Finance Minister Dr Cassiel Ato Forson has announced the establishment of a VAT reform task force to spearhead comprehensive reforms in Ghana’s Value Added Tax (VAT) system.
This initiative aims to address distortions, reduce the tax burden on businesses and households, and streamline the VAT regime.
Presenting the 2025 Budget in Parliament on Tuesday, March 11, Dr Forson stated, “We commit to the people of Ghana and the business community that we will undertake comprehensive VAT reforms this year to review the current distortions and cascading structure of the VAT regime.”
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He highlighted that Ghana’s effective VAT rate currently stands at 22%, as the 2.5% GETFund Levy, 2.5% National Health Insurance Levy (NHIL), and 1% COVID-19 Levy are added to the base VAT rate of 15%. However, businesses are not permitted to claim input VAT on NHIL, GETFund Levy, and the COVID-19 Levy, compounding the tax burden.
Dr Forson described the current VAT system as inefficient and distorted, blending VAT and sales tax principles while incorporating multiple tax rates.
To address these challenges, he said the government has requested technical assistance from the International Monetary Fund’s Fiscal Affairs Department, with an IMF mission expected to begin work in April 2025.
Ahead of the IMF’s recommendations, Dr Forson outlined six key areas that the VAT reforms—expected to be completed this year—will cover: abolishing the COVID-19 levy, reversing the decoupling of GETFund and NHIL from VAT, reducing the effective VAT rate for households and businesses, reversing the VAT flat rate regime, raising the VAT registration threshold to exempt micro and small businesses from VAT collection and enhancing VAT compliance through public education and awareness campaigns.
Dr Forson assured that the VAT Reform Task Force will hold broad consultations with key stakeholders to incorporate their inputs before finalising the reforms.
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