Government Unveils Sweeping VAT Reforms, Cuts Rates and Removes Levies to Boost Businesses and Households

By Samuel Asamoah 

Ghana’s Finance Minister, Dr. Cassiel Ato Baah Forson, has announced a major overhaul of the country’s Value Added Tax (VAT) regime, introducing wide-ranging reforms aimed at reducing the cost of doing business, stimulating investment, and easing tax burdens on households as part of the 2026 Budget Statement presented to Parliament on Friday.

The Finance Minister told Parliament that the government had fulfilled its earlier pledge to modernise the VAT system, describing the new measures as “a bold package of reforms” designed to make the tax regime fairer, simpler and more efficient. The reforms, he said, follow months of technical analysis and extensive stakeholder consultations.

Among the headline measures is the abolition of the COVID-19 Health Recovery Levy, a move expected to return GH¢3.7 billion to individuals and businesses in 2026. The Minister also announced the scrapping of the decoupling of the GETFund and National Health Insurance Levy (NHIL) from the VAT base—meaning both levies will again be subject to input tax deductions. According to him, this change alone will cut the cost of doing business by about 5 percent.

The package further includes a reduction of the effective VAT rate from 21.9 percent to 20 percent, abolition of VAT on mineral reconnaissance and prospecting, and an increase in the VAT registration threshold from GH¢200,000 to GH¢750,000. The Minister noted that the current threshold has eroded sharply in real terms since 2015, forcing many small and micro businesses into compulsory VAT registration and imposing unnecessary administrative burdens. The upward adjustment, he said, is expected to ease compliance pressures and simplify tax administration.

In all, the reforms are projected to inject GH¢5.7 billion back into the economy through savings for both businesses and households.

The Minister argued that abolishing VAT on early-stage mineral exploration is crucial to reviving investor interest in the mining sector. He said the tax had contributed to two decades of stagnation in exploration activities, and its removal is expected to stimulate new investments, promote responsible mining, and curb the uncontrolled prospecting that has harmed forests and water bodies.

The government has also extended the VAT zero-rating for locally manufactured textiles to December 2028, a measure aimed at strengthening an industry the Minister said has shown strong potential for expansion when supported with the right incentives. The extension is expected to protect over 2,000 direct jobs.

Beyond policy changes, the Finance Minister announced a push toward digitisation of VAT administration. The government will introduce systems to monitor and collect VAT on cross-border digital transactions by non-resident companies, operationalise Fiscal Electronic Devices (FEDs) to track taxable sales, and roll out a national VAT reward programme encouraging the public to demand receipts and support compliance.

“These reforms mark a turning point in Ghana’s value-added tax administration,” he told lawmakers, adding that they would enhance revenue mobilisation, strengthen fiscal credibility and create a more predictable environment for private sector growth.

The Ghana Revenue Authority is expected to embark on a comprehensive nationwide education campaign to ensure smooth implementation of the reforms.

The Minister concluded that the overhaul represents “a step toward a more just, predictable and business-friendly economy” and honours the government’s commitment to ease the burden on compliant taxpayers while supporting long-term national development.