Collins Sefa The Ghana Revenue Authority (GRA) has outlined sweeping reforms to the Value-Added Tax (VAT) system, set to take effect from January 1, 2026, marking a significant shift in how businesses calculate, report and administer the tax.
The changes, announced as part of a nationwide public information campaign, introduce new VAT rates, higher registration thresholds, expanded input tax deductions and enhanced digital compliance measures aimed at simplifying administration and easing the tax burden on businesses and consumers.
A central feature of the reforms is the repeal of the COVID-19 Health Recovery Levy. The GRA confirmed that the temporary 1 percent levy, introduced during the pandemic, will no longer form part of VAT calculations.
“The 1% COVID-19 Levy has been removed from VAT computation,” the Authority stated, noting that the move will directly reduce the overall tax burden on taxable goods and services.
Another major adjustment is the significant increase in the VAT registration threshold. From January 2026, only businesses with an annual taxable turnover exceeding GH¢750,000 will be required to register for VAT, up from the previous threshold of GH¢200,000. The GRA said the change is expected to relieve many small and medium-sized enterprises of the administrative demands associated with VAT compliance.
For businesses that remain within the VAT system, the GRA has abolished the 3 percent VAT Flat Rate Scheme and replaced it with a unified VAT structure. Under the new system, VAT will be charged at a combined rate of 20 percent, broken down into three clearly defined components: 15 percent VAT, 2.5 percent National Health Insurance Levy (NHIL), and 2.5 percent Ghana Education Trust Fund (GETFund) Levy.
These components must be displayed separately on receipts to improve transparency and consumer awareness. The GRA stressed that the reform does not amount to a tax increase, but rather a restructuring of existing levies. According to the Authority, prices of VAT-able goods and services are projected to decline by approximately 1.92 percent in 2026 as a result of the changes.
The reforms also expand input tax recovery for VAT-registered businesses. Firms will now be allowed to claim input tax credits on NHIL and GETFund levies, enabling them to recover the full 20 percent charged on eligible purchases. The GRA said this measure is expected to improve business cash flow and reduce net VAT liabilities.
Sector-specific incentives have also been introduced. Reconnaissance and prospecting activities in the mining sector will no longer attract VAT, while the zero-rated VAT status for locally produced textiles has been extended until 2028 to support domestic manufacturing.
To strengthen compliance and administration, the GRA is rolling out Fiscal Electronic Devices (FEDs) for VAT-registered businesses. These devices will support real-time transaction reporting and improve tax monitoring. The Authority is also deploying broader digital VAT solutions to capture revenue from cross-border digital transactions.
In addition, a VAT Reward Scheme will be introduced to encourage consumers to request VAT receipts and businesses to issue compliant invoices. The GRA said incentives under the scheme are intended to promote voluntary compliance and strengthen the VAT value chain.
The Authority has urged businesses and taxpayers to familiarise themselves with the new VAT framework ahead of implementation, as it positions the reforms as a key step toward a simpler, more transparent and growth-supportive tax system.
