, completed in October 2025. For businesses, understanding the implications—and preparing early—is crucial. Below is a comprehensive breakdown of the proposed reforms and what they mean for the business community.

1. Reduction of the Effective VAT Rate to a Unified 20%

One of the most impactful reforms is the move from the current fragmented VAT structure to a single unified VAT rate of 20%, replacing the effective rate of 21.9%.

Why this matters for businesses

Simpler interpretation of VAT obligations

Reduced compliance complexities

A modest reduction in the overall tax burden on consumers and businesses

A more predictable pricing structure for both domestic and international investors

This shift is expected to streamline VAT administration and promote transparency in the tax system.

2. Abolition of the COVID-19 Health Recovery Levy (1%)

Introduced to support post-pandemic recovery, the 1% COVID-19 Levy has been a point of contention among businesses, largely due to its contribution to the overall tax-on-tax effect.

Business impact

Reduction in the cost of goods and services

Increased consumer purchasing power

Lower operating costs for companies affected by cascading taxes

Its abolition aligns with the government’s commitment to phasing out temporary levies introduced during extraordinary circumstances.

3. Removal of Cascading NHIL and GETFund Levies

The National Health Insurance Levy (NHIL) and GETFund Levy have long created cascading tax effects, as they were applied on top of VAT, increasing the final tax liability for businesses.

Key benefits

Elimination of the tax-on-tax burden

Simplified VAT computation

Better cash flow management for enterprises

Enhanced transparency in invoicing and pricing

This measure is particularly beneficial for SMEs and manufacturing firms heavily impacted by compounded levies.

4. Abolishment of the VAT Flat Rate Scheme (VFRS)

The government intends to scrap the VAT Flat Rate Scheme (VFRS) and replace it with the unified VAT system.

What this means

Businesses previously under VFRS can now claim input VAT, reducing their true tax burden

Eliminates distortions caused by VFRS in supply chains

Creates a level playing field between VFRS and standard-rate businesses

Enhances VAT creditability, boosting profitability

Retail and trading sectors stand to gain the most, as VFRS often inflated their tax liabilities.

5. Increased VAT Registration Threshold: GH¢200,000 → GH¢750,000

The new threshold dramatically raises the bar for compulsory VAT registration.

Implications for SMEs and micro-enterprises

Thousands of small businesses will no longer be required to register for VAT

Reduced administrative stress and compliance costs

A friendlier environment for business formalization

Encourages micro-enterprise growth without the fear of VAT complexities

For tax administrators, this could shift the focus to higher-value, more compliant taxpayers.

6. Additional Tax Removals: E-Levy, Betting Tax, and Emissions Levy

As part of the NDC government’s broader manifesto commitments, several unpopular taxes are set to be scrapped:

Electronic Transactions Levy (E-Levy)

10% tax on bet winnings

Emissions levy

Expected outcomes

Increased digital payment adoption due to removal of E-Levy barriers

Reduced compliance burden for fintechs and payment processors

A boost in consumer activity in the gaming and digital entertainment sectors

Clearer environmental levy frameworks without placing undue pressure on motorists and businesses

These changes reinforce the government’s focus on modernizing and rationalizing the tax structure.

Implementation Timeline

October 2025 – Completion of the new VAT Bill and inclusion in the 2026 Budget

January 1, 2026 – Targeted rollout of all reforms (pending parliamentary approval)

Ghana Revenue Authority (GRA) – Leading implementation, public education, and transition guidelines

Businesses should begin preparing now by reviewing pricing models, adjusting accounting systems, and engaging tax professionals to ensure compliance when the reforms take effect.

Conclusion: Positioning Businesses for a New Tax Era

Ghana’s new VAT and tax reforms represent a major step toward creating a more equitable, efficient, and business-friendly tax environment. With reductions in the effective VAT burden, removal of nuisance taxes, and simplification of compliance obligations, the reforms aim to improve competitiveness, stimulate investment, and support long-term economic growth.

For businesses, early preparation will be key. Reviewing systems, training staff, and staying informed will ensure a smooth transition into the new tax regime—and unlock opportunities presented by a more streamlined fiscal landscape.