Ghana will overhaul its value-added tax (VAT) system from January 1, 2026, cutting the standard VAT rate, abolishing the COVID-19 Health Recovery Levy and scrapping a flat-rate scheme for retailers, the Ghana Revenue Authority (GRA) said in a notice issued to taxpayers.
The reforms follow the passage of the Value Added Tax Act, 2025 (Act 1151), which the tax authority said is aimed at easing the burden on households and businesses while simplifying administration and improving compliance.
Under the changes, the core VAT rate will be reduced to 20 percent. The GRA said the cut is intended to support economic activity by lowering consumption costs at a time when households and firms are facing persistent cost pressures.
“The VAT rate has been reduced to 20 percent to ease the tax burden on households and businesses,” the authority said in its statement.
The reforms include a significant change for small and medium-sized enterprises. The VAT registration threshold for businesses dealing in goods will rise sharply, from 200,000 Ghana cedis to 750,000 cedis in annual turnover. The measure is expected to remove thousands of small traders from the VAT net, reducing compliance costs for micro and small businesses.
Analysts say the higher threshold could help informal businesses transition gradually into the formal tax system, although it may also narrow the short-term tax base.
The GRA also announced the abolition of the COVID-19 Health Recovery Levy, which was introduced during the pandemic to help fund health and economic response measures. Its removal marks the end of one of the emergency fiscal tools adopted during the crisis.
In addition, the authority said the National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levy will be “re-coupled” with VAT. This change will allow businesses to claim input tax credits on these levies, which had previously been treated separately.
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“GETFund and NHIL levies will be treated as input tax deductions,” the GRA said, a move expected to improve cash flow for VAT-registered businesses.
Another major structural shift is the abolition of the VAT Flat Rate Scheme (VFRS), which applied mainly to retailers. The GRA said the scheme will be replaced by a single, unified VAT structure to improve transparency and reduce distortions in the tax system.
“The VAT Flat Rate Scheme has been abolished with the introduction of a unified and more transparent VAT structure,” the notice said.
The tax authority said the new VAT regime will take effect on January 1, 2026, leaving businesses with a short window to adjust their systems and pricing.
The GRA said the reforms are designed to simplify the VAT system, promote equity, enhance administrative efficiency and encourage voluntary compliance. It urged VAT-registered taxpayers, employers, accountants, auditors, importers, exporters and tax consultants to familiarise themselves with the changes ahead of implementation.
For further guidance, the authority advised taxpayers to contact its service centres or use its toll-free and digital support channels.
