The government has introduced sweeping reforms to the Value Added Tax (VAT) system, including the scrapping of the COVID-19 Health Recovery Levy and a reduction of the effective VAT rate from 21.9% to 20%.
The reforms, announced by Finance Minister Dr. Cassiel Ato Baah Forson during the presentation of the 2026 Budget Statement to Parliament on Thursday, are expected to save households and businesses an estimated GH¢6 billion.
Key components of the new VAT framework include:
-
Abolition of the decoupling of the GETFund and NHIL levies from the VAT base, allowing both to benefit from input tax deductions.
-
Removal of VAT on mineral reconnaissance and prospecting activities.
-
Increase in VAT registration threshold from GH¢200,000 to GH¢750,000.
-
Extension of VAT zero-rating on locally produced textiles to 2028.
Dr. Forson said the government conducted extensive consultations and analysis over several months to design a modernised VAT system aligned with the country’s economic transformation agenda.
He explained that reintroducing input-output deductibility for the GETFund and NHIL levies would lower business costs by about five per cent, making Ghana more business-friendly and enabling companies to expand and create more jobs.
On sector-specific benefits, the Minister noted that eliminating VAT on mineral exploration would help restore investor confidence, stimulate new projects, and support sustainable growth in the mining sector.
“This measure will promote responsible mining and curb haphazard prospecting that destroys forests and water bodies,” he said, adding that the change would help reverse the sharp decline in mineral exploration investment seen over the past two decades.
The domestic textile industry is also expected to benefit significantly from the extended zero-rating period, with Dr. Forson pledging further fiscal support to help local manufacturers scale up production.
He added that the government would implement digital and electronic tools to strengthen VAT administration, emphasising that the reforms go beyond policy adjustments to include a more efficient operational framework.
“The storm has passed. The foundation is firm. The horizon is bright,” Dr. Forson said. “Under the visionary leadership of President Mahama, we are building a Ghana that works for all and stands tall as a beacon of Africa’s renewal.”
Source: GNA
