The Ghana Revenue Authority (GRA) has provided further clarification on the implementation of the new 20 per cent Value Added Tax (VAT) rate.
It explained that the 20 per cent rate was the result of a unified calculation comprising a 15 per cent standard VAT, a 2.5 per cent National Health Insurance Levy (NHIL), and a 2.5 per cent Ghana Education Trust Fund (GETFund) Levy.
In release cited by the Ghana News Agency, the Authority emphasised that the new rate was designed to simplify the tax system and provide relief to both consumers and the business community.
The new rate, which took effect on January 1, 2026, follows the passage of the Value Added Tax Act, 2025 (Act 1151), which replaced an earlier complex structure that saw effective rates climb as high as 21.9 per cent due to the cascading effect of multiple levies.
That included the abolishment of the one per cent COVID-19 Health Recovery Levy by the Government, which was previously a non-recoverable cost for businesses.
A key highlight of the clarification was the re-coupling of the NHIL and GETFund levies with the VAT base.
Under the previous system, these levies were decoupled, meaning businesses could not claim them as input tax credits, often leading to increased prices for the final consumer.
The release said the new framework restored the ability of registered taxpayers to claim input tax credits on those levies, which the Authority said “eliminates the cascading effect where tax was being charged on top of tax, thereby reducing the overall cost of doing business.”
The GRA had also significantly increased the VAT registration threshold. Businesses dealing in goods now only had to register for VAT if their annual turnover reached GH₵750,000, a sharp increase from the previous GH₵200,000 limit.
“This move is expected to exempt thousands of micro and small enterprises from the administrative burden of VAT compliance, allowing them to remain competitive in the local market,” the release said.
Mr Anthony Sarpong, the Commissioner-General of the GRA, has urged all registered taxpayers to update their invoicing systems, including the Fiscal Electronic Devices (FEDs), to reflect the new 20 per cent rate.
He said while the reforms aimed to provide relief, it would remain relentless in enforcing domestic tax compliance to meet the 2026 revenue targets.
He reminded the public that the VAT Flat Rate Scheme had been abolished in favour of the unified regime to ensure transparency across all sectors.
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