The government has scrapped the controversial Electronic Transfer Levy (E-Levy) and the 10% tax on betting winnings, fulfilling a major campaign promise.
Finance Minister Dr. Cassiel Ato Forson made the announcement while presenting the 2025 Budget Statement to Parliament, emphasizing that the move is aimed at easing the financial burden on citizens.
According to him, the government is committed to tax reforms that support economic growth and improve disposable income for Ghanaians. “We will abolish the 10% withholding tax on winnings from lottery, otherwise known as the ‘Betting Tax’,” he stated. Additionally, he confirmed that “we will abolish the Electronic Transfer Levy (E-Levy) of 1%.”
VAT and COVID Levy to Be Reviewed
Dr. Forson also revealed plans for a comprehensive VAT reform to address inefficiencies and distortions in the system.
Ghana’s current effective VAT rate stands at 21%, due to additional levies such as the 2.5% National Health Insurance Levy (NHIL), 2.5% Ghana Education Trust Fund (GETFund) Levy, and the 1% COVID-19 Levy, which are all applied to the VAT base instead of being fully integrated into the tax structure.
He described the current VAT system as distorted and inefficient, saying, “our VAT regime has been distorted and rendered inefficient. It combines both VAT and sales tax principles with a flat rate, standard rate and levies.”
To address these issues, the government has requested technical assistance from the IMF to help restructure the VAT system. A VAT Reform Task Force will also be set up to engage stakeholders before changes are implemented.
COVID Levy to Be Scrapped
As part of the VAT reform, Dr. Forson announced that the COVID-19 Levy will be abolished. This levy was initially introduced in 2021 as a temporary measure to fund pandemic-related expenditures but has remained in place despite economic recovery. “We commit to the people of Ghana and the business community that we will undertake comprehensive Value Added Tax (VAT) reforms this year,” he assured.
Revenue Strategy and Economic Relief
The removal of these taxes is expected to boost consumer spending and business activity. While the government acknowledges a potential revenue shortfall, Dr. Forson assured Ghanaians that this will be covered through improved tax compliance and better management of public funds.
“The removal of these taxes will ease the burden on households and improve their disposable incomes. In addition, it will support business growth and improve tax compliance,” he stated.
