What You Need to Know About Ghana Sales Tax (VAT)

Ghana does not charge a single VAT rate. Instead, your customers pay a combined 20% made up of three separate components: 15% VAT, 2.5% National Health Insurance Levy, and 2.5% GETFund Levy. The new VAT Act 2025 simplified the system by abolishing the Flat Rate Scheme and, for the first time, allowing you to claim input credits on all three components. Here is how the updated system affects your business.

1. What is VAT?

VAT in Ghana is a consumption tax applied to the supply of goods and services. Under the new VAT Act 2025 (Act 1151), which took effect on 1 January 2026, the system has been simplified. The total effective rate on most goods and services is 20%, broken down as follows:

VAT: 15%
NHIL (National Health Insurance Levy): 2.5%
GETFund (Ghana Education Trust Fund Levy): 2.5%

The COVID-19 Health Recovery Levy has been removed, and the VAT Flat Rate Scheme has been abolished in favour of a single, unified system. The Ghana Revenue Authority (GRA) administers VAT collection.

2. Who does it apply to?

This usually applies to:

Businesses supplying taxable goods with annual turnover above GHS 750,000 (new threshold under Act 1151)
Businesses supplying taxable services with annual turnover above GHS 200,000
Importers of goods and services into Ghana
Any business voluntarily registered for VAT with the GRA

3. Why does it matter?

Understanding VAT helps you:

Stay compliant with tax laws
Avoid penalties and late fees
Keep proper records
File and pay correctly
Plan your cash flow better

4. How does it work?

Here's the basic process:

Register for VAT with the GRA if your turnover exceeds the threshold
Charge 15% VAT plus 2.5% NHIL and 2.5% GETFund on taxable supplies (20% total)
Issue proper tax invoices showing the breakdown
Track all input VAT paid on business purchases
Under the new Act, you can now claim input tax credits on NHIL and GETFund (previously not allowed)
File your monthly VAT return with the GRA by the last working day of the following month
Pay the net VAT due

5. What forms are involved?

VAT Return - Monthly return filed via the GRA Taxpayer Portal
VAT Registration Form - Application to register for VAT
Tax Invoice - Document issued to buyers showing VAT charged (must include your TIN)

6. What information do you need?

Before handling VAT, make sure you have:

Your Taxpayer Identification Number (TIN)
VAT registration certificate
All tax invoices for sales and purchases
Records of zero-rated and exempt supplies
Import duty and VAT receipts from customs
Bank statements for reconciliation

7. Important deadlines

Filing frequency: Monthly
Payment deadline: By the last working day of the month following the reporting period
Year-end requirements: Ensure all 12 monthly returns are filed and reconciled

8. Common mistakes to avoid

Not updating your processes after the removal of the VAT Flat Rate Scheme
Failing to charge all three components (VAT 15% + NHIL 2.5% + GETFund 2.5%)
Not claiming the newly available input tax credits on NHIL and GETFund
Charging VAT on exempt supplies (unprocessed food, agricultural inputs, medical supplies)
Missing the monthly filing deadline
Not meeting the new registration threshold for goods (GHS 750,000)
Failing to issue proper tax invoices

9. Simple example

Your business sells goods worth GHS 100,000 (excluding taxes) in a month.

VAT charged: GHS 100,000 x 15% = GHS 15,000
NHIL charged: GHS 100,000 x 2.5% = GHS 2,500
GETFund charged: GHS 100,000 x 2.5% = GHS 2,500
Total collected from customers: GHS 20,000

Your business purchases for the month total GHS 60,000:

Input VAT: GHS 60,000 x 15% = GHS 9,000
Input NHIL: GHS 60,000 x 2.5% = GHS 1,500
Input GETFund: GHS 60,000 x 2.5% = GHS 1,500
Total input credits: GHS 12,000

Net amount payable to GRA: GHS 20,000 - GHS 12,000 = GHS 8,000

10. FAQ

Q: What is the effective VAT rate in Ghana? A: The total effective rate is 20%, made up of 15% VAT, 2.5% NHIL, and 2.5% GETFund.

Q: What changed under the new VAT Act 2025? A: The Flat Rate Scheme was abolished, the COVID-19 Levy was removed, NHIL and GETFund were recoupled under the VAT system (allowing input credits), and the registration threshold for goods was raised to GHS 750,000.

Q: Can I now claim input credits on NHIL and GETFund? A: Yes. Under the new Act, businesses can claim input tax credits on all three components, which was not previously allowed for NHIL and GETFund.

Q: What supplies are exempt from VAT? A: Exempt supplies include unprocessed foodstuffs, agricultural inputs, medical and pharmaceutical products, educational services, and financial services.

Q: What is the registration threshold? A: GHS 750,000 annual turnover for businesses dealing in goods. GHS 200,000 for businesses providing services.

11. Final takeaway

Ghana's VAT system charges a combined 20% (15% VAT + 2.5% NHIL + 2.5% GETFund), and the 2026 reforms now let you claim input credits on all three components.

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What you need to know about Ghana VAT: The effective rate is 20% (15% VAT + 2.5% NHIL + 2.5% GETFund), file monthly with the GRA, and take advantage of the new input tax credit rules.

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