The government is set to overhaul Ghana’s Value Added Tax (VAT) system by the end of the year, as Finance Minister Dr. Ato Forson describes the current structure as distorted and in need of urgent reform.
Speaking on The Point of View with Bernard Avle on Channel One TV, Dr. Forson explained that merely adjusting the VAT rate or removing certain components will not resolve the fundamental inefficiencies in the tax system.
To address this, the government has sought technical assistance from the International Monetary Fund (IMF) and is forming a task force to assess and implement necessary changes.
“We see the entire VAT regime as a tax that has been distorted, and it will require a comprehensive review. If you only pick the rate and remove it, you are not solving the problem,” he explained.
Dr. Forson also criticized the coexistence of both sales tax and ad-valorem tax in Ghana’s system, stating that such a practice is uncommon globally.
“I have never seen a country where you operate both sales tax and ad-valorem tax at the same time. No one does that. You choose one of the two,” he noted.
With these planned reforms, the government hopes to simplify and streamline the VAT system to enhance efficiency and compliance, ensuring a fairer and more effective taxation regime.
