Parliament Approves Sweeping 2025 VAT Amendment Bill; Abolishes COVID-19 Levy, Reintegrates GETFund and NHIL Into VAT Structure, Lowers Effective Rates, and Introduces Major Reliefs for Businesses and Consumers

Ghana’s Parliament has passed the Value Added Tax (Amendment) Bill, 2025, marking a major transformation of the country’s tax system. The new legislation eliminates the long-criticised COVID-19 Health Recovery Levy, restructures how the GETFund Levy and National Health Insurance Levy are applied, and introduces several reforms aimed at reducing the tax burden on businesses and households.

With the passage of the bill, the 1% COVID-19 levy, which has been charged on goods and services since the pandemic era, has officially been scrapped. Government projections show that removing this levy will return an estimated GH¢3.7 billion to individuals and businesses next year. This relief is expected to help reduce prices of many common goods and services as businesses adjust to the new tax structure.

Another major shift under the amendment is the reversal of the decoupling of the GETFund Levy and NHIL from the VAT system. Previously, separating these levies from VAT prevented businesses from claiming input tax credits, which increased production costs and created a cascading effect in pricing. By reintegrating these levies back into the VAT framework, businesses are now positioned to benefit from input deductions. This makes the system more neutral and efficient, while easing pressure on manufacturers, importers, and retailers.

The bill also reduces the effective VAT rate from about 21.9 percent to 20 percent. Government explains that this adjustment is intended to ease the overall tax burden on consumers while introducing more fairness into the system. The reform is expected to improve compliance and simplicity, as well as harmonise Ghana’s VAT regime with international best practices.

In a move widely welcomed by small and medium-scale enterprises, the VAT registration threshold has also been increased from GH¢200,000 to GH¢750,000. This means thousands of micro and small businesses will no longer be required to register for VAT, saving them from the hefty administrative processes, frequent filing obligations, and potential penalties associated with compliance. The change is viewed as a way to give small businesses more space to grow while allowing revenue authorities to focus on larger taxpayers.

Taken together, these reforms represent one of the most comprehensive changes to Ghana’s tax system in years. Government expects that, beyond the GH¢3.7 billion relief from the scrapping of the COVID levy, the entire VAT reform package will return over GH¢6 billion to households and businesses. Reducing the cost of doing business by roughly five percent is projected to boost production, support job creation, and encourage more competitive pricing across sectors.

In the coming weeks, the Ghana Revenue Authority will roll out implementation guidelines to ensure a smooth transition for businesses and consumers. Pricing structures, invoicing systems, accounting software, and compliance procedures will all be updated to reflect the changes introduced by the new law.