Tax & Compliance

Withholding Tax and VAT in Ghana: What SMEs Must Get Right in 2026

2 July 20265 min read

January 2026 quietly rewrote one of the most complained-about parts of Ghana's tax system. The COVID-19 levy is gone, the VAT flat rate scheme has ended, the registration threshold has more than tripled, and the way VAT is calculated on an invoice has been simplified under the new Value Added Tax Act, 2025 (Act 1151).

At the same time, withholding tax, the other transaction-level tax SMEs wrestle with, has not changed, and it still catches businesses out weekly.

Rather than recite the law, let us follow a month at a fictional Accra business, Kandey Ltd, a growing facilities-management company, and watch where each rule bites.

Scenario 1: Kandey pays a supplier for goods

Kandey buys GHS 15,000 of cleaning supplies from a regular vendor. Because this is a payment for goods to a resident supplier above the annual threshold of GHS 2,000, Kandey must withhold 3%, pay the supplier GHS 14,550, and remit GHS 450 to the GRA.

The rule to internalise: when you pay certain suppliers, you become the GRA's collection agent whether you asked for the job or not. The common resident rates:

Payment type	WHT rate
Goods	3%
Works (e.g. construction)	5%
Services	7.5%
Rent, residential property	8%
Rent, commercial property	15%
Dividends	8%
Interest (with exceptions)	8%

Payments for goods, works and services below GHS 2,000 in a year escape withholding. Almost everything an established business pays its regular suppliers does not.

Scenario 2: Kandey hires a consultant, and gets it wrong

Kandey engages an IT consultant for GHS 8,000 and pays the invoice in full, withholding nothing. The consultant is happy. The GRA will not be: the 7.5% services withholding was Kandey's obligation, and failing to withhold makes Kandey liable for the tax it should have deducted.

This is the sharpest edge of the withholding system. The cost of forgetting does not fall on the supplier; it falls on you. Well-run businesses solve this with one habit: no supplier payment leaves the account until someone has asked what must be withheld. Then, by the 15th of the following month, everything withheld is filed and remitted together with the withholding certificates suppliers need for their own tax credits.

Scenario 3: Kandey's own invoices, under the new VAT rules

Kandey invoices a client GHS 20,000 for a month of facilities services. Since 1 January 2026, the maths on that invoice looks different from last year:

The old way (to end-2025): NHIL 2.5%, GETFund 2.5% and COVID levy 1% were added to the price first, and 15% VAT was then charged on top of price plus levies. Effective burden: roughly 21.9%, and the levies were not recoverable as input tax.
The new way (from 2026): the COVID levy is abolished. VAT of 15%, NHIL of 2.5% and GETFund of 2.5% are each calculated directly on the price, a clean 20% effective rate, and the levies are now eligible for input tax deduction like VAT itself.

So Kandey charges GHS 20,000 plus GHS 4,000, and can now recover the VAT and levies it pays on its own business inputs more fully than before. For most compliant businesses the reform is a genuine cost reduction, worth an estimated GHS 3.7 billion returned to households and firms in 2026.

Scenario 4: Kandey's sister company wonders whether to register at all

Kandey's founder also runs a small design studio with about GHS 400,000 in annual sales. Under the old GHS 200,000 threshold, it had to be VAT-registered. Under the 2026 reforms, the registration threshold has risen to GHS 750,000, so the studio can deregister, stop charging VAT and shed the monthly return entirely.

Two cautions before anyone celebrates:

Deregistration is a process, not a decision. Until the GRA approves it, the obligations continue.
Registration can still be worth keeping if your customers are VAT-registered businesses that expect VAT invoices, or if your input VAT recovery is significant. The threshold tells you what you must do, not always what you should do.

The old flat rate scheme for retailers has also ended, so businesses that used it now apply the standard mechanism.

The habits that keep both taxes tidy

Withholding tax and VAT reward the same discipline:

Decide at the point of payment or invoice, not at month-end. Retroactive tax maths is where errors breed.
Keep the paper. Withholding certificates, VAT invoices and ledgers are what turn a GRA query into a non-event.
Watch the two dates: WHT filed and paid by the 15th of the following month; VAT returns by the last working day of the following month, nil returns included.
Reflect the 2026 changes in your systems. Invoices, quotes and accounting software templates that still add the COVID levy, or compute levies the old way, are now producing wrong numbers on every transaction.

Where Teletrust fits

Every scenario above is routine when your books are current and someone competent owns the calendar. Our accounting and bookkeeping service sets SMEs up on GRA-compliant systems like QuickBooks and Xero, with invoicing that reflects the 2026 VAT structure and monthly filings that leave on time. If you are weighing decisions such as VAT deregistration under the new threshold, or cleaning up missed withholding, our consulting and advisory team will give you a clear-eyed recommendation before the GRA makes the decision for you.

Unsure how the 2026 VAT changes affect your invoicing or whether you still need to be registered? Book a free consultation and we will review your position with you.

This article is general information, not tax advice. Rates, thresholds and administrative practice change. Confirm the current position with the GRA or your advisor before acting.

Sources

withholding tax GhanaVAT Ghana 2026VAT reformGRASME tax