VAT Reforms a “Huge Relief” for Ghanaian Businesses – Prof. William Coffie

VAT Reforms a “Huge Relief” for Ghanaian Businesses – Prof. William Coffie

Professor William Coffie, a Financial Economist and Head of the Department of Accounting at the University of Ghana Business School (UGBS), has described the government’s Value Added Tax (VAT) reforms as a significant relief for businesses in Ghana.

Speaking at the LIMA Partners 2025 Budget Forum, Professor Coffie noted that prior to the reforms, additional levies had effectively increased the input VAT beyond 21%, while the output VAT remained at 15%, creating an imbalance in the tax system.

“The concept of VAT is that input and output taxes should be equal,” he stated. “However, with the additional levies imposed, the cost of doing business increased. The reforms, therefore, provide much-needed relief for business owners.”

Addressing Tax Compliance and Revenue Mobilization

Beyond VAT reforms, Professor Coffie highlighted the need for stricter enforcement of tax policies, particularly in areas such as bonded warehouses. He noted that some firms exploit these warehouses to evade taxes, a loophole that requires urgent attention.

He also advocated for innovative measures to encourage tax compliance among micro, small, and medium-sized enterprises (MSMEs). He proposed leveraging institutions such as the Ghana Enterprise Agency (GEA), the Microfinance and Small Loans Centre (MASLOC), and the upcoming Women’s Development Bank to formalize the informal sector.

“We always talk about formalizing the informal sector so they can pay taxes, but what concrete steps have we taken?” he questioned. “One approach could be to offer financial support to small businesses that demonstrate consistent tax compliance over three years. This model has been successfully implemented in the UK, where compliant businesses receive grants or low-interest loans from financial institutions.”

Support for Agriculture and Employment Programs

Professor Coffie also praised the government’s allocation to the Agriculture for Economic Transformation agenda, emphasizing its potential to curb inflation by stabilizing food prices. He explained that targeted support for the agricultural sector would reduce the cost of producing and importing essential goods.

Additionally, he acknowledged the budgetary allocations for programs such as the National Accreditation Programme, the Adwuma Wura Programme, and the National Codes Programme. He described these initiatives as strategic investments in skills development, which would not only enhance youth employability but also contribute to long-term revenue growth for the economy.

“The government is introducing several interventions that will ultimately maximize future revenue by equipping beneficiaries with the skills needed to either gain employment or start their own businesses,” he said.

The remarks by Professor Coffie come as stakeholders continue to analyze the implications of the 2025 budget, with a focus on tax policy, economic growth, and sustainable revenue mobilization.