Does a salon or barbershop need to charge VAT in Ghana?

Until the end of 2025 many small salons never thought about VAT. The rules changed on 1 January 2026, when the Value Added Tax Act 2025 (Act 1151) took effect, and the change matters more for service businesses than most owners realise.

This article explains what GRA has said, as of October 2026, and what it means at your till. It is a guide, not tax advice. Your own position depends on what you sell and how much, so confirm it with your GRA office or an accountant.

Does a salon have to register for VAT?

GRA has said that the GH₵750,000 registration threshold applies to goods only, and that there is no threshold for services. A hair salon, barbershop, nail bar or spa provides services, so you should expect to register, whatever your turnover.

The raised threshold was widely reported as relief for small businesses, and it is for shops selling goods. On 2 January 2026, GRA's Acting Head of Strategy and Research, Dr Dominic Naab, clarified that the GH₵750,000 threshold is only for the supply of goods, and that every person who provides services must be registered for VAT.

If your business also sells products, such as braiding hair, wigs or creams, ask GRA how the rules apply to a business that sells both services and goods.

What are the VAT rates for a salon in 2026?

Registered businesses charge three taxes on the same price: VAT at 15%, NHIL at 2.5% and GETFund at 2.5%, which is 20% in total. GRA lists these rates as effective from 1 January 2026.

• 15%VAT
• 2.5%NHIL
• 2.5%GETFund
• 20%Total on the same price

Source: Ghana Revenue Authority, VAT Act 2025 (Act 1151)

GRA says that, from the same date, the 1% COVID-19 levy has been abolished and the 3% flat rate scheme on goods has been removed. If you used to charge the old flat rate, your receipts and prices need to change.

How do you work out the tax inside a price?

If your prices include tax, which is what most clients expect, divide the price by 1.2 to get the price before tax. The tax is the rest. Put another way, one sixth of a tax-inclusive price is tax.

Worked example: a set of knotless braids priced at GH₵240, tax included.

• Price before tax: GH₵240 / 1.2 = GH₵200
• VAT 15%: GH₵30
• NHIL 2.5%: GH₵5
• GETFund 2.5%: GH₵5
• Total: GH₵240

GH₵240.00

• Price before taxGH₵200.00 (83.3%)
• VAT 15%GH₵30.00 (12.5%)
• NHIL 2.5%GH₵5.00 (2.1%)
• GETFund 2.5%GH₵5.00 (2.1%)

Source: Example figures; rates from the Ghana Revenue Authority

This is why registering matters to your prices. If you keep the same board price after you register, GH₵40 of every GH₵240 is now tax, and your income before tax falls. If you raise prices to keep your income, the same braids cost GH₵288 including tax.

Should prices include tax or have it added on?

Most salons should show prices that include tax. Clients pay the number on the board, there are no surprises at the till, and stylists do not have to explain the tax on every bill.

If you add tax on top, say so clearly on the price list. A client who expects to pay GH₵200 and is asked for GH₵240 will remember it.

Whichever you choose, the receipt should show the price before tax and each tax separately, so the client and GRA can both see what was charged.

What can you claim back?

A registered business can generally deduct the input tax it paid on business purchases, such as products bought from a VAT-registered supplier, when it holds the supplier's VAT invoice. Check the details with GRA. GRA says that, under the 2026 changes, registered businesses can now claim the NHIL and GETFund charged on their purchases as input tax, which they could not under the old system.

So ask your suppliers for VAT invoices for braiding hair, relaxers, dryers and other purchases, and keep them. Your accountant or GRA office can tell you how to claim.

What should a salon's receipt show?

A clear receipt protects you as much as the client. For every bill, show the business name, the date, each service and product with its price, the price before tax, each tax on its own line, and the total paid, with the payment method.

For a client who had braids, a pack of braiding hair and a bottle of edge control, that is three lines on one bill, with VAT, NHIL and GETFund worked out on the total. If she pays part in cash and part by MoMo, the receipt should show both. Clients who claim expenses, such as a company paying for a staff member's grooming, will often ask for a receipt or an A4 invoice, so be ready to give one.

Keep copies of every receipt. If GRA asks how you worked out a return, your sales and tax report for the period, backed by the receipts, is the answer.

Is anything a salon sells exempt?

Some goods are exempt from VAT under the Act. Do not assume a product is exempt without checking with GRA. If a product is exempt, mark it as exempt at the till so no tax is charged on it, and the receipt shows the difference.

What to do next

1. 1Confirm your position with your GRA office
2. 2Decide whether prices include tax
3. 3Recost your prices before tax
4. 4Update your price list and receipts
5. 5Keep suppliers' VAT invoices

How MPOS helps

MPOS charges VAT 15%, NHIL 2.5% and GETFund 2.5% on the same price under the VAT Act 2025. Prices include tax by default, items can be marked VAT-exempt, and every receipt shows the breakdown. The tax report gives your tax totals for any period, to help with your return. MPOS does not connect to GRA's E-VAT system, so if GRA has told you to issue E-VAT invoices, ask GRA about the approved ways to do it.

For the receipt side of the 2026 changes, read Ghana VAT in 2026: what changed on your receipts. To reprice your services, use how to price braids and salon services. The complete guide to running a salon or barbershop covers the rest, and you can start a free trial to see the tax breakdown on your own receipts.