Parliament approves VAT bill, 2025; Scraps COVID-19 Levy and unveils major tax reforms

Parliament has passed the Value Added Tax Bill, 2025, ushering in the most significant overhaul of Ghana’s VAT system in more than ten years and officially eliminating the COVID-19 Health Recovery Levy.

The reforms deliver on a key commitment made by the government in the 2025 Budget and Mid-Year Fiscal Policy Review to create a VAT regime that is fairer, simpler, and more aligned with economic growth. Finance Minister Dr. Cassiel Ato Forson, who championed the review, said the new legislation is designed to remove distortions in the system, reduce cascading tax effects, strengthen compliance, and enhance efficiency for businesses and consumers.

“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 during the parliamentary session.

With the levy scrapped, an estimated GH¢3.7 billion is expected to flow back to households and businesses in 2026. The bill also ends the longstanding decoupling of GETFund and NHIL from the VAT base, allowing both to qualify for input tax credits — a reform expected to cut the cost of doing business by roughly 5 percent. Altogether, the government projects that the full reform package will return nearly GH¢6 billion to the economy.

Key highlights of the VAT Bill, 2025 include:

• Abolition of VAT on mineral reconnaissance and prospecting, a measure aimed at boosting exploration activities and reviving investment in greenfield mining.




• Reduction of the effective VAT rate from 21.9% to 20%, easing the tax burden on consumers and businesses.




• Increase in the VAT registration threshold from GH¢200,000 to GH¢750,000, which will exempt thousands of micro and small businesses from mandatory VAT compliance.




• Extension of zero-rated VAT on locally manufactured textiles until December 2028, a move expected to safeguard more than 2,000 jobs and strengthen the competitiveness of Ghana-made garments.

Dr. Forson noted that the previous VAT threshold had lost considerable value since 2015, unintentionally pulling many micro-enterprises into the tax net and inflating administrative burdens. The new threshold, he said, restores equity and gives small businesses room to expand without onerous compliance costs.

Beyond rate adjustments, the reform ushers Ghana into a more digitized phase of tax administration. The rollout will feature Fiscal Electronic Devices (FEDs) to capture taxable transactions, digital VAT collection on cross-border e-commerce, and a new VAT reward programme that incentivizes consumers to request receipts and support compliance enforcement.

Government officials believe the revised VAT framework will strengthen investor confidence, boost local production, and stimulate job creation — particularly in sectors such as mining and textiles, where past policy inconsistencies have hindered growth.

“These reforms mark a turning point in Ghana’s value-added tax administration,” Dr. Forson 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 launch a nationwide education campaign to prepare businesses and consumers for the transition.

The passage of the VAT Bill, 2025, ultimately represents a decisive recalibration of Ghana’s tax policy, aimed at lowering the cost of doing business, strengthening industry, and supporting long-term fiscal sustainability.