Parliament has passed the Value Added Tax Bill, 2025, introducing the most significant overhaul of Ghana’s VAT system in more than a decade and formally repealing the COVID-19 Health Recovery Levy.
Finance Minister Dr. Cassiel Ato Forson, who spearheaded the reforms, said the new VAT legislation will eliminate long-standing distortions, curb cascading tax effects, enhance compliance, and boost 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 told Parliament.
With the levy now fully removed, the government expects individuals and businesses to save an estimated GH¢3.7 billion in 2026 alone.
The bill also ends the decoupling of GETFund and NHIL from the VAT base, making both eligible for input tax deductions. This change is projected to reduce the cost of doing business by roughly 5 percent.
Overall, the government estimates that the full package of VAT reforms will return nearly GH¢6 billion to the economy.
Other measures approved under the VAT Bill include:
• Abolition of VAT on mineral reconnaissance and prospecting, a move intended to reinvigorate exploration investment and reverse years of stagnation in greenfield development.
• A reduction of the effective VAT rate from 21.9 percent to 20 percent, easing the tax burden on consumers and businesses.
• An increase in the VAT registration threshold from GH¢200,000 to GH¢750,000, a move expected to exempt thousands of micro and small enterprises from mandatory VAT compliance and significantly reduce administrative pressures.
• An extension of zero-rated VAT on locally manufactured textiles until December 2028, a policy aimed at safeguarding more than 2,000 jobs and boosting the competitiveness of domestic garment producers.
Explaining the rationale for the expanded threshold, the Finance Minister noted that the previous limit had lost substantial real value since 2015, pulling many micro-businesses into the VAT net and inflating compliance costs for both taxpayers and the Ghana Revenue Authority.
