Finance Minister Dr. Cassiel Ato Forson announced comprehensive Value Added Tax (VAT) reforms in the 2025 budget statement. The reforms aim to simplify the tax system, reduce the cost of doing business, and improve overall tax compliance.
At the heart of the reforms is the abolition of the COVID-19 Levy, which will immediately lower the effective VAT rate. Additionally, the government plans to reverse the decoupling of the GETFund and NHIL from VAT, allowing businesses to claim input tax credits on these levies. This move is expected to reduce costs for businesses and ultimately lower prices for consumers.
Other key reforms include reducing the effective VAT rate for households and businesses, reversing the VAT flat rate regime, and upwardly adjusting the VAT registration threshold to exempt micro and small businesses from VAT collection. The government also plans to improve tax compliance through public education and awareness campaigns.
These reforms are expected to have far-reaching effects on Ghana’s economy. By simplifying the tax system and reducing the tax burden, the government hopes to stimulate economic growth, encourage investment, and promote tax compliance. The reforms are also expected to make Ghana a more attractive destination for businesses and investors.
The government has requested technical assistance from the International Monetary Fund’s (IMF) Fiscal Affairs Department to guide the VAT reforms. An IMF mission is expected to begin in April 2025, and their recommendations will help shape the final reforms.
Ruth Abla ADJORLOLO
