Finance Minister Announces Reduction in Effective VAT Rate to 20%; Says Reforms to Return GHS 5.7 Billion to Businesses, Households
Minister for Finance, Dr Cassiel Ato Forson, has announced a comprehensive set of Value Added Tax (VAT) reforms aimed at making Ghana’s tax system more equitable, transparent, and business-friendly.
Presenting the 2026 Budget Statement and Economic Policy themed “The Ghana We Want” to Parliament on Thursday, November 13, 2025, Dr Forson said the reforms are the outcome of months of detailed analysis and broad consultations with key stakeholders across the economy.
He explained that the new VAT framework is designed to support Ghana’s economic transformation agenda by simplifying compliance, reducing the cost of doing business, and providing significant relief to individuals and enterprises.
“After months of detailed analysis and broad consultations with stakeholders, we have completed the design of a modernised VAT system fit for Ghana’s economic transformation agenda,” he said.
The proposed VAT reforms, according to Dr Forson, include:
The abolition of the COVID-19 Health Recovery Levy;
The abolition of the decoupling of the GETFund and NHIL levies from the VAT base, allowing both to be subject to input tax deductions;
The abolition of VAT on reconnaissance and prospecting of minerals;
A reduction of the effective VAT rate from 21.9% to 20%;
An increase in the VAT registration threshold from GH¢200,000 to GH¢750,000; and
An extension of VAT zero-rating on locally manufactured textiles to 2028.
Dr Forson noted that the reforms are expected to put GH¢3.7 billion back into the pockets of individuals and businesses in 2026 alone through the removal of the COVID-19 levy.
He further disclosed that allowing input-output deductibility for the GETFund and NHIL levies will reduce the cost of doing business by about 5 percent, resulting in total savings of GH¢5.7 billion for businesses and households.
“These VAT reforms will make Ghana a more business-friendly economy and create opportunities for business expansion and more jobs,” Dr Forson told Parliament.
