Finance Minister Dr. Cassiel Ato Forson has described Ghana’s Value Added Tax (VAT) system as “distorted” and in urgent need of reform to provide relief for ordinary Ghanaians and businesses.

Speaking on Joy News’ PM Express on Tuesday, March 11, following his presentation of the 2025 Budget Statement to Parliament, Dr. Forson stressed that VAT reform is a critical step in addressing the country’s tax inefficiencies.

“We need to reform VAT—and reform it in such a way that it brings relief to the ordinary Ghanaian household,” he stated.

“If you look at Africa today, Ghana is the only country with an effective VAT rate of about 21.9%. The second highest is Morocco, with about 20%. Clearly, there is a problem with our VAT system.”

Dr. Forson highlighted that Ghana’s VAT structure has multiple layers of inefficiencies, making it burdensome for businesses and consumers alike.

“The VAT rate itself has been distorted. There is a cascading element, and you can see the distortion where sales tax has been mixed with Value Added Tax. We also have flat rates, a standard rate, and many other inconsistencies,” he explained.

Experts and industry players have long criticised Ghana’s VAT structure, arguing that its complexity discourages compliance and places an undue financial strain on consumers.

As the government prepares to engage stakeholders on the proposed VAT review, businesses and consumers alike will be watching closely to see how these reforms will impact prices, economic activity, and overall tax compliance.

According to the Finance Minister, these distortions create unnecessary complications and hinder economic growth.

He pointed out that VAT, in its current form, does not operate efficiently as a consumption tax, which should ideally be structured to minimise burdens on businesses and prevent double taxation.

Dr. Forson assured Ghanaians that the government is committed to a comprehensive review of the VAT system in 2025.

“This year, we want to spend some good time to engage properly and review the Value Added Tax system,” he said, emphasizing the need for a transparent and consultative approach to the reforms.

His remarks signal a major policy shift by the Mahama administration, which has repeatedly emphasized its commitment to reducing the tax burden on individuals and businesses while enhancing revenue collection efficiency.