The Ghana Revenue Authority (GRA) says the newly introduced Value Added Tax (VAT) regime will not lead to higher prices or unfair competition in the spare parts market.
It comes after the Abossey Okai Spare Parts Dealers Association warned of a possible one-week strike if the government fails to urgently review the VAT system under the Value Added Tax Act, 2025 (Act 1151).
The Association says the current 20% VAT rate is hurting pricing, competitiveness and compliance within the spare parts sector.
But in a statement on Tuesday, February 10, the GRA said the concerns were based on a misunderstanding of how the new VAT system works.
The Authority explained that although the VAT rate has moved from a 4% flat rate to a standard 20%, traders can now claim back the full VAT paid on their purchases — something that was not allowed under the old system.
According to the GRA, this input VAT deduction lowers traders’ real costs and can actually result in cheaper final prices for customers when applied correctly.
The Authority also rejected claims that the higher VAT registration threshold of GH¢750,000 would distort competition, saying small traders are being relieved of administrative burdens, while registered businesses benefit from lower cost bases.
The GRA added that the new regime removes the COVID-19 levy, eliminates “tax-on-tax” charges, and simplifies VAT compliance for businesses.
It said recent price increases are likely due to what it described as “transitional pricing errors”, where traders continue to calculate costs using the old system instead of deducting reclaimable VAT.
The GRA says it has set up a joint technical team with the Ghana Union of Traders’ Associations to help businesses adjust and is ready to extend the same support to Abossey Okai dealers.
It called on traders to engage constructively and take advantage of the benefits of the reform.
