Parliament has officially passed the Value Added Tax (VAT) Bill, 2025, representing the most significant overhaul of Ghana’s VAT system in over a decade. A key highlight of the reform is the abolition of the COVID-19 Health Recovery Levy, fulfilling a major government commitment to create a fairer, simpler, and growth-oriented VAT regime.
Finance Minister Dr. Cassiel Ato Forson, who led the reform, emphasized that the new legislation is designed to remove distortions, reduce cascading tax effects, improve compliance, and enhance economic efficiency for both 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.
Key Changes in the VAT Bill, 2025
The VAT overhaul introduces several measures aimed at reducing costs for businesses, supporting small enterprises, and stimulating investment:
- Abolition of COVID-19 Levy: Expected to return GH¢3.7 billion to businesses and individuals in 2026 alone.
- Decoupling GETFund and NHIL from VAT base reversed: Both are now eligible for input tax deductions, reducing business costs by roughly 5%.
- Reduction of effective VAT rate: From 21.9% to 20%, easing the tax burden.
- Increased VAT registration threshold: Raised from GH¢200,000 to GH¢750,000, relieving thousands of micro and small enterprises from mandatory VAT compliance.
- Zero-rated VAT extended for local textiles: Now valid until December 2028, safeguarding over 2,000 jobs and boosting domestic textile competitiveness.
- Abolition of VAT on mineral reconnaissance and prospecting: Aims to revive exploration investment and stimulate growth in greenfield development.
According to the Finance Minister, the previous VAT registration threshold had significantly eroded in real value since 2015, forcing many micro-businesses into compliance and increasing administrative burdens. The updated threshold restores fairness and allows small enterprises to grow without heavy tax obligations.
A Digital Future for VAT Administration
Beyond traditional tax reforms, the VAT Bill positions Ghana for a digitally enhanced revenue system. Planned initiatives include:
- Fiscal Electronic Devices (FEDs) to track taxable transactions.
- Digital VAT collection on cross-border e-commerce.
- VAT reward scheme incentivizing consumers to request receipts, improving compliance monitoring.
These interventions are expected to boost investor confidence, support local industries, and stimulate job creation, particularly in mining and textiles.
“These reforms mark a turning point in Ghana’s VAT administration. This is not just a tax reform, it is a step toward a more just, predictable, and business-friendly economy,” Dr. Forson noted.
Preparing Businesses for Transition
The Ghana Revenue Authority (GRA) will roll out a nationwide sensitization campaign, ensuring that both businesses and consumers are ready for the new VAT framework.
Overall, the VAT Bill, 2025, reflects a decisive shift in Ghana’s tax policy: lowering business costs, empowering local industry, and strengthening long-term fiscal stability.