VAT overhaul will ease business costs, boost revenue – expert

A tax expert has welcomed the government's planned VAT reforms, saying they could simplify compliance, reduce distortions, and strengthen revenue collection.

Speaking at KPMG's 2025 first budget discussions, Kofi Frempong-Kore noted that Ghana’s VAT system is overly complex, placing a financial strain on businesses. He suggested integrating existing levies into the VAT system and adjusting the rate from 15% to 18% to ease working capital pressures.

Currently, Ghana’s effective VAT rate is about 22% when additional levies are included, which burdens businesses, particularly those facing delayed payments. VAT contributes less than 25% of domestic tax revenue, compared to 45-50% in other countries.

The government, acknowledging inefficiencies, has sought IMF technical assistance for reforms starting in April 2025. Proposed changes include abolishing the COVID-19 Levy, reversing the decoupling of GETFund and NHIL from VAT, and increasing the VAT registration threshold to exempt small businesses.

Frempong-Kore also emphasized modernizing VAT administration through digital solutions like e-invoicing, which could improve compliance and efficiency.