Following the passage of the Value Added Tax Act, 2025 (Act 1151), which takes effect from January 1, 2026, the VAT rate has been cut to 20% from its previous rate of 21.9%.

This comes after the abolition of the COVID-19 Health Recovery Levy, marking an end to the pandemic-era tax measure.

GRA to implement new VAT reforms from January 1, 2026

In a public notice issued on its official website, the GRA said the new law introduces far-reaching changes aimed at simplifying VAT administration, improving efficiency, and promoting voluntary tax compliance.

Among the key reforms is an increase in the VAT registration threshold for businesses dealing in goods, which has been revised upward from GH₵200,000 to GH₵750,000.

Additionally, the Act provides for the recoupling of the National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levies, allowing taxpayers to claim input tax credits on these levies.

Under the new arrangement, both NHIL and GETFund levies will be treated as input tax deductions.

“The VAT rate remains at 15% while the NHIL and GETFund levies stay at 2.5% each, bringing the total effective VAT rate to 20%,” the statement read.

“This approach is designed to ease the tax burden on households and businesses while still supporting essential national programmes,” the statement explained.

The authority further announced the abolition of the VAT Flat Rate Scheme (VFRS), replacing it with a unified and more transparent VAT structure.

The GRA urged VAT-registered taxpayers, employers, accountants, auditors, importers, exporters, clearing agents, and tax consultants to take note of the reforms, stressing that the changes are designed to promote equity, enhance administrative efficiency, and strengthen compliance across the tax system.


ID/AE