By:Kenneth Appiah Bani
The Ghana Revenue Authority (GRA) has announced that it will commence the implementation of the Value Added Tax (Amendment) Act, 2023 (Act 1107), effective July 1, 2025. This amendment mandates the application of a 15% Value Added Tax (VAT) on non-life insurance premiums, with the exception of motor insurance policies.
The amendment, which modifies sections of the Value Added Tax Act, 2013 (Act 870), introduces a significant change in how general insurance products are taxed in Ghana. Under the new law, premiums paid for non-life insurance services such as fire, marine, burglary, property, personal accident, travel, liability, and workmen’s compensation will now be treated as taxable supplies and therefore attract VAT at the prevailing rate of 15%.
Life insurance and motor insurance, however, remain VAT-exempt. The exclusion of motor insurance especially third-party policies which are mandatory under Ghanaian law is a relief for motorists but raises concerns among general insurance policyholders.
According to the GRA, this move is part of the government’s wider tax reform agenda aimed at enhancing domestic revenue generation, improving tax fairness, and aligning Ghana’s tax regime with international best practices. Officials argue that many sectors of the economy, including financial and professional services, already pay VAT on their offerings, and the inclusion of non-life insurance brings consistency to the tax structure.
“This is a necessary step to widen the tax net and reduce over-reliance on a few tax handles,” a GRA spokesperson explained. “Non-life insurance policies are commercial transactions like any other, and it is only equitable that they attract VAT like other goods and services.”
The insurance industry has expressed mixed reactions to the impending tax. While some insurers acknowledge the government’s right to tax services, others fear the VAT could negatively impact the uptake of insurance, particularly among small businesses and low-income individuals.
Insurance brokers and agents are also expected to revise their premium structures to reflect the VAT component, which could lead to price increases for clients. There are calls from within the industry for broader consultation and public education to clarify the implementation details.
For policyholders, this means higher costs on general insurance policies. For instance, a travel insurance policy previously costing GHS 1,000 will now require an additional GHS 150 in VAT. Businesses that depend on property and liability insurance are likely to see significant hikes in operational expenses.
However, for VAT-registered businesses, the VAT paid on insurance premiums may be claimable as input VAT, thereby neutralizing the financial impact. Individuals and entities outside the VAT system, however, will bear the full cost.
The Ghana Revenue Authority has pledged to work closely with industry players to ensure a smooth rollout of the policy. It has also committed to undertaking public sensitization campaigns in the coming weeks to help citizens and businesses understand the new tax policy and how it will be implemented.
“The GRA will offer technical support to insurance firms and engage them on compliance procedures,” the statement noted. “We urge all stakeholders to take note of the effective date July 1, 2025 and prepare accordingly.”
As Ghana continues to explore ways to improve tax compliance and boost revenue, the VAT on non-life insurance premiums marks another step in its evolving tax landscape. While the move has attracted debate, its success will largely depend on how well it is communicated, implemented, and monitored.
Stakeholders are encouraged to liaise with the GRA for clarifications and to ensure full compliance by the July 1 deadline.
