The Mahama-led government has announced the scrapping of the COVID-19 Health Recovery Levy.
The levy was introduced by the then Akufo-Addo-led government in 2021 to help fund health-related expenditures and support the country’s economic recovery from the coronavirus pandemic.
It imposed an additional 1% charge on the existing VAT rate, applied to both goods and services, including imports. This effectively increased the total tax burden on consumers and businesses, raising prices of goods and services across sectors.
However, as economic conditions worsened, many Ghanaians and business groups criticised the levy for increasing the cost of living and doing business, especially after the pandemic had subsided.
But in what can be seen as a major relief to households and the private sector, the Finance Minister, Dr Cassiel Ato Forson, has announced the abolition of the COVID-19 Levy in the 2026 Budget.
According to Dr Forson, this is a decisive step to ease the cost of living for the ordinary Ghanaian and stimulate economic activity.
“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,” he told Parliament.
The decision to scrap the levy is expected to inject GH₵3.7 billion back into the economy, increase disposable income, and reduce the operating costs of enterprises.
The scrapping of the COVID-19 levy forms part of a wider VAT reform package that will return a total of GH₵5.7 billion to consumers and the private sector. According to the Finance Minister,
“Altogether, these VAT reforms will give back GH₵5.7 billion to businesses and households.”
The reforms include five key measures.
First, the government has scrapped the COVID-19 Health Recovery Levy, freeing GH₵3.7 billion for economic circulation.
Second, businesses will now be able to claim input tax deductions on GETFund and NHIL levies, which the Minister said will reduce the cost of doing business by about five per cent.
Third, the overall effective VAT rate will drop from 21.9 per cent to 20 per cent, slightly lowering the cost of goods and services.
Fourth, the VAT registration threshold will rise sharply from GH₵200,000 to GH₵750,000, providing relief to thousands of small and medium-sized enterprises.
Finally, VAT on mineral reconnaissance and prospecting will be abolished, while zero-rating on locally manufactured textiles will be extended to 2028.
By: Ekow Annan/newsalertgh.com
