The Ghana Union of Traders Association (GUTA) has urged the government to restore the 4% flat Value Added Tax (VAT) rate, arguing that a simplified system would improve compliance, particularly among traders in the informal sector.
The association said the current 20% VAT regime is too complex for many businesses to understand and calculate, making implementation difficult.
The Ghana Revenue Authority (GRA) announced a major overhaul of the country’s Value Added Tax (VAT) regime, beginning with a reduction in the standard VAT rate from 21% to 20%, as part of a broader reform package aimed at easing the tax burden on households and businesses.
On the other hand, the VAT flat rate has been increased from 4 to 20%, a move Ghana Union of Traders Association (GUTA) said would collapse small businesses.
The changes took effect from January 1, 2026, following the passage of the Value Added Tax Act, 2025 (Act 1151), and mark one of the most significant restructurings of the VAT system in recent years.
In an official notice issued to all VAT-registered taxpayers, the GRA said the reforms are designed to simplify the tax system, improve efficiency and encourage voluntary compliance.
According to the Authority, the reduction in the core VAT rate is intended to provide relief to consumers and producers at a time of persistent cost pressures.
Speaking at a press conference in Accra, GUTA President Clement Boateng appealed to the GRA to suspend what he described as harassment by its task force and instead engage stakeholders through dialogue.
“Traders, especially in the informal sector, struggle with complex computation, lack the necessary expertise and cannot afford to hire VAT professionals to do the calculations and the arithmetic for them. This leads to unintentional non-compliance, penalties and a negative impact on business sustainability,” he said.
GUTA is also calling for an urgent review of Act 1151, proposing a return to a simplified 3% to 4% flat VAT system for informal sector operators to make compliance easier.
