In a major relief for businesses and households, Finance Minister Dr Cassiel Ato Forson announced the official abolition of the controversial COVID-19 Health Recovery Levy, effective January 1, 2026.
The move is part of a broader tax rationalisation strategy aimed at simplifying the VAT regime and reducing the cumulative burden of taxes.
Dr Forson, while presenting the 2026 Statement of Budget and Economic Policy on the floor of parliament, framed the decision as a decisive move to stimulate consumer spending and reduce the cost of doing business, arguing that the levy, introduced during the pandemic, was no longer fit for the current economic reality.
“Mr Speaker, by abolishing the COVID-19 levy, the government is directly putting GH₵3.7 billion back into the pockets of individuals and businesses in 2026 alone,” Dr Forson stated to a resounding response from the floor.
The abolition of the levy headlines a broader VAT modernisation package expected to deliver a total financial benefit of GH₵5.7 billion to the private sector. Key reforms include the abolition of the decoupling of the GETFund and National Health Insurance levies from the VAT tax base, which will allow businesses to claim input tax deductions on these components, thereby reducing their operational expenses significantly.
Furthermore, the government announced a reduction in the effective VAT rate from 21.9% to 20%, alongside a raise in the VAT registration threshold for small and medium enterprises (SMEs) from GH₵200,000 to GH₵750,000. This measure is designed to formalise more businesses and protect smaller operators from compliance burdens.
Dr Forson emphasized that the reforms are not intended to reduce the overall tax effort but to simplify the system, improve compliance, and ensure fairness.
He reassured Parliament that sophisticated digital collection tools and enhanced enforcement mechanisms would offset the immediate revenue loss from the abolished levy, maintaining the overall fiscal consolidation trajectory while simultaneously catalysing economic activity across all sectors.
