To shore up government revenue and close its fiscal gap, the Ghana Revenue Authority (GRA) has announced that, effective July 1, 2025, a 15% Value Added Tax (VAT) will be applied to non‑life insurance premiums. The policy, an extension of the national tax reforms outlined in the 2025 Budget, will impact a range of insurance products, while motor insurance remains exempt.
Affected Insurance Products
- Property, health, travel, fire, marine, and general liability insurance premiums will now attract the VAT.
- Motor insurance, including the mandatory Third‑Party Insurance (MTPI), will continue to be exempt.
What It Means for Consumers
Policyholders—individuals and businesses—should expect a 15% increase in the cost of eligible insurance products. This follows the government's intention to broaden the tax base and generate additional revenue for public services amid rising fiscal pressures.
Effective Tax Rate – The Full Picture
Though the headline VAT rate is 15%, insurers will also collect ancillary levies:
- NHIL (2.5%)
- GETFund (2.5%)
- COVID‑19 Health Recovery Levy (1%)
When applied cumulatively, the effective tax rate on non‑life premiums becomes approximately 21.9%
Public and Industry Response
The decision has sparked intense debate:
- Parliamentarian Vincent Ekow Assafuah condemned the move as “a tax on survival” and “a betrayal of the poor,” arguing that it threatens to compromise the economic resilience of families and small businesses.
- Insurance industry voices caution that the added cost may further depress already low insurance penetration in Ghana (estimated below 2% of GDP), exposing citizens to greater financial risk.
Where This Fits into Ghana’s Fiscal Strategy
This measure is part of a wide-reaching tax reform agenda:
- The 2022 VAT rate increased from 12.5% to 15% under the Value Added Tax (Amendment) Act.
- The GRA’s target to achieve GH¢200 billion in tax revenue by end‑2025 aligns with these broadened tax‑base initiatives
What Policyholders Should Do Now
- Insurance providers are advised to update billing systems and communicate clearly to clients in time for the July 1 implementation.
- Policyholders should compare premium changes and consider adjusting coverage to balance protection with affordability.
Bottom Line
The GRA’s extension of the 15% VAT to non‑life insurance—resulting in a true tax burden of around 21.9%—marks a significant revenue‑raising step. While it supports the government’s fiscal consolidation goals, it raises concerns over affordability, reduced insurance uptake, and economic strain on low‑income households. Watch for industry responses, legislative pushback, and potential revisions ahead of July 1.
