Estimating the VAT gap in Ghana

The Government of Ghana has published a new report Estimating the VAT gap in Ghana. This report builds on a well-established IMF methodology to estimate the size and composition of Ghana’s VAT gap over the period 2013 to 2024. It estimates the revenue foregone due to both non-compliance and policy choices to help identify areas for increased enforcement or policy reform.

Key findings:

• Ghana’s VAT compliance gap is large by international standards. In 2024, the compliance gap reached 5.9% of GDP, which is equivalent to GH₵69 billion. This represents almost 70% of potential VAT revenue under the current policy framework, which means Ghana collects less than one-third of its potential VAT.
• Compliance has worsened since 2013, when the compliance gap was 64% of potential revenue or 4.7% of GDP. The sharpest increase in the compliance gap is seen after 2022.
• The patterns of overall compliance are driven mostly by falling compliance for imports. Even though the import VAT compliance gap is relatively lower and stood at 57% of potential revenue in 2024, it has increased substantially since 2013, when the gap was 38%.
• In contrast, the degree of domestic non-compliance is higher and stood at 77% of the domestic VAT potential in 2024. However, the domestic compliance gap improved slightly between 2013 and 2022, but compliance has deteriorated again since then.
• A small number of sectors account for most of the revenue losses. Wholesale & retail trade alone accounted for almost half (47%) of the domestic compliance gap in 2024. Construction and manufacturing together account for a further 33%. These three sectors generate around 80% of total domestic VAT revenue losses.
• Some export-oriented sectors appear overtaxed. Mining & quarrying and petroleum & gas consistently show negative compliance gaps, indicating insufficient VAT refunds or unclaimed input credits. 
• Existing VAT exemptions reduced potential revenue (under full compliance) by GH₵48 billion or 4.1% of GDP in 2024. Exemptions of agricultural products dominate the expenditure gap and account for almost two-thirds (64%) of the overall revenue forgone, which is equivalent to GH₵20.2 billion.

Find below the executive summary and key findings of the report and download the full report on the right side of this page. 

Executive summary 

The value added tax (VAT) is the cornerstone of Ghana’s revenue system, plays a central role in the country’s Medium-Term Revenue Strategy (MTRS) and has recently (January 2026) seen significant reforms to bring its design more into line with standard international practice. This report estimates the size and composition of Ghana’s VAT gap – the difference between actual VAT revenue and the revenue that could be raised under full compliance – over the period 2013 to 2024, prior to the recent reforms, using the International Monetary Fund’s RA-GAP methodology and detailed national accounts data.

We find that Ghana’s VAT gap over this period was large relative to comparator countries in Africa. In 2024, the compliance gap is estimated at nearly 70% of potential VAT revenue under the policy framework then in place, equivalent to GH₵69 billion or 5.9% of GDP. The average compliance gap in African countries is around 40% of potential revenue or 3% of GDP. 

Non-compliance is higher in the domestic economy than at the border. The domestic compliance gap reached 77% of potential revenue in 2024 and accounts for around two-thirds of the total compliance gap. The wholesale & retail trade, construction and manufacturing sectors together are responsible for about 80% of domestic revenue losses. While domestic compliance has improved modestly since 2013, the improvements were most visible until 2022, and the gap has widened again since then. By contrast, compliance at Customs is relatively higher, with a gap of 57% of potential revenue in 2024, but it has deteriorated significantly over time. 

Policy choices also play a major role in limiting VAT revenues. Existing exemptions and reliefs reduce potential VAT revenue by about GH₵48 billion or 4.1% of GDP, assuming full compliance. Exemptions of agricultural products alone account for almost two-thirds of the domestic expenditure gap, making them by far the largest single source of forgone VAT revenue. 

Taken together, the results suggest that meaningful increases in VAT revenue will require a dual strategy. Improving compliance, especially in a few large domestic sectors, offers the biggest immediate revenue gains. At the same time, reviewing and rationalising VAT exemptions, particularly in agriculture and parts of the service sector, could substantially broaden the tax base while remaining consistent with Ghana’s broader revenue and equity objectives. The VAT gap analysis presented in this report provides a framework for targeting both enforcement and policy reform more effectively.