Mr Kofi Frempong-Kore, a tax expert has lauded the government‘s planned Value Added Tax (VAT) reforms, describing them as a step toward simplifying compliance, reducing business burdens, and strengthening revenue collection.
Speaking at KPMG‘s 2025 first budget discussions, Mr. Frempong-Kore highlighted the complexities of Ghana‘s VAT system, which he said created financial strain on businesses and discourage compliance.
He proposed integrating existing levies into the VAT structure while adjusting the standard rate from 15% to 18% to ease working capital pressures.
Currently, Ghana’s effective VAT rate is approximately 22% when additional levies such as the COVID-19 Levy, GETFund Levy, and National Health Insurance Levy (NHIL) are factored in.
This, according to Mr. Frempong-Kore, placed a heavy burden on businesses, particularly those struggling with delayed payments.
He said in many other countries, VAT contributed between 45% and 50% of domestic tax revenue, whereas in Ghana, it accounts for less than 25%.
Mr Frempong-Kore also stressed the importance of modernizing VAT administration through digital solutions such as e-invoicing and automated tax reporting, which could improve compliance and efficiency.
He noted that countries that have adopted e-invoicing have seen significant improvements in tax collection and reductions in fraud.
However, the government has sought technical assistance from the International Monetary Fund (IMF) to implement VAT reforms starting in April 2025.
The proposed changes include the abolishment of the COVID-19 Levy, which was introduced as a temporary measure but remained in place, reversing the decoupling of GETFund and NHIL from VAT, streamlining the tax system, also increasing the VAT registration threshold, and exempting small businesses from tax burdens.
The tax expert urged the government to engage businesses and stakeholders to ensure a smooth transition and minimize any unintended economic impacts.
