In a significant policy shift, Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has announced that the COVID-19 Health Recovery Levy will be abolished. The decision, unveiled during the presentation of the 2025 Mid-Year Budget Statement to Parliament on Thursday, July 24, forms part of a broader effort to reform the country’s Value Added Tax (VAT) system.
“The COVID levy will be abolished,” Dr. Forson stated, noting that “the effective VAT rate will be reduced.” This move fulfills a major policy pledge by the National Democratic Congress (NDC) and signals a new direction for tax reform in Ghana.
A New Direction for VAT Reform
The removal of the COVID-19 levy is a cornerstone of a wider VAT reform initiative aimed at simplifying the tax structure, making it fairer, and promoting economic growth. These reforms are being drafted into a new VAT Amendment Bill, expected to be finalized by October 2025 and incorporated into the 2026 Budget.
Key proposed measures include:
- Abolition of the COVID-19 Health Recovery Levy
- Reduction in the effective VAT rate through the removal of the VAT Flat Rate Scheme
- An increased VAT registration threshold to ease the burden on small and micro businesses
- Enhanced tax compliance driven by digital systems and public education initiatives
“These reforms are aimed at addressing the distortions and cascading effect inherent in the current VAT structure,” Dr. Forson told Parliament.
Economic and Fiscal Implications
The planned VAT overhaul is designed not only to streamline tax administration but also to support macroeconomic stability and inclusive growth. The Finance Minister emphasized that the changes will:
- Boost domestic revenue mobilization
- Address inefficiencies in public financial management
- Reduce the tax burden on households and businesses
- Encourage formalization of small enterprises
- Restore investor confidence and ease inflationary pressures
Nationwide Stakeholder Engagement
Consultations with the International Monetary Fund (IMF) regarding the reforms have already concluded. The Ministry of Finance, in partnership with the Ghana Revenue Authority (GRA), is currently conducting a nationwide consultation to engage key stakeholders, especially within the trade and business sectors.
“The Ghana Revenue Authority, together with the Ministry of Finance, is undertaking a nationwide consultation process to sensitise key players in the trade and business sector on the VAT reform and solicit feedback,” Dr. Forson noted. This process is expected to conclude by September 2025.
Looking Ahead
Dr. Forson reiterated the government’s commitment to prudent fiscal policy and equitable economic recovery. “We are determined to implement a fairer, more efficient tax system that reduces the burden on citizens while strengthening the foundation for sustained growth,” he said.
The new VAT Amendment Bill will be laid before Parliament as part of the 2026 Budget Statement, marking a major step toward overhauling Ghana’s tax structure in line with broader economic recovery efforts.