Ghana has entered a new phase in its indirect tax policy with the implementation of the Value Added Tax Act, 2025 (Act 1151), which took effect on 1 January 2026. The law replaces a VAT framework that had grown increasingly complex through multiple amendments and special regimes, and it represents one of the most significant VAT reforms since 2013.

At a time when government faces pressure to mobilise domestic revenue while easing cost-of-living pressures on households and businesses, VAT reform is not merely a technical tax issue. It is a policy choice with direct implications for prices, business competitiveness, and fiscal sustainability.

A comparison with Nigeria’s VAT system provides useful regional context.

What Has Changed Under Ghana’s new VAT regime?

The defining feature of Act 1151 is simplification. The law abolishes the VAT Flat Rate Scheme, which previously applied different VAT treatments to retailers, wholesalers, and certain property developers.

Under the new framework, the statutory VAT rate remains 15%. However, when combined with the National Health Insurance Levy (NHIL) and the Ghana Education Trust Fund (GETFund) levy, each charged at 2.5%, the effective VAT burden on standard-rated supplies amounts to 20%.

Another major reform is the increase in the VAT registration threshold for suppliers of goods from GH¢200,000 to GH¢750,000. This change removes many micro and small enterprises from mandatory VAT registration, reducing compliance costs for the informal sector and allowing the Ghana Revenue Authority (GRA) to focus enforcement efforts on higher-value taxpayers.

In addition, the repeal of the COVID‑19 Health Recovery Levy and the treatment of NHIL and GETFund as deductible input taxes address long‑standing concerns about tax cascading. Registered businesses can now claim NHIL and GETFund as input tax, improving transparency and reducing embedded tax costs along supply chains.

Nigeria’s VAT system: A useful contrast

Nigeria provides a useful point of comparison. The country operates a lower VAT rate of 7.5%, increased from 5% in 2019, and applies VAT broadly across goods and services, including digital and non-resident supplies.

Rather than a major structural overhaul, Nigeria’s recent VAT reforms have focused on enforcement, digital coverage, and targeted exemptions. Despite the lower rate, Nigeria continues to face challenges with compliance and revenue mobilisation, reflected in its persistently low tax-to-GDP ratio.

Key differences at a glance

Area	Ghana	Nigeria
Standard VAT rate	15% statutory VAT (20% effective)	7.5%
Additional levies	NHIL (2.5%), GETFund (2.5%)	None
VAT registration threshold	GH¢750,000 (goods); mandatory for services	Low threshold; broad coverage
Treatment of small businesses	Many micro and small firms excluded from VAT	Small firms largely remain within VAT net
VAT administration	Ghana Revenue Authority (GRA)	Federal Inland Revenue Service (FIRS)
Digital economy	Explicitly captured under new VAT Act	Explicitly taxed under Finance Acts

What the Comparison Reveals

The contrast between Ghana and Nigeria highlights two different VAT reform philosophies. Ghana’s approach prioritizes administrative clarity and a narrower, more targeted taxpayer base, reflecting a belief that simplicity will improve voluntary compliance and reduce disputes. Nigeria’s system, by contrast, relies more heavily on broad participation and enforcement, supported by a lower headline rate.

For consumers in Ghana, the elimination of cascading taxes may help moderate price pressures over time, even with a higher visible rate. For businesses, particularly small and medium‑sized enterprises, the higher registration threshold offers relief, although the transition away from flat‑rate regimes may require adjustments to pricing and accounting systems.

Nigeria’s experience also underscores an important point: low VAT rates alone do not guarantee strong revenue performance. Without effective administration and compliance, even a broad tax base can underperform.

The Road Ahead

Ghana’s new VAT law represents a bold attempt to reset an overly complex system. Its success will depend not only on the design of the law, but on effective administration, taxpayer education, and consistent enforcement.

Nigeria’s experience underscores the importance of looking beyond headline rates and focusing on compliance and institutional capacity. As Ghana implements Act 1151, learning selectively from regional peers can help ensure that VAT remains both a reliable source of government revenue and a system that supports long-term economic growth.