Ghana’s new Value Added Tax system has angered Abossey Okai’s spare parts traders, who say it is distorting competition and may lead to strikes.
The Abossey Okai Spare Parts Dealers Association said in a press release on February 2, 2026, that the Value Added Tax Act, 2025 (Act 1151) has raised the effective VAT charge on spare parts from 4% to 20%, which has resulted in a significant increase in prices and weakened industry competition.
According to the Association, under the former system, merchants mostly complied with their tax requirements, and replacement parts remained reasonably priced.
However, under the present system, a product that used to cost 520 cedis (VAT included) now costs 600 cedis, adding 80 cedis to the cost for customers.
Concerns were also voiced by the association regarding what it called unfair treatment of dealers in the same sector.
The Association claims that merchants who purchase items locally from importers but make more than the 750,000 cedi yearly VAT registration level must charge VAT, whereas dealers who make less than that are exempt.
Because VAT-registered dealers cannot claim input VAT on locally produced items, they are forced to sell at greater rates than non-registered dealers who source from the same suppliers, according to the spare parts sellers, creating a competitive imbalance.
In the end, the Association cautioned, the scenario is eroding tax compliance within the sector by encouraging customers to patronise sellers who do not charge VAT, inhibiting business expansion, and creating incentives for informality.
The Association stated that the current VAT structure is unsustainable for spare parts merchants because of their narrow profit margins, even if it supports government initiatives to broaden the tax base.
The group is requesting that the government examine the policy and either introduce a streamlined, sector-specific VAT scheme at a flat rate of roughly three percent or lower the sector’s VAT rate by five to eight percent.
In the press release, the Abossey Okai Spare Parts Dealers Association stated that it is still willing to communicate with authorities further and warned that if the issues are not resolved, there may be a one-week strike.
Source: newsthemegh.com