For years, Ghanaian businesses had to figure out whether they fell under the standard VAT rate or the VAT Flat Rate Scheme — and the difference affected their pricing, their paperwork and their cash flow. In 2026 that question changed completely. A major reset of the VAT law scrapped the Flat Rate Scheme altogether and replaced the old patchwork of levies with a single, unified structure. This guide explains what VAT is, what actually changed, why the “standard vs flat” choice no longer exists, and how to work out VAT correctly under the new rules.
What is VAT?
Value Added Tax is a consumption tax charged on most goods and services in Ghana. A VAT-registered business adds it to the price its customers pay, collects it, and sends it to the Ghana Revenue Authority (GRA) — while reclaiming the VAT it paid on its own business purchases (called input tax). The net effect is that the tax is ultimately borne by the final consumer, and the business acts as a collector in the middle.
The headline change: the Flat Rate Scheme is gone
Under the Value Added Tax Act, 2025 (Act 1151), which took effect on 1 January 2026, the VAT Flat Rate Scheme (VFRS) was abolished. In its place is a single, transparent VAT structure that every registered business now uses.
This matters because the old system caused years of confusion. Retailers and some small traders used to charge a flat percentage on their sales and could not reclaim the VAT on their purchases, while larger businesses used the standard system and could. Two businesses selling the same item could end up pricing it differently purely because of which scheme they were on. The reform removes that split: there is now one way to do VAT.
If you still see the phrase “VAT flat rate” on older invoices, blog posts or accounting templates, treat it as out of date. From 2026 onward, there is no flat rate option to choose.
How VAT works now: one base, one method
Under the new structure, three charges sit on top of the value of a sale, and — importantly — they are all calculated on the same base (the price of the goods or service), rather than being stacked on top of each other as they were before:
- VAT — the main 15% rate.
- NHIL (National Health Insurance Levy) — 2.5%.
- GETFund Levy (Ghana Education Trust Fund) — 2.5%.
Together these come to a combined effective rate of 20% on the sale value. Two further changes made the system simpler and cheaper for business:
- The COVID-19 Health Recovery Levy was abolished. The old 1% pandemic-era levy is gone, which lowers the overall charge compared with the previous setup.
- NHIL and GETFund were “re-coupled” into the VAT base. Because they now share the same base as VAT, registered businesses can claim them as input tax credits — something they could not do before. This removes a layer of cascading tax that used to be baked into prices all the way along the supply chain.
Who has to register for VAT?
The 2026 reforms also gave small businesses real breathing room. The compulsory VAT registration threshold for businesses dealing in goods was raised sharply — from GH¢ 200,000 to GH¢ 750,000 in annual turnover. In practice this means thousands of micro and small traders no longer have to register for VAT at all, and can focus on growing the business rather than on monthly VAT filing.
If your turnover is below the threshold you can still choose to register voluntarily. Why would you? Because a registered business can reclaim the VAT it pays on its own purchases, which lowers its real cost base. A registered firm that buys a lot of VAT-able inputs may be better off registered, even if it is not strictly required to be. It is a judgement call worth discussing with an accountant.
A worked example
Suppose a VAT-registered shop sells goods with a base price (before any tax) of GH¢ 1,000. Under the 2026 rules, all three charges apply to that same GH¢ 1,000 base:
- VAT at 15% → GH¢ 150
- NHIL at 2.5% → GH¢ 25
- GETFund at 2.5% → GH¢ 25
Total tax = GH¢ 200, so the customer pays GH¢ 1,200 all in. Under the older system, where the levies were applied first and VAT was charged on top of them, the same item would have cost a little more — which is the whole point of the reform: the same-base method brings the final price down slightly while keeping the rates familiar.
On a customer-facing invoice, the GRA requires the charges to be shown on separate lines — the value of the supply, then NHIL (2.5%), GETFund (2.5%) and VAT (15%) listed individually — rather than rolled into one figure. If you issue your own computer-generated receipts, they need to be set up to break the charges out this way.
Don’t calculate it by hand. Use the free Ghana Business Web VAT Calculator to add or remove VAT on any amount under the 2026 rules — it handles the 15% VAT plus the 2.5% NHIL and 2.5% GETFund on the same base automatically. It sits alongside our PAYE Calculator and other free tools for businesses.
What about zero-rated and exempt supplies?
Not everything carries the full 20%. The system still distinguishes between:
- Zero-rated supplies — taxed at 0%. The business charges no VAT to the customer but can still reclaim input tax on related purchases. Examples under the new law include locally manufactured sanitary towels, and locally manufactured textiles (zero-rated through to the end of 2028 to support local industry).
- Exempt supplies — outside the VAT net entirely. No VAT is charged and input tax generally cannot be reclaimed.
A useful rule of thumb from the reforms: items that are zero-rated or relieved/exempt for VAT get the same treatment for NHIL and GETFund — because the three now share one base, they move together.
Filing and compliance basics
- File monthly. VAT-registered businesses file a VAT return each month, even in a month with no sales (a nil return).
- Keep clean records. Separate your business and personal money, keep purchase invoices (they are what let you claim input tax), and issue compliant invoices that itemise VAT, NHIL and GETFund.
- Use your TIN. Registration, filing and credits all run off your Taxpayer Identification Number, now linked to the Ghana Card.
- Mind the deadlines. Late filing attracts penalties and interest, so set your own calendar reminders rather than relying on GRA notifications.
Frequently asked questions
Does the VAT Flat Rate Scheme still exist in Ghana?
No. The VAT Flat Rate Scheme was abolished from 1 January 2026 under the Value Added Tax Act, 2025 (Act 1151). All VAT-registered businesses now use one unified standard structure.
What is the VAT rate in Ghana in 2026?
The core VAT rate is 15%, with NHIL at 2.5% and GETFund at 2.5%, all charged on the same base — a combined effective rate of about 20%. The old COVID-19 levy has been removed.
At what turnover must I register for VAT?
For businesses dealing in goods, registration becomes compulsory at GH¢ 750,000 in annual turnover, raised from GH¢ 200,000. Below that you may register voluntarily.
Can I now claim back NHIL and GETFund?
Yes. Because the two levies were re-coupled into the VAT base, registered businesses can claim them as input tax credits — which was not possible under the old separated structure.
Why does my invoice show VAT, NHIL and GETFund separately?
The GRA requires the value of the supply and each charge (NHIL 2.5%, GETFund 2.5%, VAT 15%) to appear on separate lines for transparency, rather than as a single combined tax figure.
Is voluntary registration worth it for a small business?
It can be. A registered business recovers the VAT it pays on purchases, lowering its real cost base. If you buy a lot of VAT-able inputs, voluntary registration may pay off — weigh it against the monthly filing obligation, ideally with an accountant.
This article is general information for Ghanaian businesses, not tax advice, and VAT rules and thresholds can change with each national budget. For a precise figure, use the VAT Calculator, and for decisions specific to your business consult the Ghana Revenue Authority (gra.gov.gh) or a qualified tax professional. Based on the Value Added Tax Act, 2025 (Act 1151), effective 1 January 2026. Last updated June 2026.
