Ghana’s Parliament has passed the Value Added Tax (VAT) Bill, 2025, marking a significant overhaul of the country’s VAT regime.
The new law replaces the existing flat-rate system with a unified structure, aiming to simplify the tax framework and improve clarity, consistency, and legal certainty.
However, some stakeholders, like the Ghana Union of Traders Associations (GUTA), have raised concerns about potential unfair competition and market distortions.
“The reforms will make compliance easier, not harder, and will not introduce new tax burdens on businesses or consumers”, Deputy Finance Minister, Thomas Nyarko Ampem, said while dismissing these concerns.
The reforms fulfil a major pledge announced by the government in the 2025 Budget and Mid-Year Fiscal Policy Review to make Ghana’s VAT system fairer, simpler, and more growth-focused.
The Finance Minister, Dr Cassiel Ato Forson, who led the policy revisions, said the new legislation will remove distortions, reduce cascading effects, promote compliance, and improve economic efficiency for businesses and households.
“We promised to abolish the COVID-19 levy. With the support of this House, I am happy to announce today that it is abolished,” Dr Forson declared on the floor of Parliament.
Under the new VAT structure, the COVID-19 levy is removed entirely and is expected to return GH¢3.7 billion to individuals and businesses in 2026 alone.
The bill also abolishes the decoupling of the Ghana Education Trust Fund (GETFund) and the National Health Insurance Levy (NHIL) from the VAT base, meaning both are now eligible for input tax deductions, a change projected to reduce the cost of doing business by about 5 per cent.
The government says that cumulatively, the full reform package will give back nearly GH¢6 billion to the Ghanaian economy.
Other approved measures under the VAT Bill include:
• Abolition of VAT on mineral reconnaissance and prospecting, aimed at reviving exploration investment and reversing years of stagnation in greenfield development.
• Reduction of the effective VAT rate from 21.9 per cent to 20 per cent.
• Increase in the VAT registration threshold from GH¢200,000 to GH¢750,000, relieving thousands of micro and small enterprises from mandatory VAT compliance.
• Extension of zero-rated VAT on locally manufactured textiles to December 2028, protecting more than 2,000 jobs and enhancing competitiveness in the domestic garment market.
According to the Finance Minister, the previous taxation threshold had eroded significantly in real value since 2015, forcing many micro-businesses into VAT registration and raising administrative costs.
The new threshold, he said, restores fairness and frees small enterprises to grow without heavy compliance burdens.
Dr Forson emphasised that the VAT overhaul goes beyond tax adjustments, positioning Ghana for a digitally enhanced revenue future.
The rollout will introduce Fiscal Electronic Devices (FEDs) to track taxable transactions, digital VAT collection on cross-border e-commerce, and a new VAT reward scheme encouraging consumers to demand receipts and help police compliance.
The government believes these interventions will boost investor confidence, support local industry, and stimulate job creation, particularly in mining and textiles, where policy distortions have long restricted growth.
“These reforms mark a turning point in Ghana’s value-added tax administration,” the Finance Minister said. “This is not just a tax reform, it is a step toward a more just, predictable, and business-friendly economy.”
The Ghana Revenue Authority has begun a nationwide sensitisation campaign ahead of implementation, ensuring businesses and consumers are fully prepared for the transition.
The passage of the VAT Bill, 2025, signals a decisive shift in Ghana’s tax policy, one aimed at easing the cost of doing business, empowering industry, and anchoring long-term fiscal stability.
Demands for broader dialogue on new VAT reforms
Meanwhile, the Africa Centre for Tax Policy Research (ACTOR) is calling for a structured dialogue between the Ghana Union of Traders Associations (GUTA), the Ministry of Finance, and the Ghana Revenue Authority (GRA) over the government’s new VAT reforms and the planned rollout of Artificial Intelligence (AI) systems at the ports.
GUTA has raised concerns that the new VAT threshold of GH¢750,000, which requires businesses exceeding it to pay 20% VAT, could create unfair competition, splitting the market between traders who charge VAT and those who do not.
Reacting to the call in a statement issued on 24th November, 2025, the policy think tank, ACTOR, said the threshold is not ‘a sudden hike but a return to the long-standing real value of VAT entry points when Ghana’s volatile exchange rate is considered.’
The think tank explained that VAT thresholds exist in Ghana and globally to protect small businesses and allow tax authorities to focus on medium and large taxpayers who generate the most revenue.
ACTOR noted that the dollar value of the threshold has remained stable over the years, with the proposed GH¢750,000 roughly equivalent to USD 62,500 within historical ranges. Their analysis also showed the real price difference between VAT-registered and non-registered traders is about 1.5%.
The think tank also disagreed with GUTA’s suggestion that all traders should be allowed to opt into the Modified Tax System (MTS), saying thresholds cannot be optional without risking system collapse. The MTS, ACTOR stressed, is meant only for micro and small businesses below the VAT threshold.
While defending the reform, ACTOR acknowledged traders’ concerns and urged the GRA to strengthen monitoring and turnover verification to prevent VAT evasion.
The group concluded that strong collaboration among stakeholders is key to a smooth rollout, minimising market distortions and building trust in the tax system.
By Adnan Adams Mohammed
