The government has announced the scrapping of the COVID-19 Health Recovery Levy and sweeping reforms to the Value Added Tax (VAT) system to inject GH¢3.7 billion into the economy and return nearly GH¢6 billion to businesses and households in 2026.
Presenting the 2026 Budget Statement and Economic Policy to Parliament yesterday, the Minister of Finance, Dr Cassiel Ato Forson, said the measures formed part of government’s broader fiscal and economic reform agenda aimed at stimulating growth, promoting fairness, and easing the cost of doing business.
“For emphasis, 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 to loud applause mainly from the Majority side of the Members of Parliament (MPs).
He explained that by removing the levy, government was “putting GH¢3.7 billion back into the pockets of individuals and businesses in 2026 alone,” adding that the decision reflected the administration’s commitment to responsible but compassionate economic management.
VAT reforms
The Finance Minister further unveiled a comprehensive package of VAT reforms designed to simplify the tax system, eliminate distortions and strengthen compliance.
Key among them were the reduction of the effective VAT rate from 21.9 per cent to 20 per cent, the raising of the VAT registration threshold from GH¢200,000 to GH¢750,000, and the restoration of input tax deductibility for the Ghana Education Trust Fund (GETFund) and the National Health Insurance Levy.
“These reforms will make our tax system more equitable, transparent and business-friendly,” Dr Forson stated, adding that they would reduce the cost of doing business by five per cent and ensure that small and micro enterprises were no longer overburdened by unnecessary compliance requirements.
He also stated that the VAT threshold had fallen in real terms from GH¢200,000 in 2015 to the equivalent of GH¢48,000 today, forcing small traders and artisans who previously qualified for exemption to register and charge VAT.
The increase announced in the new budget, he said, would ease that strain and simplify tax administration.
The minister further announced the abolition of VAT on mineral exploration and reconnaissance to revive investment in Ghana’s mining sector and the extension of VAT zero-rating on locally manufactured textiles to 2028, a measure expected to protect over 2,000 direct jobs.
Beyond policy changes, government is introducing digital solutions to improve tax collection and compliance, including fiscal electronic devices to track transactions, the monitoring of cross-border digital sales, and a VAT reward scheme that will incentivise consumers to collect VAT receipts.
“These reforms mark a turning point in Ghana’s value added tax administration. It is not just a tax reform, it is a step toward a more just, predictable and business-friendly economy,” Dr Forson emphasised.
The Finance Minister assured businesses that the Ghana Revenue Authority would undertake an extensive public education campaign to ensure a smooth transition and transparent implementation of the new reforms.
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