VAT reforms to drive 2026 revenue

Government is anchoring its 2026 fiscal strategy on a sweeping overhaul of the value-added tax system as authorities rely on enforcement and digitalisation rather than new taxes to lift domestic revenue.

The reforms sit at the centre of government’s plan to raise non-oil revenue to 15.7 percent of GDP in 2026 from an estimated 15.1 percent this year, according to the 2026 budget.

At a post-budget forum organised by KPMG and UNDP in Accra, Ghana Revenue Authority Commissioner-General Anthony Sarpong reinforced government’s emphasis on VAT as the backbone of next year’s domestic revenue efforts.

He said the threshold increase will allow smaller firms to stay out of the VAT net until they scale up, reducing their administrative burden. The change, he noted, gives small enterprises room to “focus on their business” before taking on full VAT obligations.

Government is modernising the VAT regime to reduce compliance costs, improve fairness and support industry. Changes include abolishing the COVID-19 Health Recovery Levy, reducing the effective VAT rate from 21.9 percent to 20 percent and raising the VAT registration threshold from GH¢200,000 to GH¢750,000 for goods.

It is also removing VAT on mineral reconnaissance and prospecting and extending zero-rated status for locally manufactured textiles until 2028.

The measures are expected to free up about GH¢5.7billion for businesses and households in 2026, with GH¢3.7billion of that tied to removal of the COVID-19 levy. This decision reflects government’s aim to lower operational costs while aligning tax policy more closely with industrial development priorities.

Businesses will also see the elimination of cascading effects created by levies such as the NHIL and GETFund components, which previously added about 6% in nondeductible costs. Making these levies deductible forms part of the broader shift toward a cleaner, more creditable VAT system aimed at boosting compliance and encouraging consumption.

Mr. Sarpong said the reforms are part of a wider strategy to strengthen tax compliance through automation. GRA plans to deploy an AI system to support Customs valuation and classification, replacing manual processes that often take up to an hour per consignment.

He said early tests showed potential improvements of 40 percent to 45 percent in assessed duty values. “When this works, our revenue from Customs is just going to go up,” he said.

The authority is also preparing to roll out blockchain-enabled cargo information tools to curb leakages in import declarations and foreign transfers. A five-year GRA review showed more than US$45billion transferred under import declarations resulted in fewer than US$7billion worth of goods arriving in the country. The new system will allow GRA and banks to independently verify whether goods linked to foreign transfers have been shipped.

Other enforcement measures include stricter rules on cash movements at airports. Travellers carrying more than US$10,000 will need to declare it, while those moving amounts above US$50,000 must provide details on the source and purpose of the funds. Scanners are expected to be installed for detecting undeclared currency.

Mr. Sarpong said GRA will also enforce long-delayed fiscalisation rules in 2026. Retailers will be required to use electronic devices that transmit VAT data directly to the authority in real-time. A separate digital tool will capture VAT on cross-border online purchases from foreign platforms at the point of payment.

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