The Minister of Finance, Dr Cassiel Ato Forson, has confirmed that the implementation of the new VAT reforms has officially begun, with households projected to save about GHȻ 6 billion by the end of 2026.
According to the Finance Minister, the reforms undertaken by the government are tax relief actions geared towards the ‘Resetting for Growth, Jobs and Economic Transformation.’ He emphasized that the government’s focus is to bring relief to the people of Ghana by supporting businesses and triggering transformation in key areas to promote growth.
The announcement of the new (Value Added Tax) VAT reforms is one anticipated since the latter part of 2025, with the Ghana Revenue Authority (GRA) embarking on several exercises to show their readiness and action plan for the implementation of the restructured tax system.
The new VAT reforms comprise the abolishment of some levies, the reduction of specific tax rates for special purposes, the replacement of staggered initiatives, and the effectiveness of revenue mobilization and collection.
Key Reforms Under the New VAT System to Note
According to Dr Ato Forson, it is key for every Ghanaian to know that “the COVID-19 [Health Recovery] Levy has been abolished, putting GHȻ 3.7 billion back into the pockets of individuals and businesses in 2026 alone.”
To ease the tax burden on households and businesses, he reminded Ghanaians of the reduction of the 20 percent VAT rate from the previous 21.9 percent.
“GETFund and NHIL Levies are now input output deductible, reducing the cost of doing business by about 5 percent,” the Minister said. This change follows the passage of the relevant amendment acts by Parliament in December 2025 and the official announcement by the Ghana Revenue Authority (GRA).
Previously, these levies were treated as non-deductible costs for businesses, which led to a cascading tax effect. The new reform integrates the 2.5% NHIL and 2.5% GETFund levies back into the Value Added Tax (VAT) structure, allowing businesses to claim input tax credits.
He further stated that businesses will now be registered only when their turnovers exceed GHȻ 750,000, which the previous bar stood at GHȻ 200,000. The increased VAT threshold exempts more Small and Medium Enterprises (SMEs). Growing businesses are supported to plowback profit for further expansion as they take off.
A unified and more transparent VAT structure has replaced the VAT Flat Rate Scheme. The new VAT structure involves accounting for the difference between output tax (VAT charged on sales) and input tax (VAT claimed on purchases), while the VAT Flat Rate Scheme requires businesses to pay a fixed percentage of their gross turnover to GRA, and generally not a reclaimable input tax.
Notable Economic Impact of New VAT Reforms
Aside from the relief and ease of financial pressure on households and businesses – Ghanaians get to share GHȻ 3.7 billion for the year 2026 from the abolished COVID-19 Levy, plus benefits from other reductions and replacements – the new VAT reforms make other essential impacts on the Ghanaian economy.
The new VAT reforms will assist business growth, especially for startups. This will encourage the innovation and entrepreneurial spirit of Ghanaians, especially the youth, to explore and implement new business ideas. While some of the reforms exempt some businesses from tax obligations, others provide growth opportunities. Generally, the cost of doing business is reduced while boosting enterprises.
Not only does the government aim to increase job creation with a conducive business environment to expand, but the new VAT reform will also support businesses in retaining employees and provide job protection.
The ease in the business environment will also improve compliance, another major objective of the new VAT reforms. Digital tools like the E-VAT system will enhance tax collection. All things being equal, the government will achieve its revenue targets as businesses will eagerly pay their taxes, complemented by the well-performing macroeconomic indicators and development.
These reforms, as highlighted by Dr Ato Forson, are part of the 2026 Budget he read in Parliament in November 2025. The objective of the government, as reiterated by the Finance Minister, is to simplify the tax system, promote fairness, and stimulate economic activity.
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