Understanding Ghana VAT
Ghana's Value Added Tax (VAT) system includes multiple components that together create the total tax burden on goods and services. For businesses on the Standard Rate scheme, the effective rate is approximately 21.9%.
Standard Rate Components
- GETFund Levy (2.5%) Funds the Ghana Education Trust Fund for educational development
- NHIL (2.5%) National Health Insurance Levy supports healthcare funding
- COVID-19 Health Recovery Levy (1%) Introduced in 2021 to support health infrastructure
- VAT (15%) Applied to the net amount plus all levies above
How the Rate Compounds
The effective rate of approximately 21.9% results from VAT being calculated on the levy-inclusive amount. For example, on a GHS 100 net amount: levies total GHS 6, making the VAT base GHS 106, and 15% VAT on GHS 106 equals GHS 15.90.