Deloitte Ghana warns that the government’s new Value Added Tax (VAT) reforms will only succeed if Ghana expands its narrow tax base and strengthens compliance.
In its analysis of the 2026 Budget, the professional services firm acknowledges that the reforms are a welcome response to long-standing complaints from businesses. However, it cautions that smoother administration alone will not automatically generate higher revenue. The real impact depends on how effectively the government can bring more economic actors into the formal tax space.
The 2026 Budget, presented to Parliament by Finance Minister Dr. Cassiel Ato Forson last week, introduced several changes aimed at simplifying VAT administration. These include a redesigned filing system for small businesses, a simplified process for claiming input tax credits, and clearer categorisation of exempt, zero-rated, and standard-rated goods and services. The effective VAT rate has been reduced from 21.9 percent to 20 percent, while the registration threshold has increased from GH¢200,000 to GH¢750,000.
Business associations such as the Ghana Union of Traders’ Associations (GUTA), the Association of Ghana Industries (AGI), and others have consistently complained that the current VAT regime is confusing and overly demanding. They have particularly criticised its cascading effect, where businesses end up paying tax on tax. The reforms, developed with support from the International Monetary Fund (IMF), are meant to remove these pain points while promoting fairness and making the tax system more predictable.
But Deloitte Ghana stresses that broadening the tax base remains the most critical factor for success. With only a fraction of eligible taxpayers currently registered for VAT, the burden falls heavily on a small group of compliant businesses.
“Government’s reform of the current VAT system is a sound policy and a good response to concerns raised by private sector businesses regarding the pain points in the VAT administration during the National Economic Forum and other fora,” Deloitte indicated in its analysis sighted by The High Street Journal. “However, its success will depend on broadening the tax base, improving administration and ease of compliance, and maintaining strong enforcement. These actions will help safeguard revenue, promote fairness, and support Ghana’s economic transformation agenda.”
According to the firm, a stronger enforcement regime, simpler registration processes, and better taxpayer education will be essential to bring more businesses into the system. Without these steps, the promise of the reforms will fall short, and Ghana may not realise the full revenue benefits. The changes are not a quick fix to improving revenues, Deloitte stressed.
Finance Minister Cassiel Ato Forson acknowledged that the reforms mark a turning point in Ghana’s VAT administration, describing them as part of a broader agenda to reset the economy for growth, jobs, and transformation. The measures are expected to return about GH¢5.7 billion to businesses and households in 2026, with GH¢3.7 billion of that tied to the abolition of the COVID-19 Health Recovery Levy.
The government has also announced plans to deploy digital VAT monitoring systems, fiscal electronic devices, and a VAT reward scheme to improve compliance and transparency. The Ministry of Finance will undertake a comprehensive review of key tax laws, including the Income Tax Act, the Customs Act, and the Excise Duty Act, to align them with international standards.
Industry leaders have welcomed the reforms but remain cautious about implementation. The success of the 2026 Budget’s tax measures will largely depend on whether the government can deliver on its commitments in the first half of the year, when businesses will be watching closely to see if targets are being met.
Source: newsghana.com.gh
