Complex VAT system is dead - GNCCI says simpler regime will ease prices and compliance stress - MyJoyOnline

The Ghana National Chamber of Commerce and Industry (GNCCI) has welcomed the government’s recent overhaul of the Value Added Tax (VAT) system, describing it as a long-awaited relief for businesses across the country. Mark Badu Aboagye, the CEO of GNCCI, emphasized that the previous VAT structure was a major source of frustration for his members due to its complexity and the high compliance costs it imposed. For years, the Chamber has been pushing for reforms, repeatedly urging the government to simplify the VAT regime and lower the effective tax rate in their annual budget submissions. According to Aboagye, the initial announcement last year that the government would review the VAT system sparked hope, but progress was slow, taking nearly a year before any tangible steps were taken. This year’s budget, however, finally delivered the changes that many businesses had been clamoring for. The biggest gripe among GNCCI members was the convoluted nature of the old VAT system, which combined the Standard VAT with various straight-line levies like the National Health Insurance Levy (NHIL), the Ghana Education Trust Fund (GETFund) levy, and the so-called "Almighty Covid levy." These levies, he explained, were particularly problematic because businesses couldn’t claim input VAT on them, which meant they became pure costs that directly impacted their bottom lines. The consolidation of these levies into a single Standard VAT has fundamentally changed the situation. Now, businesses can claim input VAT on these charges, transforming what was a direct expense into a recoverable tax element. This shift is expected to ease financial pressure on firms and potentially influence market prices downward as costs come down. The new VAT regime is straightforward: businesses will pay a flat 20% rate and have clear guidelines on how to calculate output VAT, input VAT, and deductions before remitting the balance to the government. This clarity, said Aboagye, alone lifts a significant burden off companies, who no longer have to grapple with complicated computations. The CEO noted that this transparency and simplicity will not only reduce compliance stress but could also positively affect pricing structures, though discussions about how prices adjust will be an important topic moving forward. Overall, the GNCCI views the VAT reform as a major problem solved for its members after years of advocacy. The new system simplifies tax compliance, reduces hidden costs, and brings a level of predictability that businesses desperately needed. While the full impact on prices and the broader economy will unfold over time, the initial response from the business community is one of optimism and relief. The Chamber hopes that this reform marks the beginning of a more business-friendly tax environment in Ghana, encouraging growth and investment. This development is seen as a welcome step toward aligning Ghana’s tax system with international best practices where input VAT can be claimed, ensuring that businesses aren’t unfairly penalized by indirect taxes. The GNCCI continues to monitor the implementation closely and looks forward to further engagement with government to refine tax policy in ways that support economic resilience and competitiveness.