Major relief for businesses – GNCCI welcomes new VAT reforms
The Ghana National Chamber of Commerce and Industry (GNCCI), has welcomed the Value Added Tax (VAT) reform announced in the 2026 budget, describing it as a solution to what has been a persistent challenge for businesses across the country.
The Chamber cited years of frustration with the previous VAT system, which it described as a complex and costly tax structure that directly increased business costs.
During an appearance on Joy News’ PM Express on Monday, the Chief Executive Officer of the GNCCI, Mark Badu Aboagye revealed that the Chamber has been advocating for VAT reforms for about four years, consistently raising concerns in every budget cycle about the need for a more streamlined approach.
“This has been one of our major concerns for the past three to four years, and in all the budgets, one of our major inputs is for the VAT to be reformed,” Aboagye explained, noting that while the government announced intentions to reform and possibly reduce the effective VAT rate in last year’s budget, it took nearly a full year for the changes to appear in the current budget proposal.
The GNCCI Chief Executive revealed that the previous VAT system created significant operational challenges for members, primarily due to its complexity. He explained that the existing structure combined standard VAT with various straight-line levies, creating what he described as a computational nightmare for many business owners.
This, he said, presented not just an inconvenience but also created barriers to compliance, even among businesses willing to meet their tax obligations.
“The computation itself was a challenge for most of our members. Some of them, it’s not that they don’t want to pay, but how to even compute it was a challenge,” he emphasized, and highlighted that the previous system imposed direct costs on businesses through various levies, including the National Health Insurance Levy (NHIL), the Ghana Education Trust Fund (GETFund), and the recently scrapped COVID-19 levy.
These levies, he said, could not be claimed as input VAT, meaning businesses had to absorb these costs directly, ultimately affecting their operational expenses and, by extension, consumer prices.
The reformed system seeks to address these concerns by consolidating these various levies into the standard VAT structure. This, in effect, will allow business owners to claim input VAT on these previously non-claimable amounts, effectively removing the direct cost burden on their operations.
“Now that we have consolidated, it is part of the standard VAT, it becomes a VAT that a business person can also claim an input VAT. So, it doesn’t become a direct cost to businesses again,” he clarified explained, expressing that this could potentially impact pricing structures.
The proposed reforms set to take effect from January 1, 2026, will merge the various levies into a single, fully deductible VAT system, reduce the effective VAT rate to a straightforward 20% down from the existing 21.9%, abolish the COVID-19 Health Recovery Levy, and extend input tax deductibility to the NHIL and GETFund Levy components.
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