Government to Cut Effective VAT Rate to 20% From 2026
Businesses in Ghana will see some relief on their tax burden from 2026, as the government moves to reduce the effective Value Added Tax (VAT) rate from 22 percent to 20 percent.
The reduction will be captured in the 2026 Budget, expected to be presented to Parliament in October this year by Finance Minister, Dr. Ato Forson.
Currently, businesses pay about 22 percent as the effective VAT rate due to a combination of levies and surcharges. However, ongoing reforms aimed at simplifying the VAT regime and tax regulations will see the rate lowered from next year.
Commissioner General of the Ghana Revenue Authority (GRA), Anthony Sarpong, who disclosed this on PM Express on Thursday, August 21, 2025, said the government is committed to easing the tax burden on businesses.
“The new VAT bill should be ready by September this year and that should help the Finance Minister lay it before the end of 2025,” Mr Sarpong noted. He added that the reforms will also decouple the various levies that have historically pushed up the final VAT rate.
The standard VAT rate currently stands at 15 percent, following a parliamentary amendment. In addition, consumers and businesses face separate levies: the National Health Insurance Levy (2.5%), the Ghana Education Trust Fund Levy (2.5%), and the COVID-19 Health Recovery Levy (1%). These combine to raise the effective VAT paid by registered businesses to around 22 percent.
Ongoing VAT reforms
Mr Sarpong confirmed that the GRA has made significant progress in finalising reforms to simplify Ghana’s VAT laws. He revealed that government is set to remove the COVID-19 levy, with revised VAT regulations and the removal bill expected to be presented to Parliament before the close of 2025, although implementation will begin in 2026.
Rejecting claims that a 20 percent effective rate is still too high, the GRA boss argued that improved compliance could pave the way for further reductions in the future.
“We are working very hard to improve compliance and that could see government reduce the rate further going forward,” he said.
The Commissioner General further highlighted that the GRA has intensified education efforts to help businesses understand tax laws, a move he said would strengthen compliance and enhance revenue mobilisation.
