Domestic VAT Collections surge 34% as consumer spending rebounds

Ghana’s domestic Value Added Tax (VAT) collections surged by 33.6 percent in the first five months of 2025, reaching GH¢8.31 billion compared to GH¢6.22 billion during the same period last year, according to the Bank of Ghana’s July Monetary Policy Report.

The central bank attributed the strong performance to a rebound in consumer demand, improved tax compliance, and steady growth in retail sales.

Between January and May 2025, retail sales rose cumulatively by 35.7 percent — a clear sign of rising household spending and a sustained recovery in private consumption.

In May alone, retail sales grew 38.6 percent year-on-year to GH¢277.62 million, up from GH¢200.27 million in May 2024. Month-on-month figures also showed a 4.6 percent increase, from GH¢265.46 million in April to GH¢277.62 million in May.

Domestic VAT performance mirrored this positive trend, climbing 30.1 percent year-on-year in May to GH¢1.77 billion. The report linked this growth to stronger economic activity, improved consumer confidence, and more efficient tax administration.

The data suggests a gradual but steady rebound in domestic demand, supported by price stability and moderate gains in disposable income.

However, economists caution that sustaining this momentum will require continued fiscal discipline, measures to curb inflation, and policies that enhance household purchasing power to keep consumer confidence high.