The 2026 Budget Statement and Economic Policy, presented by Finance Minister Dr. Cassiel Ato Forson, has delivered a major tax relief package to Ghanaians, anchored by the complete abolition of the COVID-19 Health Recovery Levy and a broad restructuring of the Value Added Tax (VAT) regime.
The reforms, which take effect in 2026, are expected to return GH₵5.7 billion to households and businesses, making this one of the most significant tax relief programmes introduced in over a decade.
GH₵3.7 Billion Direct Relief From Scrapping COVID-19 Levy
The standout measure is the removal of the COVID-19 levy, a charge introduced at the height of the pandemic to support health-related expenditures.
Presenting the budget on Thursday, November 13, Dr. Forson emphasized the immediate and substantial economic impact:
“Mr. Speaker, by abolishing the COVID-19 levy, Government is putting GH₵3.7 billion in the pockets of individuals and businesses in 2026 alone.”
The policy is expected to increase household disposable income and reduce operational costs for enterprises across all sectors, helping sustain jobs and boost private sector liquidity.
Five Major VAT Reforms Unveiled
The abolition of the levy forms part of a wider package of VAT reforms aimed at modernizing the tax system, reducing distortions, and easing the burden on producers and consumers.
Together, these reforms will provide GH₵5.7 billion in financial relief to the private sector and the general public.
“Mr. Speaker, all together, the VAT reforms are expected to give back GH₵5.7 billion to businesses and households.”
The key reforms include:
1. Abolition of the COVID-19 Health Recovery Levy
This measure alone returns GH₵3.7 billion to the economy in 2026.
2. Input Tax Deductions on GETFund and NHIL Levies
The government is abolishing the decoupling of these levies from the VAT base, allowing businesses to claim input tax deductions on both.
This is expected to reduce the cost of doing business by 5%, driven by improved deductibility and lower effective tax obligations.
3. Reduced Effective VAT Rate
The effective VAT rate will fall from 21.9% to 20%, offering consumers a marginal but meaningful reduction in the prices of goods and services.
4. Increased VAT Registration Threshold
The threshold will rise sharply from GH₵200,000 to GH₵750,000, exempting thousands of micro and small businesses from mandatory VAT registration.
This is expected to ease compliance burdens and support the growth of SMEs.
5. Targeted VAT Relief for Key Sectors
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VAT on reconnaissance and prospecting of minerals will be abolished to encourage upstream investment.
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VAT zero-rating on locally manufactured textiles has been extended to 2028, supporting the competitiveness of the domestic textile industry.
A Shift Toward Growth and Relief
The comprehensive VAT package marks a major shift in Ghana’s tax policy—from revenue consolidation toward growth stimulation. Dr. Forson stressed that the reforms are designed to expand economic activity, support recovery, and relieve the pressure on both consumers and businesses following years of economic headwinds.
The measures are expected to accelerate industrial expansion, strengthen private sector resilience, and improve living conditions for millions of Ghanaians.
