VAT rate reduced to 20% under new tax reforms effective 2026

The VAT rate has been reduced to 20 percent as part of sweeping tax reforms set to take effect from January 1, 2026, the Ghana Revenue Authority has announced.

In a public notice to VAT-registered taxpayers, the GRA said the reduction is intended to ease the tax burden on households and businesses while improving efficiency and fairness in VAT administration.

“The VAT rate has been reduced to 20% to ease the tax burden on households and businesses,” the Authority stated.

The reforms follow the passage of the Value Added Tax Act, 2025 (Act 1151), which introduces significant changes to Ghana’s VAT system.

Alongside the rate reduction, the threshold for VAT registration for businesses dealing in goods has been increased sharply from GH¢200,000 to GH¢750,000, a move expected to exclude many small businesses from mandatory registration.

“The threshold for VAT registration for businesses who deal in goods has been increased from GH¢200,000 to GH¢750,000,” the GRA noted, describing the change as part of efforts to simplify compliance and reduce administrative pressure on small enterprises.

The Authority also announced the abolition of the COVID-19 Health Recovery Levy, which was introduced during the pandemic.

“The COVID-19 Health Recovery Levy has been abolished,” the notice said, ending an additional charge that had remained in place after the peak of the health crisis.

Another key change is the re-coupling of the National Health Insurance Levy (NHIL) and the GETFund levy to allow for input tax credit claims.

According to the GRA, “GETFund and NHIL levies will be treated as input tax deductions,” a move expected to improve cash flow for VAT-registered businesses.

In a major structural shift, the VAT Flat Rate Scheme has also been scrapped. “The VAT Flat Rate Scheme has been abolished with the introduction of a unified and more transparent VAT structure,” the Authority said.

The GRA explained that the reforms are designed “to simplify the VAT system, promote equity, improve administrative efficiency, and encourage voluntary tax compliance.”

It urged taxpayers, employers, accountants, auditors, importers, exporters and tax consultants to familiarise themselves with the changes ahead of implementation.

The Authority said all measures under the new VAT Act will take effect on January 1, 2026, and encouraged the public to seek clarification through its taxpayer service centres and official support lines as the transition approaches.