Ghana's overhaul of its Value Added Tax regime, which took effect 1 January 2026 under the VAT Act, 2025 (Act 1151), is entering a new phase, with the Ghana Revenue Authority (GRA) preparing to extend automated VAT collection to online purchases and digital transactions from August 2026.
What changed on 1 January 2026
The new Act repealed and consolidated the previous VAT Act, 2013 (Act 870) and its amendments. Key changes include a unified 15% VAT rate, with the former 3% flat-rate scheme for retailers and 5% flat rate on immovable property abolished. The National Health Insurance Levy (NHIL) and Ghana Education Trust Fund Levy (GETFund), both 2.5%, continue to apply on the same taxable value, bringing the combined effective rate to roughly 20%. The Covid-19 Health Recovery Levy has been abolished. A significant structural change also makes NHIL and GETFund deductible as input tax, removing a longstanding cascading effect on domestic supplies, according to EY's tax alert on the reforms. The value-added tax (VAT) rate has been unified at 15%, while the previous flat rates for certain supplies have been abolished. The levies that go with the VAT remain at the aggregate rate of 5%. New administrative measures include stricter penalties for VAT nonregistration. New substantive measures include changes in the scope of taxable activity, taxable supply, exempt supplies, zero-rated supplies and relief supplies.
Registration rules also shifted
service providers now face no turnover threshold and must register within 30 days of starting operations, while suppliers of goods must register once turnover exceeds GHS750,000 in a 12-month period, up from the previous GHS200,000 threshold, per the GRA's official administrative guideline (GRA/AG/25/002) issued 31 December 2025. Automated VAT on e-commerce from August: According to a Facebook post from KS TV/KSM News Online dated 25 May, and corroborated by reporting from The Business & Financial Times and the Ghana Netherlands Business & Culture Council, GRA Commissioner-General Anthony Kwasi Sarpong announced that the Authority has completed a three-month pilot of an automated system that will deduct VAT directly from online payments at the point of purchase, including from non-resident companies selling to Ghanaian consumers, with full deployment targeted for August 2026. Sarpong reportedly said the voluntary compliance approach for online transactions had not been effective, noting that analysis of 2025 data suggested the automated system could have generated over GHS 2.5 billion in additional revenue had it been active that year. The initiative will also require businesses to route transactions through GRA-linked point-of-sale devices, and the Authority plans to extend digital monitoring to cryptocurrency transactions.
How the math works in practice
The GRA's administrative guideline includes worked illustrations for businesses. For a straightforward domestic supply of GHS100,000, NHIL/GETFund of 5% (GHS5,000) and VAT of 15% (GHS15,000) apply on the same base, for total tax of GHS20,000 added to the cost. Similar logic extends to imported services, with formulas provided for apportioning tax where a service is used for both taxable and exempt supplies. Import-related VAT also carries new teeth: unregistered importers bringing in taxable goods exceeding the GHS750,000 threshold must now pay an upfront 20% of customs value in addition to standard import duties, recoverable later once the importer registers and files VAT returns. Compliance and enforcement tightened: Penalties for VAT nonregistration have risen to a minimum of three times the unpaid tax, up from a previous maximum of twice. Tax evasion penalties now carry a mandatory minimum of two years' imprisonment alongside fines of two to three times the evaded amount. The GRA is also rolling out mandatory Fiscal Electronic Devices (FEDs) for real-time invoice reporting in key sectors during 2026, with strict protocols for reporting system downtime within 24 hours. Sector-specific shifts: Betting and gaming, along with management fees for private equity, venture capital, and mutual funds, have lost their exempt status and are now taxable. Electricity supply has become fully exempt, removing previous consumption caps. Locally manufactured textiles retain zero-rating through 2028, but the zero-rated treatment for vehicles assembled under the Ghana Automotive Development Programme has lapsed.
What it means for businesses and consumers
With the August rollout, Ghanaian and foreign online sellers alike will face automatic VAT withholding at the point of digital payment, a marked shift from the current system where compliance from online and digital service providers has been inconsistent. Consumers should expect VAT to be more consistently applied to online purchases going forward, while businesses — particularly in e-commerce, SaaS, and cross-border digital services — face a tighter compliance window before enforcement intensifies.
