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Ghana Finance: Value Added Tax Changes

Overview of Policy Changes

The Value Added Tax (VAT) Act, 2025 (Act 1151) took effect on 1st January 2026.  It revises the Value Added Tax Act 2013 (Act 870), overhauling the VAT system to simplify taxation, stimulate economic activity, and reduce the cost of doing business and cost of living for households. 

The legislation makes the following key changes to the VAT: 
1.    Effective VAT Rate Adjusted through Abolition of the COVID-19 levy: It reduces the effective VAT burden from approximately 21.9% to 20% by abolishing the 1% COVID levy and integrating key levies back into the VAT base.  This reflects a shift away from pandemic-era revenue measures.  Ghana’s Finance Ministry estimates that removing this levy will return approximately 3.7 billion Ghanaian cedis to households and businesses in 2026 alone. 

2.    Structural Simplification: It simplifies the VAT computation system so that the traditional VAT (15%), National Health Insurance Levy (NHIL, 2.5%) and GETFund Levy (2.5%) are all calculated on the same tax base, eliminating the cascading tax effects that previously increased the overall tax charge. 

3.    Threshold Increase for Registration: It raises the VAT registration threshold for businesses dealing in goods from GH¢200,000 to GH¢750,000 in annual sales, reducing compliance obligations for micro and small enterprises. 

4.    Elimination of Flat Rate Scheme: It removes the 3% flat rate on goods and 5% flat rate on immovable property, moving to a more unified VAT structure. Please consult this article and a tax advisor for more details. 

5.    Mining Sector Changes: It abolishes the VAT on mineral exploration and prospecting.   

6.    Digital Services Trade: The new VAT rates will also apply to Ghana’s VAT on digital services.  Please see CS Ghana’s older market intelligence on that tax.  In addition, for electronic communications services such as calls, data, and SMS, tax authorities assess the 5% communications services tax which is added to the cost to arrive at the taxable value before charging VAT and levies.  

Compliance and Administration:

The re-integration of levies (NHIL and GETFund) into the VAT base and allowance for input tax deductions is expected to improve tax neutrality and reduce the administrative burden on businesses, potentially enhancing compliance and revenue quality over time. 

More information about the administration of the Value Added Tax in Ghana can be found at the Ghana Revenue Authority website at: VAT – GRA.  The Ghana Revenue Service has published guidelines at: https://gra.gov.gh/wp-content/uploads/2026/01/VAT-Guidelines-for-VAT-ACT-1151.pdf  

Please see the Commercial Service Ghana’s Business Service Providers’ list for professional services providers in the taxation area. 

For more information about doing business in Ghana, please contact Office.Accra@trade.gov. Please click here to see Commercial Service Ghana’s other market intelligence reporting.