BY Daniel Bampoe
In a decisive shift towards rebuilding the post-crisis economy, the National Democratic Congress government has introduced a new package of tax reforms under the 2026 Budget Statement and Economic Policy, aimed at broadening the tax net and tightening fiscal discipline while easing the cost of doing business.
Finance Minister Dr. Cassiel Ato Forson, presenting the budget to Parliament on Thursday, November 13, said the new measures are part of a strategic balance between revenue generation and economic relief following years of fiscal strain.
While announcing the abolition of the COVID-19 Health Recovery Levy, a move expected to inject GH₵3.7 billion back into the economy, Dr. Ato Forson emphasized that the government’s overall tax strategy is not about removing taxes entirely, but about restructuring the system to make it more efficient, equitable, and growth-oriented.
“Mr. Speaker, our focus is on expanding the tax net, not overburdening existing taxpayers,” he told lawmakers. “We are introducing a new, fairer structure that ensures everyone contributes their share to national development.”
New Tax Structure Aimed At Fairness And Efficiency
Under the new reforms, the government will reorganize the Value Added Tax (VAT) regime and introduce a number of targeted tax adjustments to improve compliance and strengthen revenue mobilization.
Key among these is the abolition of the decoupling of the GETFund and NHIL levies from the VAT system. Previously, these two levies were treated separately, meaning businesses could not claim input tax deductions on them. With the reform, companies can now deduct these levies as part of their VAT filings, effectively reducing their operating costs.
Ato Forson said this change will also enhance transparency and accountability in tax administration, while allowing the government to better track compliance and revenue performance.
At the same time, the VAT registration threshold has been raised from GH₵200,000 to GH₵750,000, a move designed to formalize the operations of medium-scale enterprises while exempting micro-businesses from the VAT net.
This reform, the Minister explained, will streamline tax administration and reduce the compliance burden on smaller traders.
“These changes are not just about relief; they are about responsibility. Every sector must contribute its fair share, but within a framework that supports growth and protects livelihoods,” he said.
Widening the Tax Net, Not Raising Rates
Although the government has reduced the effective VAT rate from 21.9% to 20%, it intends to make up for the lost revenue by expanding the tax net and improving compliance across informal and under-taxed sectors.
The Ghana Revenue Authority (GRA) is expected to roll out new digital tools and enforcement mechanisms to capture more taxpayers, especially in the informal, digital, and extractive industries.
Furthermore, the government will maintain VAT exemptions for key strategic sectors, including mineral prospecting and locally manufactured textiles, to encourage investment and job creation.
According to Ato Forson, the total VAT reform package will return GH₵5.7 billion to households and businesses while simultaneously improving tax efficiency and ensuring sustainable revenue for public spending.
Fiscal Targets Remain Tight
Despite the significant relief measures, the Finance Minister said the government remains committed to its fiscal consolidation agenda, targeting a deficit reduction from 2.8% of GDP in 2025 to 2% in 2026.
On a cash basis, the fiscal deficit is expected to stand at 4% of GDP, while the primary shortfall will narrow to 1.5%, in line with the fiscal anchor under the IMF-supported economic programme.
Government expenditure is projected to rise marginally from 15% of GDP in 2025 to 15.4% in 2026, mainly to finance infrastructure projects under the Big Push Programme and other social initiatives.
“This fiscal stance balances discipline with growth,” Ato Forson said. “We will consolidate our gains while safeguarding resources for productive investment.”
