A sweeping set of multiple reformed tax measures officially took effect in Ghana on Monday, July 1, 2025, with wide-ranging implications for businesses, consumers, and informal sector operators.
The reforms are already triggering a mix of optimism, anxiety, and resistance from businesses, informal workers, and consumers alike.
From reintroduced excise duties on plastics to value-added tax (VAT) on property and insurance premiums, the measures are poised to reshape the financial landscape for enterprises and households across Ghana.
While the measures are expected to help stabilise Ghana’s fiscal outlook and reduce overdependence on external borrowing, stakeholders across key sectors are raising concerns about the timing, burden-sharing, and likely inflationary impact of the taxes.
5% excise duty on local plastics
One of the key components of the new tax regime is the reintroduction of a 5% excise duty on locally manufactured plastic products.
The duty, originally imposed under the Excise Duty Act, 2013 (Act 870), was scrapped by the previous administration in 2017, but returned through legislative changes made in 2023.
For manufacturers, the reimposed tax translates to increased production costs.
Companies producing plastic containers, bags, packaging, and related goods will either absorb these costs or pass them onto the consumer, leading to anticipated price hikes on many everyday products.
Industry leaders have already expressed concern that the tax could erode competitiveness and force cutbacks in a sector that supports thousands of jobs.
Informal sector
GRA also began implementing a presumptive tax regime that targets informal sector operators who have largely remained outside the formal tax system.
Under the new rules, individuals and businesses earning below GH¢20,000 annually will pay a fixed quarterly tax of GH¢25, GH¢35, or GH¢45, depending on the nature of their activity.
3% flat rate
Operators with earnings between GH¢20,000 and GH¢500,000 per year will be taxed at a flat 3% on their total sales.
For those whose earnings exceed GH¢20,000 but do not cross GH¢500,000, a Modified Cash Basis taxation approach has been introduced, allowing for allowable deductions like rent, salaries, and utilities while applying graduated tax rates.
The move has been welcomed by some economists as a long-overdue step toward tax equity, but small business associations warn that low-income traders, artisans, and roadside vendors may struggle to comply.
5% VAT on real estate sparks outcry
One of the most contentious components of the new tax measures is the imposition of VAT on the sale and rental of immovable property by estate developers.
Under the Value Added Tax (Amendment) Act, 2023 (Act 1107), all such transactions now attract a 5% VAT, with a further 1% COVID-19 levy also applicable.
Property prices to go up
Developers argue that the new requirement would raise home construction costs and push up property prices, worsening Ghana’s housing affordability crisis.
Critics also warn that the added tax burden may be transferred directly to tenants, especially in urban areas where demand is already high.
However, exemptions have been outlined for residential dwellings and agricultural land.
The GRA has also issued firm warnings to withholding agents tasked with collecting and remitting the VAT, noting that failure to comply will attract stiff penalties. Agents who neglect their responsibilities will be liable for the full amount due, plus a 30% surcharge.
15% VAT on non-life insurance
Another industry rocked by the reforms is insurance. For the first time, insurance companies are now required to charge 15% VAT on a wide range of insurance premiums, including fire, marine, travel, burglary, indemnity, property, personal accident, workmen’s compensation, and liability insurance.
Motor vehicle insurance has been exempted from the VAT requirement, providing a slight relief to the mass market.
But for business clients and high-value policyholders, the tax is expected to significantly increase the cost of coverage.
There are fears that the change may discourage insurance uptake, which remains low in Ghana despite efforts to increase financial protection and resilience among households and businesses.
Withholding agents under pressure to comply
The new regime also places greater responsibility on appointed withholding agents, including estate developers, major contractors, and institutional landlords.
Under the VAT amendment, such agents must collect and remit applicable VAT to the Commissioner-General by the 15th day of the following month.
Failure to do so not only attracts a penalty but also obliges the agent to pay the full uncollected amount.
This compliance requirement is expected to tighten the noose around tax leakages and boost accountability within high-value transactions, but it also places additional administrative burdens on real estate and infrastructure players who must now adapt swiftly or face legal consequences.
Govt justifies the measures
Government officials and tax authorities have defended the reforms, describing them as necessary to improve tax equity and build a sustainable public finance system.
The GRA has pledged to roll out education campaigns and provide simplified digital platforms to assist micro and small enterprises in complying with the new requirements.
The rollout has been met with growing discontent among business associations and advocacy groups.
