Editorial: GRA’s Enforcement Of The VAT Regime Compliance Commendable

According to a story published on myjoyonline, the Ghana Revenue Authority (GRA) has intensified efforts to enforce the reformed Value Added Tax (VAT) regime that took effect on January 1, 2026 after disclosing that nearly 60 percent of businesses have not complied. This non-compliance, the Authority warns, is undermining the policy’s promise of price relief for consumers and causing significant revenue losses to the state.

In response, the GRA has inaugurated a 26-member Compliance and Enforcement Unit within its Domestic Tax Revenue Division to close gaps in VAT collection before the end of the year. Commissioner-General Anthony Kwasi Sarpong has stressed that effective enforcement is critical to meeting revenue targets and strengthening domestic revenue mobilisation.

VAT remains one of Ghana’s most important tax instruments due to its broad base and relative efficiency. However, its success depends on fair, consistent, and nationwide application. The current compliance deficit highlights longstanding structural challenges in tax administration, particularly among small and medium-sized enterprises and the informal sector.

While enforcement is necessary, the broader issue goes beyond policing. It raises questions about taxpayer education, administrative simplicity, trust in public institutions and whether the reform has been communicated and implemented in a manner that encourages voluntary compliance rather than resistance.

The revelation that six out of every ten businesses are yet to comply with Ghana’s reformed VAT regime should set off alarm bells not only at the Ghana Revenue Authority, but also at the Ministry of Finance and within the wider policy community.

VAT is not a marginal tax. It is a central pillar of domestic revenue mobilisation and persistent gaps in its implementation weakens the state’s capacity to fund public services, stabilise the economy and reduce dependence on borrowing.

The GRA’s decision to inaugurate a dedicated Compliance and Enforcement Unit is, therefore, understandable and, to an extent, overdue. For years, uneven enforcement, selective compliance and weak monitoring have eroded the integrity of the VAT system.

Honest businesses that charge and remit VAT correctly often find themselves at a competitive disadvantage, compared to non-compliant operators who undercut prices by simply ignoring the law. In that sense, enforcement is not punitive, it is a matter of fairness.

That said, enforcement alone will not fix a problem of this magnitude. A 60 percent non-compliance rate suggests systemic issues. Ghana’s economy is still heavily informal, with many businesses operating without proper records, digital systems, or a clear understanding of tax obligations.

If VAT reforms are complex, poorly communicated, or perceived as unstable, compliance will naturally suffer. Businesses cannot be expected to comply with rules they do not fully understand or trust.

There is also the credibility challenge. Tax compliance improves when taxpayers see a clear link between what they pay and the public services they receive.

In an environment where citizens routinely complain about poor roads, unreliable utilities, and wasteful public spending, aggressive tax enforcement risks being viewed as coercive rather than civic. The GRA must therefore pair enforcement with transparency, education, and visible accountability in the use of tax revenues.

Moreover, the promise that the reformed VAT would bring price relief to consumers must be carefully monitored. If enforcement leads to higher consumer prices due to pass-through effects, public confidence in the reform will erode further. Policymakers must be honest about trade-offs and ensure that any relief mechanisms are real, not rhetorical.

In the end, VAT has the potential to significantly boost Ghana’s revenue base, but only if it is applied consistently, fairly, and intelligently. The new enforcement unit is a step in the right direction, but it should mark the beginning of a more balanced approach one that combines firm enforcement with simplification, taxpayer education, and a renewed social contract between the state and citizens. Without that balance, the VAT gap may narrow temporarily, but the trust gap will only widen.

 

 

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