By: Eye witness news

Ghana is taking a significant step to revitalize its mining sector by planning to scrap a long-standing Value Added Tax (VAT) on minerals exploration and reconnaissance. This move is designed to boost investment and stimulate new mining activity in the country. As Africa's largest gold producer, the government believes that removing this 25-year-old tax will revive investor confidence and ensure the long-term sustainability of the industry.

The policy was announced by Ghana's Finance Minister, Cassiel Ato Forson, during the 2026 budget presentation to Parliament. The central goal is to incentivize investment across the board, targeting not only large corporate miners but also small-scale players. This initiative represents a direct effort to make Ghana more competitive as a global mining destination.

This strategic direction places Ghana on a different path from South Africa, where the policy focus is on mineral beneficiation, or adding value to raw materials before export. South Africa's Mineral and Petroleum Resources Minister, Gwede Mantashe, has argued that the continent should not engage in a "race to the bottom" by merely exporting raw materials at low prices set by international markets.

The push for this tax removal is partly driven by the impressive performance of Ghana's small-scale mining sector. In the last ten months, small-scale gold exporters delivered $8.1 billion, outperforming large corporates which produced $6.6 billion. This highlights the critical economic role of smaller players and the government's desire to formalize and support their activities.

A major challenge that this policy aims to address is the issue of gold smuggling, which has cost Ghana an estimated R200 billion over the past five years. By creating a more favorable tax environment, the government hopes to incentivize miners to operate within the formal, legal economy, thereby recapturing billions in lost state revenue.

The proposal has been welcomed by industry bodies, notably the Ghana Chamber of Mines. The Chamber stated that the VAT had negatively affected the country's competitiveness as a mining jurisdiction and acted as a "clog on the pipeline" of new mining projects, implying that its removal will unlock future development.

This policy aligns Ghana with other African nations like Burkina Faso, Ivory Coast, and Kenya, which are also creating incentives to boost mineral production. It is seen as a bold step to harness the full potential of the mining sector by encouraging investment, increasing formal production, and ultimately stemming the massive revenue losses from smuggling.