Ghana’s 2026 VAT Update: Understand the New Rate and Its Business Impacts

Ghana is set to transform its tax landscape in 2026 with the introduction of a unified 20% Value Added Tax (VAT) rate, replacing the current complex regime of multiple levies (according to its Ministry of Finance and as contained in the 2026 presented budget to parliament). In a strategic move to spur business growth, the government has also announced the elimination of the COVID 19 Health Recovery Levy — a change that promises to inject GHS 3.7 billion back into the economy. These reforms aim to make VAT more transparent, reduce administrative burdens, and boost economic activity. For businesses operating in Ghana, understanding these changes — including their impact on NHIL and GETFund levies — is critical to preparing for the future.

What’s Changing: Key VAT Reforms for 2026

Here are the major reforms announced in the 2026 Budget Statement:

Reduction of the Effective VAT Rate to 20%

Currently, Ghana’s effective VAT rate is about 21.9%, resulting from the base rate of 15% plus levies such as NHIL, GETFund, and the COVID-19 Levy. The reform consolidates and simplifies this, reducing the rate to a flat 20% depending on their turnover.

This coming change also aligns with the objective of the Modified Tax Scheme.

Abolition of the COVID-19 Health Recovery Levy

The COVID-19 levy, which was introduced to help fund health recovery during the pandemic, will be scrapped by the end of 2025. Abolishing this levy will return GHS 3.7 billion to businesses and consumers.

Input Credit for NHIL and GETFund Levies

The GETFund and NHIL levies will be decoupled from the VAT base, meaning they will become eligible for input tax credits. This change is expected to reduce the cost of doing business by about 5%, according to the Finance Minister. For details, see NHIL and GETFund levies.

Higher VAT Registration Threshold

The threshold for mandatory VAT registration will be increased from GHS 200,000 to GHS 750,000, easing regulatory burden on small and micro enterprises and simplifying VAT compliance.

Removal of VAT on Mineral Reconnaissance and Prospecting

VAT will no longer be charged on mineral exploration and prospecting activities. This reform is expected to boost mining investment and improve sector competitiveness.

Extension of Zero-Rating on Locally Manufactured Textiles

The zero rate on locally made textiles will be extended until December 2028 to support the textile industry.

Digitalization & Compliance Tools

The government plans to roll out Fiscal Electronic Devices (FEDs) to better monitor transactions. A VAT Reward Scheme will encourage consumers to ask for receipts, improving transaction traceability. These reforms align with long-standing calls, including from the IMF, for e-invoicing (E-VAT).

Public Education and Awareness

The Ghana Revenue Authority (GRA) will conduct a nationwide education campaign to ensure businesses and consumers understand the changes and their implications.

Why These Reforms Matter

Fairness & Equity: Eliminating the COVID-19 levy and allowing input deductions for NHIL and GETFund reduces the burden on VAT-registered businesses.
Simplicity: A single effective rate (20%) simplifies VAT calculation and compliance. Removal of flat-rate schemes further reduces complexity.
Growth & Investment: Removing VAT on mineral prospecting can attract more mining investment.
Support for SMEs: Raising the registration threshold prevents small businesses from being overburdened with VAT paperwork.
Transparency & Accountability: Digital tools (FEDs, e-invoicing) and consumer incentives (VAT receipt rewards) improve compliance and traceability.

Potential Challenges & Risks

Implementation Risk: Rolling out FEDs and e-invoicing may face logistical challenges. Public education must be effective to avoid confusion and non-compliance.
Revenue Risk: Revenue shortfalls must be managed. Success depends on improved compliance, not just rate reduction.
Behavioral Risk: Businesses may delay adjusting pricing or operations. Consumers’ purchasing behavior may change unexpectedly.

What Businesses Should Do to Prepare

Review Current Pricing Models: Reassess pricing to account for the new 20% VAT, abolished COVID-19 Levy, and input credits.
Train Your Finance Team: Educate staff and update VAT-compliance processes and invoicing systems.
Upgrade Technology: Prepare systems for e-invoicing and integration with FEDs.
Engage with GRA: Participate in consultations and follow public education campaigns.
Communicate with Customers: Inform customers about VAT changes and encourage collection of receipts.

Learn More About NHIL & GETFund Levies

For a deeper dive, visit our full guide on NHIL & GETFund Levies in Ghana’s New 20% VAT System.

Ghana's Modified Tax Scheme

Frequently Asked Questions — Ghana's New VAT System (Effective 2026)

1. What is the new VAT rate in Ghana for 2026?

Ghana will introduce a flat 20% VAT rate beginning in January 2026. This forms part of a major tax reform intended to simplify compliance, eliminate overlaps, and improve efficiency in revenue administration.

2. Is the COVID-19 Health Recovery Levy being removed?

Yes. The COVID-19 Health Recovery Levy (1%) will be scrapped by the end of 2025, a move expected to return approximately GHS 3.7 billion into the economy to support growth and household spending.

3. How will the new VAT rate affect pricing for businesses?

The unified 20% VAT structure will make pricing calculations more predictable. Businesses will need to adjust pricing models, cost build-ups, quotation templates, POS systems, and invoicing processes before the 2026 rollout.

4. What is the new VAT registration threshold in Ghana?

The VAT registration threshold will increase from GHS 200,000 to GHS 750,000 annually. This change is designed to ease compliance pressure on small businesses while improving focus on medium-to-large taxpayers.

5. Will NHIL and GETFund levies still apply under the new VAT system?

Yes. NHIL (2.5%) and GETFund (2.5%) will still apply, but they will be decoupled from the VAT base and become input-tax-deductible, reducing cumulative tax costs by about 5% for VAT-registered businesses.

6. What should businesses do to prepare for the new system?

Businesses should begin early preparation by updating accounting and ERP systems, reviewing VAT pricing formulas, training staff on the new rules, implementing e-invoicing tools where applicable, and following GRA circulars and transitional guidelines.