Ghana has officially implemented the Value Added Tax Act, 2025 (Act 1151). This legislation represents a landmark shift in the nation’s fiscal policy, designed to modernize the tax system, enhance transparency through digitization, and significantly reduce the cost of doing business for international trade partners.

Understanding these changes is vital for optimizing import-export operations and ensuring compliance with the new digital standards.

1. The Core Pillar: A Unified 20% Standard Rate

The primary objective of Act 1151 is the simplification of the tax structure. Previously, the “cascading” nature of separate levies created an effective tax burden of nearly 22%.

• Unified Rate: The standard VAT rate is now set at a flat 20%.
• Levy Integration: The National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levy have been “recoupled.” Unlike the old system where these were separate sunk costs, they are now integrated into the VAT framework, allowing businesses to claim them as Input Tax Credits.
• Abolition of the COVID-19 Levy: The 1% Health Recovery Levy has been permanently repealed to lower the overall tax burden on consumers and businesses alike.

2. Strategic Impact on International Trade

For Importers to Ghana

The new Act is a significant win for importers. By making the NHIL and GETFund levies deductible, the government has removed the hidden “tax on tax.”

• Reduced Landing Costs: Importers pay the 20% VAT at the point of entry but can now offset this against the VAT they collect on sales. This change is estimated to reduce the effective tax burden for compliant importers by approximately 6%.
• Threshold Update: The VAT registration threshold for goods has been raised to GH¢750,000, allowing smaller importers more flexibility before entering the full VAT regime.

For Exporters from Ghana

To encourage local production and global trade, Act 1151 reinforces the Zero-Rating principle.

• Zero-Rating (0%): Goods exported from Ghana are taxed at 0%. This ensures that Ghanaian products remain price-competitive in international markets.
• Input Tax Recovery: Exporters can reclaim 100% of the VAT paid on local inputs (such as raw materials, electricity, and logistics) used to produce those exports, effectively removing domestic tax from the final export price.

3. The Digital Shift: E-VAT and E-Invoicing

Act 1151 mandates a transition to a fully digital environment. The Ghana Revenue Authority (GRA) now utilizes an E-VAT system to monitor transactions in real-time.

• Mandatory E-Invoicing: All VAT-registered businesses must issue electronic invoices through GRA-certified systems.
• Abolition of the Flat Rate Scheme: The 3% and 4% Flat Rate Schemes (VFRS) have been largely abolished. Most businesses are now required to operate under the standard 20% regime to ensure full transparency and eligibility for input tax credits.

4. Comparative Summary: Old vs. New

5. Resources

For official inquiries and professional guidance regarding the implementation of Act 1151, consult the following bodies:

• Ghana Revenue Authority (GRA): gra.gov.gh
• Chartered Institute of Taxation, Ghana (CITG): taxghana.org

Regulatory Compliance Disclaimer

This article is provided for informational and educational purposes only and does not constitute legal, financial, or professional tax advice. Tax laws and government regulations in Ghana are subject to frequent updates and administrative interpretations by the Ghana Revenue Authority (GRA). It is essential to verify all details, obtain the latest gazetted copy of Act 1151, and consult with a licensed tax practitioner or a member of the Chartered Institute of Taxation, Ghana (CITG) before making business or investment decisions. Neither the author nor the publisher assumes liability for actions taken based on this content.