The Ghana Revenue Authority (GRA) has stated that the recent reduction in Value Added Tax (VAT) has returned an estimated GH¢6.5 billion to consumers’ pockets, contributing to a noticeable decline in the prices of goods and services nationwide.
According to the GRA, the VAT cut was designed to ease the cost-of-living pressures on households while stimulating consumer spending and supporting businesses.
Prices of goods and services have fallen by about 1.9 per cent since the implementation of recent tax reforms, following a reduction in the effective VAT rate to 20 per cent.
Early indicators, the Authority noted, suggest that the policy is having its intended impact, with several sectors recording price adjustments following the tax reduction.
Speaking on the development, the Commissioner-General of the GRA, Anthony Kwasi Sarpong, said early indications show the reforms are delivering the intended results. He was speaking during a VAT compliance monitoring exercise at shopping malls in the Spintex enclave.
Sarpong explained that the reforms comprise a reduction in the VAT rate, the removal of the COVID-19 levy, the decoupling of VAT, and increased thresholds for small businesses.
He noted that inspections at several retail outlets revealed that businesses had updated their systems and were applying the revised VAT rates.
He further explained that lower VAT charges have reduced the tax burden on essential commodities and services, allowing retailers to pass on savings to consumers, adding that it has helped improve purchasing power at a time when many Ghanaians are still recovering from the effects of high inflation and economic slowdown.
Engagements with shoppers also pointed to increasing satisfaction with the lower prices, supporting government’s assertion that the reforms are easing the cost burden on consumers.
During the visit, Sarpong urged businesses to voluntarily comply with the new VAT framework and encouraged consumers to request VAT invoices for every purchase to enhance enforcement.
He emphasised that sustained compliance by both businesses and consumers is critical to revenue mobilisation for national development, adding that responsible tax compliance underpins government’s broader agenda of economic growth, job creation, and national transformation.
According to him, the vision outlined by President John Dramani Mahama for 2026 largely depends on the country’s ability to generate adequate domestic revenue.
Shopping malls visited during the exercise — including Palace Mall, Melcom, Orca Décor, United Commercial Trading, and Palace Home Décor — confirmed that their systems had been adjusted to reflect the new VAT regime. Shoppers at the malls also welcomed the changes, saying the price reductions were already being reflected at the tills.
However, the GRA cautioned that the full benefits of the VAT cut will depend on sustained compliance by businesses.
It urged traders and service providers to reflect the reduced tax rates in their pricing and not take undue advantage of consumers.
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.
