The Ghana Revenue Authority (GRA) and the Ghana Union of Traders’ Association (GUTA) have announced that, to ensure the effective rollout of the new VAT law (VAT Act, 2025, Act 1151), traders will continue to charge an effective 20 per cent Value Added Tax (VAT) in the first quarter of 2026.

The new VAT law abolishes the 2.5 percent COVID-19 Health Recovery Levy, raises the VAT registration threshold for goods from GH¢200,000 to GH¢750,000, introduces digital invoicing and compliance systems, and sets a unified effective VAT rate of 20 per cent, comprising VAT, the National Health Insurance Levy (NHIL), and the Ghana Education Trust Fund (GETFund) Levy.

According to both institutions, the move is intended to allow room for feedback and adjustments while ensuring compliance with the law.

GUTA and GRA held a meeting in Accra on Wednesday, January 7, 2026, following widespread concerns raised over the possible impact of the implementation of the new VAT regime on thousands of traders, particularly those who previously operated under the VAT Flat Rate Scheme. The scheme was a simplified method of VAT collection and accounting, mainly applied to retailers of taxable goods with annual turnover above GH¢200,000 but not exceeding GH¢500,000. Under the system, traders charged a flat 4 per cent VAT/NHIL (plus the COVID-19 levy when it existed) instead of using the standard VAT system.

However, under the new interim arrangements, all eligible taxpayers, including GUTA members, will charge and account for VAT at the applicable effective rate of 20 per cent until the end of the first quarter of implementation.

Both GUTA and GRA also agreed to establish a collaborative technical team to address any potential challenges the new system may present. The team will focus on sector-level concerns such as VAT record-keeping, input VAT claims, and calculation methods, and will make recommendations for possible reviews based on practical challenges encountered on the ground.

Another effort to ensure the effective implementation of the new tax system, as proposed by the two groups, is the intensification of education and sensitisation programmes nationwide to enlighten traders and enable them to comply with the revised VAT framework.

The GRA pledged its readiness to provide the necessary technical assistance to traders, especially those transitioning from the flat rate scheme, and to adopt a collaborative approach to ensure a smooth transition. GUTA, on its part, urged members to comply with the law while engaging constructively with the tax authority.

Both organisations reaffirmed their commitment to sustained dialogue, stressing that the successful implementation of the VAT reforms is critical not only for traders and consumers but also for national development.

In December 2025, the GRA announced that the implementation of the value-added tax reforms was set to take effect from January 1, 2026.

The new VAT Commissioner for the Domestic Tax Revenue Division, Dr Martin Kolbil Yamborigya, explained that customers will now be required to pay 20 per cent instead of 21.9 per cent on goods and services.

“There will be a lot of benefits for the taxpayer because we have now recoupled the National Health Insurance Levy and the Ghana Education Trust Fund (GETFund). This will bring down the amount to be paid, resulting in savings for businesses, and the fact that it has become an input tax means it can be claimed at the end of the day,” he said.

Following the passage and presidential assent of the VAT Bill 2025 in November, after it was presented to Parliament during the 2026 Budget Statement and Economic Policy presentation, the new law was set to simplify Ghana’s tax framework, consolidate existing regulations, abolish the COVID-19 levy, and enhance compliance through digitalisation.

The reforms are aimed at promoting fairness and stimulating economic growth while strengthening domestic tax mobilisation. They also reflect recommendations from the International Monetary Fund (IMF) to reduce bureaucratic hurdles in revenue collection.

Earlier this year, President John Dramani Mahama’s administration repealed the betting tax, emissions tax, and other levies. The Electronic Transaction Levy (E-Levy), introduced in 2022, imposed a 1.5 per cent tax on electronic transactions. Although it was later reduced to 1 per cent, the levy remained unpopular, drawing criticism from businesses, consumers, and political stakeholders who argued that it stifled digital transactions and disproportionately affected low-income earners. Many contended that it placed an unnecessary burden on citizens.

The removal of the levy was a core pledge in the NDC’s manifesto, aimed at reducing the cost of living and encouraging business expansion. With the repeal bill now signed into law, many Ghanaians can breathe a sigh of relief.

Supporters of the repeal argue that eliminating these levies will promote digital transactions, stimulate economic activity, and improve disposable income for households and businesses. Meanwhile, the government has officially scrapped the COVID-19 Health Recovery Levy introduced during the pandemic era.

Introduced on March 31, 2021, under Act 1068 during the tenure of former President Nana Addo Dankwa Akufo-Addo, the levy imposed a 1 per cent charge on the supply of goods and services in Ghana, excluding certain items, as well as on imports of goods and services. According to the New Patriotic Party (NPP), the levy was intended to help the government raise funds to fight the pandemic and support recovery efforts.

However, presenting the 2026 Budget Statement and Economic Policy to Parliament on Thursday, November 11, Finance Minister Cassiel Ato Forson disclosed that the government had abolished the levy with immediate effect.

According to him, the move will save individuals and businesses GH¢3.7 billion in taxes—funds that can instead be invested back into businesses or personal ventures.