Many consumers and households have still not realised the full benefits of the Value Added Tax (VAT) reform, which took effect from January 1, 2026, because many businesses have not fully complied with the changes, two months after its implementation.
Businesses, including shopping malls, supermarkets and eateries, have not yet recalibrated their receipting systems to remove the one per cent COVID-19 levy, nor have they decoupled the five per cent health insurance and education levies to reduce the tax liability to the final consumer.
The Daily Graphic’s seven-week monitoring of how some businesses in the Greater Accra Region are implementing the new tax reform shows widespread confusion regarding the tax component on their invoices.
The team found that while some businesses still had on their invoices the COVID-19 levy, which has been outlawed since January 1 this year, others had removed it, yet their prices remained unchanged.
Also found were three VAT charges – a zero VAT, a three per cent VAT rate or a 15 per cent VAT rate – on different invoices from various shops.
During the shopping exercise, the team found out that although some of the businesses had publicly advertised that they had adjusted their pricing structures in line with the new Value Added Tax Act, 2025 (Act 1151), some consumers who interacted with the team insisted that they had yet to see any corresponding reductions in charges, which would translate into benefits to them.
Some consumers maintained that the new reform, which abolished the one per cent COVID-19 levy and reduced the effective VAT rate from 21.9 per cent to 20 per cent, should have resulted in at least a 1.9 per cent reduction in the prices of items on shelves. However, no such relief has been observed in shops that refuse to recalibrate.
The reform was expected to free about GH¢5.7 billion of the disposable income of consumers.
Despite ongoing public education by the Ghana Revenue Authority (GRA), many businesses say they do not completely understand how to implement the new VAT reform, sparking concerns that they are either genuinely confused or intentionally pretending not to understand for their own advantage.
In response, many of the businesses that spoke to the Daily Graphic, during the exercise held between January 12, 2026 and February 28, 2026, maintained that they were not given sufficient transition time to adjust their systems to comply with the new Act.
The GRA has stated that it would continue to educate taxpayers on doing the right thing as part of its nationwide educational campaign.
The authority, however, appealed to the public, especially those who bought from VAT-registered persons and shops, to insist on paying only the effective 20 per cent VAT.
GRA’s position
The Head of Enforcement and Debt Management in Accra South Area Office of GRA, Rev. John Buabeng, emphasised that it was unlawful for any business to continue charging the levy after its repeal.
“Once the President assented to the new law, it meant that the COVID-19 levy and all related charges ceased to exist. We do not expect any business to continue charging it,” he stressed.
On why some firms continue to impose the levy, Rev. Buabeng explained that some firms cited system configuration challenges as the reason for the continued imposition.
However, he insisted that such explanations did not justify the charge.
“Even if their software installation was done externally and requires adjustments, customers must be refunded at the point of sale because the law no longer authorises the levy.
“With a valid receipt, consumers who have already paid the levy can walk into any GRA office and apply for a refund.
Auditors will verify whether the amount was remitted to the state, and the necessary steps will be taken,” he said.
Flat rate, pricing concerns
Addressing concerns about unchanged prices despite the reforms, Rev. Buabeng clarified that the new 20 per cent standard VAT regime was designed to eliminate cascading taxes and simplify calculations.
“There is no more flat rate and no more three per cent VAT.
Anyone charging three per cent is still operating under the old system, which is not proper and unlawful,” he stated.
He explained that under the current regime, input VAT paid at the point of importation or production was deductible, preventing tax-on-tax.
“If businesses configure their systems correctly and apply input-output deductions as required, prices should actually reduce,” Rev. Buabeng said.
He urged consumers to insist on VAT invoices, adding that “If you do not demand your receipt, the revenue could leak.
The invoice compels accountability”.
Unlawful imposition
A Senior Tax Partner at PwC, Abeku Gyan-Quansah, stated that only Parliament had the authority to impose taxes, and once a tax law had been repealed and assented to by the President, it ceased to have effect unless a specific saving clause provided otherwise.
“If you ask whether it was lawful for businesses to continue charging or factoring in the levy after its abolition, the straightforward answer is that it was not lawful,” he told the Daily Graphic in an interview.
He said that once the repeal took effect, the levy should no longer appear on invoices or receipts.
Automatic price reductions
However, Mr Gyan-Quansah stated that expectations of automatic price reductions were more complex.
While consumers might have assumed that prices would fall after the removal of a tax, he explained that pricing was influenced by multiple factors beyond just tax components.
“Price determination was not always purely cost-based. So many things went into pricing,” he said.
Mr Gyan-Quansah maintained that some businesses might not be acting in bad faith but could have been struggling with system updates and technical adjustments.
“A law being changed does not automatically mean accounting and billing systems are updated,” he added.
Inadequate transition
A tax practitioner and lawyer, Albert Kungmaa Ziem, attributed the low level of compliance with the new VAT regime to the short transition period for businesses to adjust.
He explained that although the new tax law was announced in November 2025 and subsequently passed by Parliament and assented to by the President in December 2025, its implementation took effect only a couple of weeks later, on January 1, this year.
He said the short window between passage and enforcement did not provide the business community, particularly small and medium enterprises (SMEs), enough time to reconfigure their accounting systems and internal processes to align with the new requirements.
Mr Ziem maintained that beyond passing the law, the GRA should have embarked on an extensive public education and direct engagement with businesses before enforcement began.
He stressed that while some non-compliance might stem from ignorance, the continued imposition of outlawed taxes was illegal and should attract penalties.
The management accountant and chartered taxation fellow urged the GRA to intensify business-to-business education campaigns to ensure full compliance.
Consumer rights perspective
From a consumer rights perspective, the Director of the CUTS International West Africa Centre, Appiah Kusi Adomako, argued that consumers should benefit by at least a 1.9 per cent reduction in prices following the reform.
He explained that although businesses claimed pricing was complex, the tax relief ought to have been passed on to consumers.
“The taxes that were taken off were supposed to go back to the consumer’s pocket,” Mr Adomako said.
Instead, he said that some firms had adjusted their base prices upward to maintain previous totals, a practice he described as “more of a dishonest approach” rather than outright criminality.
The context
In the 2025 Budget Statement and Economic Policy, the government announced comprehensive reforms to the country’s VAT system aimed at strengthening domestic revenue mobilisation, eliminating inefficiencies and modernising tax administration.
The reforms were anchored in the enactment of Act 1151 and the COVID-19 Health Recovery Levy Repeal Act, 2025, both of which took effect on January 1, 2026.
Act 1151 repealed and consolidated the previously fragmented VAT laws, enhanced clarity and legal certainty, corrected structural distortions, and abolished the COVID-19 Levy introduced in 2021.
The new VAT regime introduced significant changes, including the removal of cascading taxes, a reduction in the effective VAT burden to 20 per cent, an increase in the registration threshold and the abolition of the VAT Flat Rate Scheme (VFRS).
