COVID-19 Levy abolished, GH₵5.7b returned to households and businesses

The presentation of the 2026 Budget Statement and Economic Policy by Finance Minister Dr. Cassiel Ato Forson delivered a significant boost to household budgets and the private sector, headlined by a major overhaul of Ghana’s Value Added Tax (VAT) regime.

The most anticipated measure is the abolition of the COVID-19 Health Recovery Levy, a pandemic-era tax that has burdened consumers and businesses since its introduction.

GH₵3.7 Billion Relief Anchor

The government’s decision to scrap the levy is positioned as a powerful stimulus measure. Speaking in Parliament, the Finance Minister confirmed the immediate financial impact:

“Mr. Speaker, by abolishing the COVID-19 levy, the Government is putting GH₵3.7 billion in the pockets of individuals and businesses in 2026 alone.”

This injection is aimed at increasing household disposable income, reducing operating costs for businesses, supporting job retention, and boosting market liquidity.

Five Major VAT Reforms Announced

The abolition of the COVID-19 levy is part of a wider VAT reform package, expected to provide a total financial benefit of GH₵5.7 billion to businesses and consumers.

“Mr. Speaker, altogether, the VAT reforms is expected to give back GH₵5.7 billion to businesses and households.”

The key reforms include:

Abolishment of the COVID-19 Health Recovery Levy: Returning GH₵3.7 billion to the economy.
Input Tax Deductions on Levies: Decoupling of the GETFund and NHIL levies from the VAT tax base will be abolished, allowing businesses to claim input tax deductions.

“Mr. Speaker, these reforms will also reduce the cost of doing business by 5 percent result of subjecting the GETFund and NHIL levies to input-output deductibility.”

Reduced Effective VAT Rate: The overall effective VAT rate will drop from 21.9% to 20%, slightly lowering the cost of goods and services.
Raised VAT Registration Threshold: The threshold will increase from GH₵200,000 to GH₵750,000, offering relief to thousands of small and medium-sized enterprises (SMEs).
Targeted Industry Relief: VAT on reconnaissance and prospecting of minerals will be abolished to encourage upstream resource investment. VAT zero-rating on locally manufactured textiles will be extended to 2028, supporting domestic industry growth.

The comprehensive VAT package reflects the government’s efforts to stimulate economic growth and ease the financial burden on Ghanaians following years of fiscal consolidation.

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