Businesses Sigh Relief as COVID Levy, E-Levy to be Yanked Off; VAT Rationalised in Today’s Budget Presentation
The business community will today sigh a big relief as the Covid-19 levy and the electronic levy (E-Levy) described as “nuisance” taxes are expected to be scrapped off by the Government in the presentation of the 2025 budget to Parliament.
There have been considerable concerns around taxes, such as the Electronic Transfer Levy (E-Levy) and the COVID-19 Levy, which have emerged as significant pain points for businesses, with businesses expressing strong apprehensions toward the levies.
According to KPMG’s pre-budget survey, Ghana could lose approximately GHS 6.4 billion in revenue if the government abolishes the Covid-19 levy and the E-levy in the 2025 budget.
The removal of the taxes will be in addition to the rationalisation of the Value-Added Tax (VAT) tax regime.
President of the Association of Ghana Industries (AGI), Dr. Humphrey Ayim-Darke, has strongly criticized the current Value Added Tax (VAT) system, describing it as “the killer in the room” that is crippling local businesses.
Dr. Ayim-Darke has called for an urgent overhaul of the VAT regime, warning that its distortions are stifling the operations of businesses, particularly small and medium-sized enterprises (SMEs).
Highlighting the inconsistencies in the VAT application in an interview some weeks ago, he explained how businesses in the same industry, importing identical raw materials, face different tax treatments due to VAT complexities.
“Imagine two companies operating in the same sector, both importing the same product and paying the same HS code for raw materials. Yet, because of how the VAT is applied, their treatments are completely different. That inconsistency is distorting the market and hurting competitiveness,” he stated, calling on the government to implement a uniform VAT system rather than embedding levies that increase business costs.
“If you want to implement a total VAT at 21%, then we say fine, let’s do input-output VAT properly. But don’t embed levies within it that end up distorting our entire operations. When you do that, businesses are left with no choice but to pass the cost onto consumers, which defeats the purpose of fair taxation and stifles economic growth,” he argued.
Minister for Finance, Dr Cassiel Ato Forson, speaking at the 2025 National Economic Dialogue (NED), stated that urgent reforms are needed to address the distortions in the country’s Value-Added Tax (VAT) system to enhance the collection of domestic revenue for the state.
According to the Minister for Finance, this has become critical due to the inefficiencies in the current system, which is not yielding the necessary results.
“Ghana is lagging behind in tax revenue collection and, more significantly, VAT. This will mean we need urgent reforms to rationalize our VAT regime because currently it has been distorted and there is very little compliance”, he said.
