Government has unveiled a sweeping package of Value Added Tax (VAT) and customs reforms aimed at improving tax compliance, broadening the tax base and increasing domestic revenue mobilisation without imposing higher tax rates on businesses and households.
Announced as part of the 2026 Mid-Year Fiscal Policy Review, the reforms form a key pillar of government’s strategy to raise non-oil tax revenue from 13.1 percent of GDP in 2025 to 14.1 percent in 2026 through improved administration, digitalisation and the closure of long-standing loopholes in the tax system.
Finance Minister Dr. Cassiel Ato Forson said the reforms are designed to eliminate distortions, improve efficiency, strengthen compliance and create a fairer business environment while protecting government revenues.
Government described its VAT reforms as the most ambitious restructuring of the tax since the system was introduced more than a decade ago.
The measures include the abolition of the COVID-19 Health Recovery Levy, the decoupling of the GETFund Levy and National Health Insurance Levy from the VAT base to enable input tax deductions, and a reduction in the effective VAT rate from 21.9 percent to 20 percent.
Authorities have also abolished VAT on reconnaissance and prospecting activities in the mining sector, increased the VAT registration threshold from GH¢200,000 to GH¢750,000, and extended the zero-rating of locally manufactured textiles until 2028.
According to the Finance Minister, the reforms are intended to reduce the tax burden on businesses, improve cash flow and encourage compliance while simplifying the VAT regime.
“These reforms have simplified the VAT system, removed distortions, lowered the tax burden and strengthened the foundation for improved compliance,” Dr. Forson told Parliament.
Beyond changes to the law, government is increasingly relying on technology to improve tax administration and reduce leakages.
A cross-border technology solution for collecting VAT from non-resident digital platforms was successfully piloted in April 2026 and is now moving toward nationwide deployment.
Government projects that the system will generate approximately GH¢2.3 billion in its first full year of operation, with revenues expected to expand by around 20 percent annually thereafter.
The initiative seeks to ensure that digital platforms earning income from Ghanaian consumers contribute their fair share of taxes, bringing the tax system more in line with the rapidly evolving digital economy.
Government is also advancing the rollout of Fiscal Electronic Devices (FEDs), which will enable real-time monitoring of taxable transactions and enhance VAT compliance nationwide. The pilot phase is currently at an advanced stage.
To encourage greater participation, authorities plan to introduce a VAT Reward Scheme that will provide incentives to consumers who request and retain valid VAT invoices.
The Finance Minister noted that Ghana currently loses an estimated 60 percent of its potential VAT revenue through non-compliance and systemic inefficiencies, making implementation of the reforms increasingly urgent.
Alongside the VAT changes, government has proposed extensive amendments to customs laws to curb tax evasion and strengthen border revenue collection.
The reforms follow concerns that significant volumes of imports entering through customs suspense regimes—including warehousing, transit, temporary admissions and free zones—have escaped duties and taxes. Between 2020 and 2025, about 37 percent of taxable imports passed through these arrangements.
Government argues that while the frameworks were originally designed to facilitate legitimate trade, they have increasingly been exploited to divert goods into the domestic market without payment of applicable duties.
To address the challenge, the proposed Customs Bill introduces statutory limits on warehousing periods, capping storage at three months for perishable goods, six months for general goods and twelve months for raw materials. Re-warehousing will also be restricted to a maximum of six months.
In addition, bonded warehouses will be required to operate electronic inventory systems linked directly to Customs, enabling real-time monitoring and audit controls.
Government also plans to introduce a First Port Duty Rule, under which duties on goods declared for transit become payable at the first port of entry. Officials believe the measure will eliminate one of the most common channels for false declarations and revenue leakages.
Further reforms will target the free zones regime, which government says has drifted from its original purpose of promoting export-led industrialisation. Authorities intend to strengthen controls on raw materials usage and prevent abuse of duty exemptions.
Customs oversight of import declarations will also be tightened through mandatory use of appropriate taxpayer identification numbers, stronger monitoring of Import Declaration Forms and improved valuation procedures.
In the downstream petroleum sector, government will enforce bank guarantees on refined petroleum product lifting and require product movements to be tracked electronically through approved distribution systems. Tax exemptions on bunkering services will also be removed to curb smuggling and protect revenue.
The reforms come as government seeks to demonstrate that stronger compliance, technology and better administration can generate revenue growth without increasing tax rates.
Officials point to the success of AI-powered customs reforms, including the Publican AI Trade Solution, which has already increased assessed customs collections by more than US$300 million and boosted monthly customs revenues from roughly GH¢4 billion in 2025 to between GH¢5.3 billion and GH¢5.5 billion in 2026.
By: Christian Akorlie / businesspostonline
