Ghana’s 2025 VAT Reform: Key Changes and IMF Guidance

August 13, 2025

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Following the IMF's recommendations on addressing tax neutrality concerns regarding the imposition of three cascading taxes alongside VAT, the Ghanaian government, in its March Budget, stated that it will address the raised issues. Accordingly, in its recently published 2025 Mid-Year Budget Review (Mid-year Budget) report, the Ghanaian government reaffirms its commitment to the tax initiatives introduced in the 2025 Budget Statement, including those related to VAT.

Key VAT Measures From the Mid-year Budget

The IMF recommended that the Ghanaian government address the issue of imposing three cascading taxes alongside VAT: the 2.5% GETFund levy, the 2.5% National Health Insurance Levy (NHIL), and the 1% COVID-19 levy.

Faced with the criticism, the Ghanaian government, in its March Budget, stated that it will consider repealing the COVID-19 levy and separating GETfund and NHIL from VAT. Additionally, the government announced that it will consider measures to lower the VAT burden for households and a review of the VAT flat rate regime.

The newly published Mid-year Budget report confirms that the government will reduce the effective VAT rate and repeal the COVID-19 levy. Furthermore, the government plans to remove the punitive cascading effect of the GETFund and NHIL levies.

Other VAT measures from the Mid-year Budget report include the removal of the 3% and 5% VAT flat rates, unification of all VAT rates into a standard VAT rate, an increase in the VAT registration threshold currently set at GHS 200,000 (approximately USD 19,000), the establishment of more effective measures to boost voluntary compliance rates, and the introduction of fiscal electronic device requirements.

Conclusion

Ghana’s 2025 Mid-Year Budget marks a decisive step toward aligning its VAT system with international best practices and the IMF’s recommendations. The new VAT law, which will amend the existing rules and regulations and reform the VAT system, is scheduled to be presented to Parliament by October 2025. However, while the announced reform promises to improve tax neutrality and encourage voluntary compliance, its effectiveness will hinge on careful implementation and sustained policy commitment.

Source: Government of Ghana - 2025 Mid-Year Fiscal Policy Review

What are the main VAT changes in Ghana’s 2025 Mid-Year Budget?

The budget includes repealing the COVID-19 levy, reducing the effective VAT rate, removing cascading GETFund and NHIL levies, unifying VAT rates, raising the registration threshold, and introducing electronic fiscal devices.

Why is Ghana repealing the COVID-19 levy?

The repeal aims to reduce the overall VAT burden on households and address IMF concerns about tax neutrality, as the levy contributed to a cascading tax effect.

How will the VAT registration threshold change?

The threshold will be increased from GHS 200,000 (around USD 19,000) to a higher amount, easing compliance for small businesses and focusing tax administration on larger enterprises.

What does the IMF recommend for Ghana’s VAT system?

The IMF recommends removing cascading taxes like GETFund and NHIL from VAT, repealing the COVID-19 levy, and aligning VAT rules with international best practices to improve neutrality.

When will the new VAT law be presented to Parliament?

The government plans to present the new VAT law, which will amend current regulations, to Parliament by October 2025.

How will the reforms encourage voluntary VAT compliance?

The reforms introduce clearer tax rules, remove punitive cascading effects, raise the threshold to reduce the burden on smaller businesses, and require fiscal electronic devices to improve transparency.

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