Gov’t cuts VAT to 20%, raises registration threshold to GH¢750,000

The government has announced a 1.9% reduction in the Value Added Tax (VAT) rate, dropping it from 21.9% to 20% in a series of tax reforms aimed at creating a fairer and more business-friendly economy, Finance Minster Dr. Cassiel Ato Forson has revealed.

As part of the reforms outlined in the 2026 Budget statement, the government has also raised the VAT registration threshold by 275%, from GH¢200,000 to GH¢750,000 as part of efforts designed to ease the burden on small and medium enterprises.

Presenting the budget to Parliament on Thursday, November 13, Dr. Cassiel Ato Forson emphasized that these reforms mark a pivotal point in the country’s tax administration and are designed to make compliance easier for businesses while boosting government revenue.

“This is not just a tax reform. It is a step toward a more just, predictable, and business-friendly economy, it honors our pledge to lighten the load on honest taxpayers while building a stronger foundation for national development,” he said, adding that the said adjustments will return about GH¢5.7 billion to households and businesses.

In a bid to stimulate investment, the government has also scrapped VAT on mineral exploration and reconnaissance activities, while extending the zero-rating for locally manufactured textiles to 2028 to protect local jobs.

To improve compliance and transparency, the finance minister further revealed the government’s plans to introduce digital VAT monitoring systems, fiscal electronic devices, and a VAT reward scheme, adding that new systems will be implemented at ports to combat smuggling, under-invoicing, and misclassification.

This, he said will address persistent revenue leakages and enhance customs efficiency.

“Through these reforms, we are not merely raising revenue,” Dr. Forson emphasized. “We are rebuilding trust between citizens and the state, ensuring that every cedi collected is used to build the Ghana we want.”