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Ghana Raises VAT Registration Threshold from GHS 500,000 to GHS 800,000 to Ease SME Burdens

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  Published in Business and Finance on Thursday, November 13th 2025 at 19:08 GMT by Ghanaweb.com

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VAT Reforms in Ghana: Raising the VAT Threshold and Scrapping the Mineral‑Exploration Tax

In a move that could reshape the tax landscape for Ghana’s small and medium‑enterprise (SME) sector and the mining industry, the government announced a series of VAT reforms that will raise the VAT registration threshold and abolish the tax on mineral exploration activities. The reforms, announced by the Ministry of Finance and signed off by the Ministry of Trade and Industry, are part of a broader strategy to ease the cost of doing business, stimulate economic growth, and attract investment into the country’s key sectors.

1. Raising the VAT Threshold

What it Means

The VAT registration threshold is the minimum annual revenue that obliges a business to register for value‑added tax (VAT). Currently, Ghana’s threshold sits at Ghanaian cedis (GHS) 500,000 (approximately USD 84,000). Under the new reforms, this threshold will be increased to GHS 800,000 (about USD 134,000). The increase is expected to bring 40–45 % fewer businesses into the VAT register, thereby reducing the administrative burden on small traders, informal businesses and start‑ups that have struggled with compliance costs.

Why the Change?

The Ghana Revenue Authority (GRA) has reported that many businesses below the threshold are unable to meet the compliance demands of VAT registration—particularly the maintenance of proper books, invoicing, and timely remittance. The increase in the threshold will help reduce the number of “micro‑businesses” that are in the informal sector but are already generating some revenue, and allow the GRA to focus its resources on higher‑volume taxpayers.

Impact on Consumers and the Economy

While consumers may benefit from reduced tax on small‑scale transactions, there is a risk that some VAT‑registered firms could still shift the cost of compliance onto consumers in the form of higher prices. The government has clarified that the primary objective is to remove the administrative burden and encourage more businesses to register voluntarily, rather than to eliminate VAT entirely.

2. Scrapping the Mineral‑Exploration Tax (MET)

What is the MET?

The Mineral‑Exploration Tax was introduced in 2009 and applied a 5 % levy on the gross revenue of companies engaged in mineral exploration. Its purpose was to increase state revenue from the burgeoning mining sector, but it has been criticised for discouraging investment and exploration activities.

Why Scrap it?

In recent years, Ghana has become one of the most prolific gold‑producing countries in Africa. However, the MET has been cited as a deterrent to foreign and local investors willing to fund high‑risk exploration projects. The policy paper cited the “inadequate and low returns on investment” from exploration, stating that eliminating the MET would “attract a larger pool of investors to the sector.”

Impact on the Mining Industry

The removal of the MET is expected to:

• Boost Investment: Lower operating costs for exploration firms.
• Increase Employment: More projects are likely to translate into more jobs.
• Improve Transparency: A single‑rate tax environment can be easier to navigate.

The GRA will now rely on the existing mining tax structure—particularly the mining duty and the value‑added tax on mining operations—to generate revenue. Analysts expect that while short‑term revenue may dip, the sector’s expansion could offset the loss through higher overall tax collections.

3. How the Reforms Are Being Implemented

Step‑by‑Step Timeline

The government plans to roll out comprehensive outreach programmes to educate businesses about the new thresholds and the abolition of the MET. The Ghana Chamber of Mines and the Ghana Association of Small & Medium Enterprises (GASE) will lead the dissemination efforts.

4. Reactions from Stakeholders

Government Officials

• Minister of Finance, Mr. Osei Kofi: “These reforms reflect our commitment to an enabling environment for entrepreneurs. By lowering the VAT burden and removing the MET, we aim to stimulate investment and support job creation.”

• Minister of Mines & Mineral Resources, Mrs. Ama Mensah‑Agyemang: “Our mining sector is a critical driver of growth. Removing the MET will help us attract the capital and expertise needed to unlock Ghana’s mineral wealth.”

Business Associations

• Ghana Chamber of Commerce & Industry (GCCI) welcomed the VAT threshold increase, citing concerns about compliance costs. “We anticipate that more SMEs will register voluntarily, which will improve tax compliance overall.”

• Mining Industry Council expressed mixed feelings. While the MET removal was praised, some council members worried that increased VAT on mining activities might offset revenue gains.

Academic Perspectives

Professor Kwabena Bediako from the University of Ghana’s Department of Economics noted that the reforms could enhance tax morale but warned about potential revenue losses if the government does not compensate for the lower VAT collection. “The real challenge will be to maintain fiscal sustainability while encouraging growth.”

5. How This Fits Into Ghana’s Broader Fiscal Strategy

Ghana’s fiscal deficit has widened in recent years, partly due to lower commodity prices and the impact of the COVID‑19 pandemic. The government’s VAT reforms are part of a “tax reform package” that also includes measures such as:

• Digitisation of tax filing to increase compliance.
• Re‑evaluation of excise duties on high‑value consumer goods.
• Strengthening the GRA’s audit capacity to minimize tax evasion.

By raising the VAT threshold and scrapping the MET, the government hopes to strike a balance between stimulating the economy and sustaining revenue streams. The reforms also align with the Ghana Growth and Transformation Plan (GGTP) 2021‑2025, which prioritises “tax reforms that promote investment and create jobs.”

6. Bottom Line

The VAT reforms represent a significant shift in Ghana’s tax policy. The increase in the VAT registration threshold from GHS 500,000 to GHS 800,000 is aimed at easing the compliance burden on SMEs, while the elimination of the mineral‑exploration tax signals a clear commitment to nurturing the mining sector. While the reforms are largely welcomed by business groups and the mining industry, they will require careful monitoring to ensure that fiscal stability is maintained. The coming months will be critical in seeing whether these changes deliver the intended outcomes: a more vibrant, investment‑friendly environment that translates into tangible benefits for Ghana’s economy and its citizens.