Ghana is currently losing approximately 60 percent of its potential Value Added Tax (VAT) revenue, primarily due to systemic inefficiencies and widespread non-compliance.

Thomas T. K. Agorsor, Head of the Domestic Tax Revenue Division (DTRD) Free Zones Office of the Ghana Revenue Authority (GRA), highlighted these challenges during a media engagement organized by the Ghana PortsandHarbours Authority (GPHA).

He noted that decades of amendments to VAT, particularly the decoupling of various levies, have created a “tax-on-tax” effect, raising operational costs for businesses and ultimately driving higher prices for consumers. This complexity has discouraged compliance and widened the tax gap.

Comprehensive VAT Reforms Introduced

In response, the Ministry of Finance has launched a major VAT reform aimed at consolidating previous amendments into a single, clear legal framework.

The new VAT Act 1151 of 2025 harmonizes VAT, the GETFund levy, and the National Health Insurance Levy into a standard 20 percent rate.

Key reforms include abolishing the COVID-19 levy, recoupling past levies, and raising the VAT registration threshold.

These measures are expected to reduce business costs, stabilize consumer prices, and simplify compliance procedures for medium and large enterprises, while small businesses will transition to the Modified Tax Scheme.

Expected Outcomes and Implementation

Officials, including Agorsor and Chief Revenue Officer David Lartey Quarcoopome, project that the reforms will narrow the VAT compliance gap from 60 percent to approximately 20 percent, boost Ghana’s tax-to-GDP ratio from 13 to 16 percent, and contribute to the government’s GH¢225 billion revenue target for 2026.

The GRA plans to support compliance through taxpayer education, digital payment platforms, electronic invoicing, and targeted market outreach, aiming to create a fair, predictable, and efficient VAT system that benefits both businesses and consumers.