GRA, GUTA agree 20% VAT charge till end-Q1

By Wisdom JONNY-NUEKPE

The Ghana Revenue Authority (GRA) and Ghana Union of Traders’ Association (GUTA) have agreed to continue an effective 20 percent VAT till the end of first quarter this year.

The agreement was made following a high-level consultation between GRA and GUTA, aimed at easing the newly enacted VAT Act, 2025 (Act 1151) rollout.

The decision was made at a joint meeting held in Accra during 2026 after concerns were raised about how the new VAT regime would affect traders – particularly those who previously operated under the VAT flat rate scheme.

Under the interim arrangement all eligible taxpayers, including GUTA members, will charge and account for VAT at the applicable effective rate of 20 per cent – made up of VAT, National Health Insurance Levy (NHIL) and GETFund Levy – until the end of the first quarter of implementation.

According to both institutions, the move is intended to allow room for feedback and adjustments while ensuring compliance with the law.

To address trader-specific challenges under the new system, GRA and GUTA also agreed to establish a joint technical team. The team will focus on sector-level concerns such as VAT record-keeping, input VAT claims and calculation methods and will make recommendations for possible reviews based on practical challenges encountered on the ground.

Beyond policy coordination, the two bodies say they will intensify education and sensitisation programmes nationwide to help traders better understand the transitional arrangements and comply with the revised VAT framework.

The GRA reassured traders – especially those migrating from the flat rate scheme – of its readiness to offer technical support and adopt a collaborative approach to ensure a smooth transition. GUTA, on its part, urged members to comply with the law while engaging constructively with the tax authority.

Both organisations reaffirmed their commitment to sustained dialogue, stressing that a successful implementation of the VAT reforms is critical not only for traders and consumers but also for national development.

Background

This move is in line with commencement of the Value Added Tax Act, 2025 (Act 1151), which became effective 1 January 2026.

According to this new legislation, the VAT registration threshold has been increased to GH¢750, 000 (previously GH¢200,000) for companies that supply goods.

The 1 percent COVID-19 health recovery levy has been abolished – with both the National Health Insurance levy (2.5 percent) and GETFUND levy (2.5 percent) fully recoverable as deductible input taxes.

The total effective VAT rate  – the unified standard rate – is now 20 percent (comprising a standard VAT rate of 15 percent plus aggregate levies of 5 percent). The previous rate was around 26 percent.

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