Parliament has passed the Value Added Tax Bill, 2025, ushering in the most sweeping overhaul of Ghana’s VAT system in more than a decade and officially abolishing the COVID-19 Health Recovery Levy.
The Bill delivers on a major commitment announced by government in the 2025 Budget and Mid-Year Fiscal Policy Review to make Ghana’s VAT framework fairer, simpler, and more growth-oriented.
Finance Minister Dr. Cassiel Ato Forson, who led the reform process said the changes are designed to remove distortions, reduce cascading taxes, enhance compliance, and improve economic efficiency for businesses and households.
“We promised to abolish the COVID-19 levy. With the support of this House, I am happy to announce today that it is abolished,” Dr. Forson declared in Parliament.
Under the new VAT structure, the COVID-19 levy is removed entirely, expected to return GH¢3.7 billion to individuals and businesses in 2026 alone. The legislation also abolishes the decoupling of GETFund and NHIL from the VAT base, making both eligible for input tax deductions. This reform expected to reduce the cost of doing business by about 5 percent. In total, government says nearly GH¢6 billion will be released back into the economy.
Key Measures Passed Under the VAT Bill, 2025
- Abolition of VAT on mineral reconnaissance and prospecting, improving investor incentives and reversing stagnation in greenfield exploration.
- Reduction of the effective VAT rate from 21.9% to 20%.
- Increase in the VAT registration threshold from GH¢200,000 to GH¢750,000, relieving thousands of micro and small enterprises from mandatory VAT compliance.
- Extension of zero-rated VAT on locally manufactured textiles to December 2028, protecting more than 2,000 jobs and enhancing competitiveness in the domestic garment market.
Dr. Forson explained that the previous registration threshold had lost significant real value since 2015, compelling many micro-businesses into VAT compliance and driving up administrative burdens. The new threshold, he said, “restores fairness and gives small enterprises the space they need to grow.”
He added that the reforms are not limited to tax cuts but are intended to modernize the VAT system. The rollout will introduce Fiscal Electronic Devices (FEDs) to capture taxable transactions, digital VAT collection on cross-border e-commerce, and a consumer VAT reward scheme to encourage the public to demand receipts and help improve compliance.
Government believes the reforms will strengthen investor confidence, support local industry, and stimulate job creation particularly in the mining and textiles sectors, where longstanding policy distortions have hindered productivity.
“These reforms mark a turning point in Ghana’s value-added tax administration,” the Finance Minister said. “This is not just a tax reform , it is a step toward a more just, predictable, and business-friendly economy.”
The Ghana Revenue Authority is expected to begin nationwide sensitization ahead of implementation to ensure businesses and consumers fully understand the new measures.
