Regulatory costs could offset VAT reform in Ghana — MyJoyOnline
Ghana’s small, medium-sized and micro enterprises face significant costs for local permits and licences, which could offset the effect of the national tax reform. This is stated in an opinion column published by MyJoyOnline. The article’s author, Kweku Hammond, believes that non-transparent and fragmented procedures at the municipal level create a hidden financial burden for businesses.
Under the Value Added Tax Act 1151, which entered into force in 2026, the effective VAT rate was reduced from approximately 21.9% to 20%. The 1% COVID levy was also abolished, and the VAT registration threshold was raised from 200,000 to 750,000 Ghanaian cedis in annual turnover. The finance minister said these changes should return about 6 billion cedis to households and businesses in 2026 and reduce the cost of doing business by 5%.
Costs of permits and licences
At the same time, a study by the Institute for Liberty and Policy Innovation, cited by the author, estimates the average cost of a permit from a metropolitan, municipal or district assembly at 1,275 cedis. The average licence fee is 1,600 cedis and reaches 3,000 cedis for some businesses. Business registration costs another 1,030 cedis on average.
The article states that entrepreneurs also face overlapping powers among different authorities, excessive paperwork and inconsistent application of rules. Due to the complexity of procedures, businesses, according to the author’s assessment, are often forced to turn to informal intermediaries.
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The formalisation problem
According to the Ghana Statistical Service, the informal sector accounted for 92% of the country’s 1.8 million private enterprises in 2024 and employed about 69% of workers. An ILAPI study covering 600 companies estimates that MSMEs account for 92% of all enterprises and contribute nearly 70% of GDP.
The column’s author notes that formal small businesses may bear a greater tax and administrative burden than informal ones. He proposes consolidating municipal licensing procedures, creating a single digital platform for applying for multiple permits, and publishing all fees.
The article also cites the example of the carbon emissions tax: a 2024 study by the Nordic Africa Institute recorded an overall compliance rate of 15%, and 4% among microenterprises. The tax was abolished in April 2025.
