Ghana Revenue Authority (GRA) officials have clarified critical registration and compliance requirements as businesses adjust to sweeping Value Added Tax (VAT) changes that took effect January 1 under the Value Added Tax Act, 2025 (Act 1151).
The reforms establish distinct thresholds for goods and services, with service providers facing mandatory registration regardless of revenue while businesses supplying goods must exceed GH₵750,000 in annual turnover. The standard rate now sits at 20 percent following reduction from the previous 21.9 percent rate, marking a significant departure from the previous regime that offered multiple rate categories.
Dominic Naab, Acting Head of the Strategy and Research Department at GRA, emphasized during a recent public briefing that service sector operators cannot avoid VAT obligations based on size. Every person providing services must register for VAT because the tax system targets consumption rather than production. Consumers ultimately bear the tax burden when purchasing services, making universal registration essential for proper revenue collection.
The GH₵750,000 threshold applies exclusively to goods suppliers, creating a compliance divide between sectors. Small retailers selling physical products below this amount escape registration requirements, potentially reducing administrative burdens for thousands of micro and small enterprises. Service businesses operating even modest consultancies, repair shops, or professional practices must navigate the full VAT system immediately.
Companies already registered under the previous framework face immediate transition obligations. Naab explained that all persons registered under the old regime must continue charging VAT at standard rates throughout the transitional period. The Authority expects businesses to maintain compliance with current regulations until GRA completes necessary administrative procedures for system migration.
The VAT Flat Rate Scheme has been abolished with introduction of a unified and more transparent VAT structure, fundamentally altering operations for retailers who previously benefited from simplified rates. The old system offered four categories including flat rates of 3 percent and 5 percent that reduced complexity for smaller operators. Under the new law, these categories vanish entirely.
Businesses holding VAT flat rate booklets must return unutilized materials to the Commissioner General. Naab clarified that flat rate persons are required to surrender these booklets until they complete migration or deregistration processes. During this interim period, affected businesses cannot charge flat rates despite possessing valid booklets. They must apply standard rates exclusively.
The Commissioner General has not deregistered former flat rate taxpayers, leaving them in regulatory limbo. These businesses must keep charging VAT at standard rates rather than abandoning tax collection entirely. The transition demands careful documentation as companies await official deregistration or migration into the new unified system.
Companies supplying goods now face clear turnover calculations to determine obligations. Operations generating GH₵750,000 or more in annual sales must register and charge VAT, while those below this threshold remain exempt. This represents a substantial increase from the previous GH₵200,000 threshold, offering breathing room for businesses affected by inflation and currency fluctuations over recent years.
Service providers confront different realities. A small accounting firm earning GH₵50,000 annually faces identical registration requirements as a major consulting operation generating millions. The absence of any threshold for services reflects government intentions to capture consumption taxes across the entire service economy without exemptions based on business size.
Accounting teams across sectors are reviewing internal processes to ensure compliance with standard rate applications. Financial controllers must verify that invoicing systems correctly calculate the new 20 percent rate while removing any references to abolished flat rates. Many companies are conducting staff training sessions to familiarize teams with updated requirements.
Business owners are simultaneously adjusting pricing strategies to reflect uniform VAT application. Retailers previously charging 3 percent flat rates must now incorporate 20 percent into their pricing structures, potentially affecting competitiveness and margins. Service businesses accustomed to informal arrangements now face mandatory VAT registration with corresponding compliance costs.
The COVID-19 Health Recovery Levy has been abolished alongside the flat rate scheme, removing another layer from Ghana’s tax structure. The pandemic era measure added to the overall tax burden but disappears under the new framework. This elimination partially offsets the increased compliance complexity facing service providers.
The reforms also recoupled National Health Insurance Levy (NHIL) and Ghana Education Trust Fund (GETFund) levies with the main VAT system. GETFund and NHIL levies will be treated as input tax deductions, allowing businesses to claim these levies as input tax credits. This technical change reduces the effective cost of doing business by permitting companies to offset these payments against their VAT liabilities.
The standard rate technically comprises 15 percent VAT plus 2.5 percent NHIL and 2.5 percent GETFund, totaling 20 percent. This structure maintains funding for critical national programs while simplifying the overall calculation for taxpayers. Businesses collect a single combined rate rather than tracking multiple separate levies.
GRA has established multiple support channels for businesses navigating the transition. Taxpayer Service Centres across the country offer face to face consultations, while the toll free line 0800 900 110 provides telephone assistance. The Authority also maintains WhatsApp support on 055 299 0000 and 020 063 1664, alongside email support through [email protected].
Implementation challenges extend beyond registration mechanics. Service providers must establish proper accounting systems if they previously operated informally. This includes purchasing or developing invoicing software capable of generating VAT compliant receipts, maintaining detailed transaction records, and filing monthly returns through GRA’s electronic platforms.
Goods suppliers approaching the GH₵750,000 threshold face strategic decisions. Companies expecting revenue growth might register voluntarily to avoid sudden compliance obligations mid year. Others may restructure operations to remain below the threshold, though such arrangements could limit business expansion opportunities.
The unified VAT structure aims to promote equity and improve administrative efficiency according to GRA statements. Eliminating multiple rate categories and exemptions theoretically simplifies enforcement while expanding the tax base. Service sector inclusion particularly broadens revenue collection beyond traditional goods based commerce.
Critics question whether mandatory service provider registration imposes disproportionate burdens on informal sector operators. Many small service businesses lack sophisticated record keeping systems or financial management expertise. Compliance costs including accounting software, professional advice, and administrative time could exceed actual VAT liabilities for marginal operations.
Enforcement mechanisms remain unclear as implementation proceeds. GRA must balance aggressive compliance enforcement against the practical challenges facing newly registered taxpayers. Overly harsh penalties during the transition period could discourage voluntary compliance and drive businesses underground, undermining the reform’s revenue objectives.
The January 1 implementation date provides limited adjustment time compared to similar reforms elsewhere. Many businesses learned of the specific requirements only weeks before the deadline, constraining their ability to update systems and train staff. The compressed timeline reflects government urgency to simplify tax administration but creates operational stress for taxpayers.
Regional differences in business sophistication may affect compliance patterns. Urban enterprises in Accra and Kumasi typically maintain better records and access professional tax advice more easily than rural operators. This geographic divide could create uneven implementation across the country, concentrating compliance in major commercial centers while rural areas lag behind.
The reforms represent the most significant VAT restructuring since Ghana introduced the tax decades ago. Success depends on effective communication, reasonable enforcement, and ongoing taxpayer support as businesses adapt to the unified system. Early implementation months will prove critical for establishing sustainable compliance patterns.
