The Ghana Revenue Authority (GRA) has announced the introduction of a 15% Value Added Tax (VAT) on non-life insurance premiums, effective July 1, 2025.
This was disclosed through a post on the GRA’s official X (formerly Twitter) account, signaling a significant shift in Ghana’s tax framework aimed at expanding the country’s revenue base.
The new VAT will apply to all non-life insurance products, including property, health, travel, fire, marine, and general liability insurance policies.
However, compulsory motor insurance remains exempt from the tax, a relief for millions of vehicle owners and transport operators across the country.
According to the GRA, the decision is in line with the VAT Act, 2013 (Act 870), which provides for the taxation of non-life insurance services.
However, its enforcement had been suspended for several years following stakeholder concerns and industry consultations.
With the planned implementation date now set, the tax authority has urged insurance companies to make the necessary preparations and update their systems accordingly.
The introduction of the VAT on non-life insurance premiums is significantly set increase government tax revenues, especially as Ghana continues efforts to meet its fiscal consolidation targets under the International Monetary Fund (IMF) programme.
Therefore, the VAT will generate tens of millions of cedis annually, helping to fund essential public services and reduce the national budget deficit.
On the other hand, the tax could also lead to increased costs for individuals and enterprises seeking financial protection through insurance.
Further, premiums for non-life policies are likely to rise by at least 15%, which would discourage uptake in an industry that is already grappling with low penetration rates estimated at under 2% of GDP.
For consumers, the cost of protecting homes, businesses, goods in transit, and other assets may increase, potentially leading to reduced insurance coverage and higher out-of-pocket expenses during unforeseen events.
Some insurance companies have expressed concern about the timing of the tax, arguing that it could slow down efforts to deepen insurance penetration and financial inclusion.
They fear it may particularly affect small and medium-sized enterprises (SMEs) and low-income earners who are already struggling with rising costs of living.
Nonetheless, over the past two years, the government has introduced several tax policy adjustments, including the e-levy, growth and sustainability levy, and revised excise duties.
By extending VAT coverage to previously untaxed sectors like non-life insurance, the government aims to ensure a more equitable distribution of the tax burden.
