Ghana's New VAT Law Is in Force. Is Your Business Ready?

What Changed Under Act 1151 — And Why It Matters

The Value Added Tax Act, 2025 (Act 1151) and the COVID-19 Health Recovery Levy Repeal Act, 2025 both took effect on 1 January 2026, repealing and replacing the old VAT Act, 2013 (Act 870) entirely.[1] Together they represent, in the words of Crowe Veritas, "far-reaching changes" that distinguish "prepared and unprepared businesses".[2]

According to Ghana's Finance Minister Dr. Cassiel Ato Forson, abolishing the COVID-19 levy alone is expected to return approximately GH₵3.7 billion to businesses and households in 2026 — a meaningful reduction in the cost of doing business.[3]

Here is a plain-English summary of every major change and what it means for your business:

Effective VAT rate: 21.9% → 20%

The 1% COVID-19 Health Recovery Levy is abolished. The total rate is now 20%: VAT at 15%, NHIL at 2.5% and GETFund at 2.5%, all charged on the same base. Your invoices must now reflect 20%, not the old 21.9%.

VAT Flat Rate Scheme abolished

Businesses previously charging flat-rate VAT at 3% must immediately switch to the standard 20% rate. Failure to do so is non-compliant under Act 1151. If your turnover is below GH₵750,000, you may apply to be deregistered.

NHIL and GETFund now creditable as input tax

Previously, NHIL (2.5%) and GETFund (2.5%) were straight levies that could not be claimed back. Under Act 1151 they are fully integrated into the VAT base and deductible as input tax — potentially improving your effective tax cost by up to 5%.

Registration threshold: GH₵200,000 → GH₵750,000 (goods only)

Businesses dealing in goods are only required to register for VAT when annual turnover reaches GH₵750,000. However, service providers must register regardless of turnover, unless specifically exempted by the Commissioner-General.

New invoice format required

All VAT invoices must now show separate lines for 15% VAT, 2.5% NHIL and 2.5% GETFund. Your existing invoice templates — whether in software or print — must be updated.

E-VAT clearance now mandatory for all

Every invoice must be transmitted to the GRA's Virtual Sales Data Controller (VSDC) and receive a clearance number, digital signature and QR code before it can legally be issued to a customer.

Records must be kept for 6 years digitally

All financial records must be maintained digitally and accessible for audit for a minimum of six years. Paper records alone are no longer sufficient.

E-VAT: Ghana's Mandatory Electronic Invoicing System

The E-VAT system is the most operationally significant change for most businesses. Under the GRA's clearance model — now embedded in Act 1151 — every invoice must be transmitted to the GRA's VSDC before it can be issued. An invoice that has not been cleared by the GRA is not a legally valid VAT invoice.[4]

The E-VAT process works as follows:

Your accounting or invoicing software prepares the invoice and transmits the data to the GRA's VSDC via the internet
The VSDC validates your TIN, business registration, invoice format and VAT calculation
The GRA returns a unique Invoice Reference Number (IRN), digital signature, timestamp and QR code
Only then can you issue the cleared invoice to your customer — the QR code must be visible on the invoice
Invoice data is stored in the GRA's centralised system, creating a real-time audit trail of every transaction

Offline mode is permitted: if your internet connection is disrupted, your system can issue a provisional invoice, but the data must be transmitted to the GRA within 24 hours of connectivity being restored. GRA must also be notified within 24 hours of any system outage.[4][5]

What Happens If You Are Not Compliant

Non-compliance under Act 1151 and the Revenue Administration Act, 2016 (Act 915) carries serious consequences. The GRA has made clear through its Compliance and Enforcement Unit that non-issuance of fiscal receipts and invoices is a criminal offence, prosecutable under sections 78 and 82 of Act 915.[6]

The specific penalties include: a fine of not more than 100 penalty units; a term of imprisonment of not more than six months; or both — plus an additional financial penalty of up to GH₵50,000 or three times the tax involved, whichever is greater.[6]

The GRA has confirmed it is actively conducting compliance operations to check fiscal receipt issuance across businesses in Ghana, and plans to expand enforcement through the Fiscal Electronic Devices mandate and the Sentinel digital transaction monitoring programme in 2026.[7]

Your VAT Compliance Checklist Under Act 1151

Work through this checklist for your business. Every 'no' represents an active compliance gap that needs to be addressed before the GRA addresses it for you.

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Have we confirmed whether we are above or below the GH₵750,000 registration threshold (for goods)?

Service providers: you must register regardless of turnover.

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Are our invoices showing the correct breakdown: 15% VAT + 2.5% NHIL + 2.5% GETFund on separate lines?

A combined '20%' line without the breakdown is non-compliant under Act 1151.

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Has our accounting software been updated to reflect the new VAT structure?

Check this with your software provider — many systems needed configuration updates.

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Are we onboarded onto the GRA's E-VAT system and issuing GRA-cleared invoices?

Contact your GRA Taxpayer Service Centre if not yet onboarded.

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Are we correctly claiming input tax credits on NHIL and GETFund?

This is a new right under Act 1151 — failing to claim it costs your business money.

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If we were previously on the VAT Flat Rate Scheme, have we fully migrated to the standard 20% rate?

Continuing to charge 3% flat rate is non-compliant as of 1 January 2026.

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Are our financial records being maintained digitally and stored for the required 6-year period?

Paper records alone are no longer sufficient under the new digital compliance framework.

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Have our finance staff been briefed on the changes and trained on the updated processes?

Staff who do not understand the new rules are your biggest practical compliance risk.

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Could we confidently respond to a GRA audit or compliance visit tomorrow?

If any of the above questions gave you pause, the honest answer is probably not yet.

Compliance Goes Beyond Filing Returns

Many businesses assume they are compliant simply because they submit their VAT returns on time. But under Act 1151, timely filing is just one dimension of compliance. The questions that matter are:

Are your invoices being issued through the GRA's E-VAT clearance system?[4]
Is your accounting software correctly configured for the new 20% structure with separate levy lines?
Are you claiming input tax credits on NHIL and GETFund — a new right your business may not yet be exercising?[1]
Has your VAT position been reviewed since 1 January 2026 to ensure the transition was handled correctly?
Are your records maintained digitally and retained for the required six-year period?

Crowe Veritas, one of Ghana's leading professional services firms, advises that "VAT compliance under Act 1151 is largely system-driven, with minimal tolerance for manual workarounds."[2] A business that is still relying on manual invoicing, notebook records or an unconfigured accounting system is not managing a minor gap — it is operating outside the law.

Sometimes the biggest risk is not getting the tax wrong — it is assuming you have already got it right.

Ucresco's Perspective

Tax errors are rarely discovered at the moment they occur. They surface during a GRA audit, a compliance review, a bank's due diligence process or when a major client requests your VAT compliance certificate. By then, the cost of correcting them — in penalties, professional fees, management time and reputational impact — is always far higher than the cost of getting it right from the start.

The businesses that will navigate 2026's heightened enforcement environment successfully are those that treat VAT compliance as a management responsibility, not just an accounting task. That means systems configured correctly, staff trained, invoices issued digitally, records kept, and input tax credits claimed.

At Ucresco, we conduct VAT compliance reviews, help businesses configure their accounting systems for Act 1151, support E-VAT onboarding, and provide ongoing tax compliance support. If any of the checklist questions above gave you pause, your business would benefit from a compliance review before the GRA prompts one.

Key Takeaways

Act 1151 is in force now — effective 1 January 2026. There is no transition period remaining.[1]
The effective VAT rate is 20% (not 21.9%). Any invoice still showing 21.9% is incorrect.[1]
NHIL and GETFund are now creditable as input tax — a cash flow benefit your business must actively claim.[1]
The Flat Rate Scheme is abolished. Any business still charging 3% flat-rate VAT is non-compliant.[1][2]
Non-issuance of E-VAT-cleared invoices is a criminal offence under Act 915, carrying fines of up to GH₵50,000 or three times the tax involved.[6]
From 2024, only E-VAT-cleared invoices support income tax deductibility — check your suppliers too.[4]
GH₵3.7 billion is being returned to business in 2026 through the COVID levy abolition — make sure your pricing, systems and returns reflect this.[3]

References

[1] Ghana Revenue Authority (GRA) (2026). Notice to All VAT Registered Taxpayers — Key Changes Under Act 1151. Official GRA public notice. gra.gov.gh/news/portfolio/notice-to-all-vat-registered-taxpayers
[2] Crowe Veritas Ghana (February 2026). Ghana VAT Reform 2026: A Practical Guide for Businesses. Crowe professional services analysis of Act 1151. crowe.com/gh/news/ghana-vat-reform-2026
[3] JsMorlu Ghana (2025). Ghana Abolishes COVID-19 Levy and Overhauls VAT System. Cites Finance Minister Dr. Cassiel Ato Forson: GH₵3.7 billion returned to businesses in 2026. jsmorlu.com.gh/blog/tax/ghana-covid-levy-abolished
[4] Fonoa (December 2025). Ghana VAT Rules for Digital Businesses: E-Invoicing Now Required. Technical guide to GRA's E-VAT clearance model and VSDC requirements. fonoa.com/resources/blog/ghana-e-vat-e-invoicing-2026
[5] PowerSoft System (2026). Ghana E-VAT Complete Guide 2026: Setup, Compliance & Software. Covers VSDC API integration, 24-hour offline transmission rules and system certification. powersoftsystem.com/post/ghana-e-vat-guide-2026
[6] Fiscal Solutions (undated). Ghana Revenue Authority Enforces the E-VAT System. Documents GRA enforcement operations, criminal prosecution under Act 915 sections 78 and 82, and penalty schedule: up to GH₵50,000 or 3× the tax involved. fiscal-requirements.com/news/2540
[7] News Ghana (November 2025). GRA Pushes Digital Tax Solutions to Capture Informal Economy. GRA Commissioner-General outlines Sentinel programme and 2026 enforcement plans. newsghana.com.gh

About Ucresco Consult Ltd

Ucresco is a Business Growth and Management Consulting firm dedicated to helping entrepreneurs, startups and SMEs across Ghana build resilient, scalable businesses. We partner with our clients to strengthen financial management, implement digital accounting solutions, ensure tax compliance and prepare businesses for sustainable long-term growth.