The Abossey Okai Spare Parts Dealers Association has cautioned about a potential one-week strike if the government does not immediately reconsider the recently implemented Value Added Tax (VAT) system under the Value Added Tax Act, 2025 (Act 1151).
According to a press release issued on February 8, 2026, and signed by Takyi Addo, the Association’s Head of Communications, the existing 20% VAT rate is harming pricing, competitiveness, and compliance in the spare parts market.
The statement said, “The new VAT rate is having a major impact on our operations and making it hard for dealers to maintain competitiveness,” and cautioned that the policy runs the risk of driving more enterprises into informality.
The VAT on spare parts was 4% under the old tax system, which helped dealers maintain stable prices. The Association noted that the tax on a product that was formerly priced at GH¢500 was GH¢20 in VAT but is now GH¢100, bringing the total cost to GH¢600.
This equates to a further GH¢80 burden on consumers for the same product, according to the organization, at a time when the majority of Ghanaians are already having trouble with the high cost of living.
The dealers also expressed concern about what they called unequal treatment under the new administration. Businesses with annual turnover exceeding GH750,000 are obligated to register for VAT and levy 20% at the point of sale, whereas smaller companies can offer lower prices even if they purchase from the same importers.
The statement pointed out that “this imbalance penalizes growth, efficiency, and compliance, while unintentionally rewarding fragmentation and informality. “
Additionally, the Association lamented that certain traders are unable to claim input VAT on goods manufactured locally, which results in higher selling prices and a competitive disadvantage.
The organization suggested alternate strategies to alleviate the strain on the industry, while simultaneously backing the government’s initiatives to broaden the tax base and increase revenue collection. Among these are lowering the VAT rate on replacement parts to between 5 and 8 percent or establishing a streamlined, industry-specific plan at a fixed rate of 3 per cent.
The Association claims that these changes would help to reduce tax leakages, safeguard legitimate enterprises, promote voluntary compliance, and bring prices back into line with competition.
The spare parts dealers emphasized that businesses that abide by the law should not be penalized for doing so. The statement stated, “We respectfully request a review of the VAT rate and structure as applied to the spare parts sector and remain open to further engagement on this matter. “
Source: myjoyonline.com