New VAT Act takes effect January 1, 2026 as GRA unveils major reforms

The Ghana Revenue Authority has announced that the Value Added Tax Act, 2025 Act 1151 will officially take effect on January 1, 2026, giving businesses and taxpayers time to adjust to far-reaching changes in the country’s VAT system.

In a public notice to VAT-registered taxpayers and the general public, the Authority said the new law introduces sweeping reforms aimed at simplifying VAT administration, improving efficiency and strengthening voluntary tax compliance. The changes are expected to significantly alter how VAT is charged, reported and credited across the economy.

A key feature of the new Act is a substantial increase in the VAT registration threshold for businesses dealing in goods. The threshold has been raised from GH¢200,000 to GH¢750,000, a move expected to reduce the compliance burden on micro and small enterprises by exempting more of them from mandatory VAT registration.

The GRA also announced the removal of the COVID-19 Health Recovery Levy, ending an additional consumption tax that was introduced during the pandemic period. The Authority said this measure is intended to ease the overall tax load on consumers and businesses.

Another major reform is the recoupling of the National Health Insurance Levy and the Ghana Education Trust Fund levies under the VAT system. This change will enable businesses to claim input tax credits, a benefit that was previously unavailable under the separated levy structure.

Under the revised VAT framework, the standard VAT rate has been reduced to 20 percent. According to the GRA, this reduction is designed to lessen the financial burden on households while also supporting business growth and competitiveness.

The VAT Flat Rate Scheme has also been abolished, clearing the way for a single, unified VAT system that the Authority says will be more transparent and easier to administer.

The GRA said the reforms are aimed at promoting fairness in the tax system, enhancing administrative efficiency and improving compliance levels among taxpayers nationwide.

It has urged employers, accountants, auditors, importers, exporters, clearing agents and tax consultants to familiarise themselves with the new provisions ahead of the January 2026 implementation.

Taxpayers who require further clarification have been encouraged to visit GRA Taxpayer Service Centres or make use of the Authority’s toll-free lines and digital support platforms as preparations intensify for the rollout of the new VAT Act.