A new report by the Ministry of Finance has revealed widespread non-compliance with the country’s Value-Added Tax (VAT) system, with many businesses that meet the registration threshold failing to sign up.
The report, produced in collaboration with the UK’s Institute for Fiscal Studies, examines Ghana’s VAT framework, revenue trends and compliance issues.
According to the findings, while some businesses voluntarily register below the VAT threshold, a significant number operating above the threshold remain unregistered.
Additionally, many registered businesses either fail to file returns or submit ‘null’ returns, reporting zero sales and purchases.
The report highlights the need for improved enforcement and voluntary compliance as part of the government’s Medium-Term Revenue Strategy (MTRS).
Another key policy shift noted in the report is the 2023 restriction of the VAT Flat Rate Scheme (VFRS) to small taxpayers.
This change is believed to have boosted tax revenues while reducing administrative burdens for smaller businesses.
Despite Ghana’s overall economic growth, VAT revenues have not kept pace, partly due to the country’s investment and export-led growth pattern, which limits VAT’s impact as a consumption tax.
The government is now reviewing tax exemptions and exploring further policy reforms to strengthen revenue collection.
The findings are already influencing tax policy decisions and will guide future VAT administration reforms under the MTRS.
Value Added Tax (VAT) is a consumption tax that is levied on the value added at each stage of a product’s production and distribution.
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The Government of Ghana introduced the Value Added Tax Act, 2013 (Act 870) in 2013 to revise and consolidate the law relating to the imposition of the value added tax (VAT) and to provide for related matters.
