Executive summary

On 11 March 2025, Ghana's Minister for Finance and Economic Planning (the Minister) presented the 2025 Budget Statement and Economic Policy of the Government of Ghana (GoG) to Parliament on the authority of the President of the Republic in accordance with Articles 179 and 180 of the Constitution, 1992.

The Minister stated that the GoG's objectives were, in part, to achieve revenue and economic growth, create jobs, stimulate demand for local products, reduce GoG expenditures and stabilize the Ghanaian cedi (GHS) as well as restore fiscal responsibility. He added that GoG's economic transformation and reform agenda was aimed at ensuring macroeconomic stability.

With specific reference to taxation, the GoG aims to optimize domestic revenue mobilization through broadening the tax base, increasing non-tax revenue collection, adopting enhanced tax collection measures and modernizing tax administration through digitalization.

Proposed tax measures

The Minister indicated that the GoG is committed to enhancing domestic revenue mobilization while providing relief for taxpayers by eliminating specific taxes that are considered a "burden" on businesses and individuals.

The key tax measures proposed in the 2025 Budget and related details are highlighted below.

Taxes to be abolished

The following taxes and levies would be abolished:

• 10% withholding tax on lottery winnings (Betting Tax)
• 1% Electronic Transfer Levy (E-Levy)
• Emissions levy on industries and vehicles
• Valued-Added Tax (VAT) on motor vehicle insurance policies
• 1.5% withholding tax on small-scale miners' unprocessed gold winnings

The GoG intends to abolish these taxes to ease the burden on households and businesses, thereby increasing individuals' disposable income and supporting business growth.

Taxes to be reduced

According to the Minister, the 2025 minimum wage rate would be taxed at zero percent. Thus, individuals earning less than or equal to the 2025 minimum wage would not be subject to income tax, thereby increasing their disposable income. This proposal is likely to be realized by amending the graduated tax rates applicable to resident individuals.

Revision of administrative provisions

The GoG aims to reduce the tax refund ceiling from 6% to 4% of total revenue to address the revenue gap created by removing certain taxes, including E-Levy and betting taxes, by amending the Revenue Administration Act, 2016, Act 915 (as amended). According to the Minister, a study revealed that 57% of the tax refund account was misapplied, and therefore a reduced allocation of 4% is enough to close the revenue shortfall that would result from removing the taxes.

Businesses may need to engage with the GoG more extensively during the implementation stage of the law due to issues in the current tax administrative processes, such as reaudits and delays in tax audits, which could adversely affect opportunities for tax refunds.

Energy sector levies and consolidation

The Minister indicated that there is a plan to restructure and consolidate existing levies under the Energy Sector Levies Act, 2015, Act 899 (as amended) (ESLA).

The ESLA would be revised to consolidate the:

• Energy Debt Recovery Levy
• Energy Sector Recovery Levy (Delta Fund)
• Sanitation and Pollution Levy

The following levies would be maintained for their original purposes:

• Road Fund Levy for road maintenance and infrastructure
• Public Lighting Levy to support electricity supply for public spaces
• National Electrification Levy to fund rural electrification programs

The proposed consolidation of the energy sector levies aims to assist the GoG in addressing energy sector debts and servicing inherited debt obligations. However, this consolidation may create a funding gap for sanitation and pollution activities, which previously received earmarked funds under the law. Those funds would be redirected toward servicing energy sector debt.

Extractive sector taxation

The GoG is proposing increasing the Growth and Sustainability Levy (GSL) for mining companies from 1% to 3% of gross production. Mining companies that do not have beneficial fiscal stability terms with GoG could be faced with increased tax cost. According to the Minister, the purpose of the increased rate is to ensure that Ghana benefits from the recent surge in gold prices on the global market.

Taxation affecting all sectors, unless otherwise indicated

GoG proposes extending the sunset clause for the GSL from 2025 to 2028, which would affect all companies. Extending the levy would continue to increase the income tax cost of doing business in Ghana.

The sunset clause for the Special Import Levy would be extended from 2024 to 2028. Importers of qualifying goods would continue to pay the levy until 31 December 2028.

Repealing or amending the applicable laws related to qualifying matters discussed above is set to begin in the second quarter of the 2025 calendar year.

VAT reforms

The proposed VAT reforms include:

• Abolishing the COVID-19 levy
• Reversing the decoupling of the Ghana Education Trust Fund Levy (GETFL) and National Health Insurance Levy (NHIL) from VAT, so these levies are "properly structured"
• Reducing the effective VAT rate for businesses and households
• Reversing the VAT flat rate regime
• Increasing the VAT registration threshold to exempt micro and small businesses from VAT obligations
• Enhancing public education and awareness to improve compliance

According to the Minister, the current VAT regime needs to be reformed because the structure of taxation has a cascading effect, which affects the cost of doing business in Ghana. However, businesses will have to wait to see the outcome of work by the Fiscal Affairs Department of International Monetary Fund and a local VAT Reform Task Force to be formed by the Minister, which are tasked with determining the parameters for the implementation. It is expected that qualifying VAT-registered persons will be entitled to claim the levies incurred under the input-output standard rate mechanism, thus eliminating the compounding burden on households of the levies.

Increasing the VAT registration threshold to exempt micro and small businesses from VAT would not only reduce their administrative and compliance costs but would also reduce the costs incurred by consumers of their goods and services.

The effective date for the repeal or amendment of applicable laws for implementing the VAT reform is anticipated to be in 2025 but the specific timing is unclear.

Reintroduction of road tolls

The Minister proposed reintroducing road tolls in 2025 as part of the "Big Push Programme." Key aspects of this initiative include:

• A technology-driven solution that will be used to ensure efficient toll collection and minimization of leakages
• A policy designed to minimize the burden on road users while generating sustainable revenue for road construction and maintenance

Property rate and non-tax revenue (NTR) collection

The Minister mentioned that, to strengthen revenue generation beyond taxation, the GoG is introducing a new legal framework for NTR. The reforms would include:

• Developing a national strategy for NTR collection, ensuring that fees and levies from GoG services are properly managed
• Enhancing property rate collection through a standardized system, ensuring local governments receive adequate funding for development projects

The timing for the enforcement of the property rate is unclear.

Compliance and taxpayer engagement

The Minister, as part of his speech, indicated that tax compliance, particularly among small and medium-sized enterprises and individuals, remains low, adversely affecting revenue collection. To improve tax compliance, the GoG would implement the following measures:

• A nationwide tax education campaign over the next two to three years to increase awareness and encourage voluntary compliance
• Quarterly dialogue sessions to be held among the Ghana Revenue Authority (GRA), Ministry of Finance and the business community to address tax-related concerns and streamline tax administration