Editorial: Deeper public education on VAT reforms needed

Concerns over a possible increase in consumer prices and market distortion following implementation of the new Value Added Tax (VAT) regime have been debunked by the Ghana Revenue Authority (GRA).

It is to be recalled that GRA rolled out major VAT reforms since January 1, 2026 under the Value Added Tax Act, 2025 (Act 1151), streamlining the system to a 20 percent effective rate.

This reform abolished the COVID-19 Health Recovery Levy and VAT Flat Rate Scheme (VFRS), raised the registration threshold for goods to GH¢750,000 and allowed full input tax deductions for the National Health Insurance Levy (NHIL) and GETFund Levy.

However, a section of the business community – the Abossey Okai Spare-Parts Dealers Association – has raised concerns that the new regime will lead to higher consumer prices, distort market competition and unfairly burden spare-parts traders.

In a bid to clarify these concerns, GRA said they were based on a misunderstanding of how the revised VAT system operates. It explained that under the old flat rate scheme, traders paid 21.9 percent input VAT on purchases which was not deductible – thereby embedding the tax in their cost.

Under the new regime, the 20 percent input VAT is fully deductible; allowing traders to reclaim it and operate on a lower cost base. It said non-registered traders will still pay VAT on purchases but cannot claim input tax, while registered traders reclaim input VAT and charge output VAT – resulting in similar final prices for consumers.

Thankfully, GRA has established a joint technical team with the Ghana Union of Traders’ Associations (GUTA) to provide guidance on VAT record-keeping, input tax claims and correct pricing structures.

The Authority is prepared to extend similar support to the Abossey Okai traders and other groups.

The new VAT regime forms part of broader tax reforms aimed at simplifying compliance, improving transparency and reducing embedded costs within Ghana’s tax system.

As these concerns crop up from time to time, it is the view of this Paper that intensive public education on the VAT reforms is required as implementation is on-going to disabuse the minds of those holding negative views.

It certainly will bring stakeholders up to speed and align with the new reforms.

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