Accra: Ghana is losing nearly 60 per cent of its potential Value Added Tax (VAT) revenue due to inefficiencies, Mr Thomas T. K. Agorsor, Head of the Domestic Tax Revenue Division (DTRD) Free Zones Office of the Ghana Revenue Authority (GRA), has announced.
According to Ghana News Agency, Mr Agorsor spoke at a media engagement organised by the Ghana Ports and Harbours Authority (GPHA) on the theme: 'GRA's New VAT Reforms and Their Implications for Businesses and Consumers in 2026'. He attributed the gap primarily to non-compliance within the tax system. He explained that despite VAT's 27-year presence in Ghana, multiple amendments over the years, especially the decoupling of levies from the main VAT regime, have complicated compliance and widened the tax gap.
He further elaborated that the practice of charging levies separately before imposing VAT resulted in a 'tax-on-tax' effect, which increased prices of goods and services, leading to greater resistance to compliance. This practice rendered businesses unable to reclaim input tax on levies, effectively turning them into business costs that were eventually passed on to consumers.
Mr Agorsor highlighted that the comprehensive VAT reform initiated by the Ministry of Finance aims to consolidate all amendments under a single, clear law. This initiative seeks to improve certainty, reduce complexity, and enhance revenue mobilisation. Narrowing the VAT compliance gap to about 20 per cent is expected to significantly improve Ghana's tax-to-GDP ratio, which the government aims to raise from about 13 per cent to 16 per cent.
He also emphasized that reviewing Ghana's extensive list of tax exemptions is critical, as these exemptions continue to erode potential revenue.