Government has embarked on a comprehensive review of its Value Added Tax (VAT) regime, with the primary objective of simplifying the system and fostering a more conducive business environment.
This move was disclosed by Finance Minister Dr. Cassiel Ato Forson during a high-level meeting with Wencai Zhang, Managing Director and Chief Administrative Officer of the World Bank Group.
Dr. Forson emphasized that the current VAT structure has proven cumbersome for businesses, citing the effective VAT rate of 21.9%, one of the highest in Africa, as a significant contributor to compliance difficulties and operational inefficiencies.
To address these challenges, the government is collaborating with international partners, including a Technical Assistance Mission from the International Monetary Fund (IMF), to support the review process.
“We are fully aware of the challenges posed by the existing VAT structure,” Dr. Forson stated.
“That is why we are undertaking a complete overhaul of the system. I can assure our partners and the Ghanaian public that this reform process will be concluded before the main budget is presented in November.”
This initiative aims to improve tax compliance, enhance revenue mobilization, and create a more business-friendly tax system. The World Bank has pledged its support for Ghana’s reform efforts, reaffirming its commitment to working closely with the government to establish a more efficient and equitable tax regime.
The review process is expected to alleviate the strain on businesses, particularly small and medium-sized enterprises, and ultimately contribute to a more favorable business environment in Ghana.
He added that by November, the government plans to finalize the reform process, paving the way for a more streamlined and effective VAT system.
