Government Commences Review of VAT Regime with IMF Support
Accra, Ghana - 14 April, 2025 - Ghana has launched a comprehensive review of its Value Added Tax (VAT) regime, seeking to simplify the system and improve the business environment.
The move, announced by Finance Minister Dr. Cassiel Ato Forson during a meeting with World Bank Managing Director Wencai Zhang, aims to address compliance difficulties and inefficiencies caused by the current 21.9% VAT rate, one of the highest in Africa.
Dr. Forson acknowledged the challenges posed by the existing VAT structure and assured that the reform process would be concluded before the main budget is presented in November.
“We are fully aware of the challenges posed by the existing VAT structure,” Dr. Forson said. “That is why we are undertaking a complete overhaul of the system. I can assure our partners and the Ghanaian public that this reform process will be concluded before the main budget is presented in November.”
A Technical Assistance Mission from the International Monetary Fund (IMF) is currently working alongside local authorities to support the review process. The government aims to conclude the reform process before the main budget is presented in November.
The review seeks to improve tax compliance, enhance revenue mobilization, and make the tax system more business-friendly. The World Bank has expressed support for Ghana's reform efforts, committing to work closely with the government to achieve a more efficient and equitable tax regime.
This initiative builds on previous analyses of Ghana's VAT system, which highlighted the need for reforms to ensure exemptions are effective and to improve compliance among businesses.
A recent report by the Ministry of Finance and the Institute for Fiscal Studies (UK) found that Ghana's VAT system is progressive, with richer households bearing a larger share of the tax burden. However, the report also noted that many businesses above the VAT registration threshold fail to register, while others do not file tax returns.
Source: Lead News Online
