Success of VAT Reforms Heavily Dependent on Broadening the Tax Base – Deloitte

By Praisebell Rosemond Larbi

Deloitte Ghana has welcomed the government’s latest reforms to the Value Added Tax (VAT) system but warns that the measures will fall short of their intended impact unless they are accompanied by stronger enforcement and a deliberate effort to widen Ghana’s narrow tax base.

According to Deloitte’s post-2026 Budget analysis, the newly announced VAT changes, though a major step forward cannot, on their own, deliver the significant revenue growth government is expecting. The firm emphasised that improving the administrative efficiency of VAT must go hand in hand with bringing more businesses into the formal tax net.

The 2026 Budget, presented to Parliament last week by the Minister for Finance, Dr. Cassiel Ato Forson, introduces several adjustments aimed at simplifying VAT filing and reducing long-standing bottlenecks. These include a redesigned filing platform for micro and small businesses, a clearer framework for assessing input tax credits, and an improved categorisation of exempt, zero-rated, and standard-rated items. The reforms are also aligned with IMF-supported fiscal consolidation efforts.

For years, business associations such as the Ghana Union of Traders Association (GUTA) and the Association of Ghana Industries (AGI) have criticised Ghana’s VAT regime as confusing, distortive, and burdensome, particularly for small and medium-sized enterprises with limited administrative capacity. Complaints have centred on delayed refunds, ambiguous classifications, and the cascading “tax-on-tax” effect that inflates production costs.

Deloitte notes that these grievances make the administrative reforms timely and necessary. The firm describes the government’s move as a “sound policy decision” shaped by private sector feedback gathered at the National Economic Forum and other stakeholder engagements.

However, Deloitte cautions that simplification alone will not boost revenue. The firm points out that only a small fraction of eligible businesses currently register for VAT, leaving the burden of compliance on a limited pool of taxpayers. A significant share of economic activity, especially among informal sector operators, continues to escape VAT entirely.

“Improving administration without broadening the tax net risks reinforcing an already uneven system,” Deloitte warns, adding that only structural improvements in compliance will safeguard the country’s revenue expectations.

The firm is urging government to adopt stronger enforcement measures, streamline registration requirements, and invest in sustained taxpayer education to boost voluntary compliance. These steps, Deloitte argues, are critical to ensuring fairness, improving predictability for businesses, and supporting Ghana’s broader economic transformation agenda.

Without these complementary efforts, Deloitte concludes, the much-anticipated reforms may not deliver the meaningful revenue gains policymakers are hoping for, as “the changes are not a quick fix to improving revenues.”