By Benjamin Nii Nai Anyetei
The Abossey Okai Spare Parts Dealers Association has warned of a possible one-week strike action if government fails to urgently review the newly introduced Value Added Tax (VAT) regime under the Value Added Tax Act, 2025 (Act 1151).
In a press statement issued on February 8, 2026, and signed by the Association’s Head of Communications, Takyi Addo, the group expressed concern over the 20 percent VAT rate now applied to spare parts, saying it is hurting pricing, competitiveness, and compliance within the sector.
According to the Association, spare parts previously attracted a VAT rate of 4 percent, which allowed dealers to keep prices relatively affordable. Under the new system, an item that previously sold for GH¢500 with GH¢20 VAT now attracts GH¢100 in tax, raising the final price to GH¢600. The Association says this represents an additional GH¢80 cost to consumers for the same product.
The group also raised concerns about what it described as unequal treatment among dealers. Under the new VAT law, businesses with an annual turnover exceeding GH¢750,000 are required to register for VAT and charge the full 20 percent at the point of sale. However, dealers below the threshold can sell the same products at lower prices, even when they source from the same importers.
The Association said this situation discourages growth and compliance, while unintentionally encouraging informality within the sector. It added that dealers who source spare parts locally but are unable to claim input VAT are forced to sell at higher prices, placing them at a disadvantage compared to non-registered competitors.
While acknowledging government’s efforts to expand the tax base and improve domestic revenue mobilization, the Association proposed alternative measures. These include reducing the VAT rate on spare parts to between 5 and 8 percent, or introducing a simplified sector-specific VAT scheme with a flat rate of 3 percent, applied uniformly to both imported and locally sourced goods.
According to the group, such reforms would help restore price competitiveness, encourage voluntary tax compliance, protect formal businesses, and reduce revenue losses caused by tax evasion and informality.
The Association urged government to review the VAT structure affecting the spare parts industry, stressing that compliant and growing businesses should not be punished under the current system.
The group said it remains open to engagement with government to find a fair and sustainable solution.
