Spare parts dealers at Abossey Okai have threatened to shut down their shops for one week if the government fails to urgently review the newly implemented Value Added Tax (VAT) regime under the Value Added Tax Act, 2025 (Act 1151).
In a press statement dated February 8, 2026, and signed by its Head of Communications, Mr Takyi Addo, the Abossey Okai Spare Parts Dealers Association said the current 20 per cent VAT flat rate was severely affecting pricing, competitiveness, and compliance within the sector.
VAT hike hurts prices and competitiveness
“The new VAT rate is significantly affecting our operations and making it difficult for dealers to remain competitive,” the statement said.
It added that the policy risks pushing more businesses into informality, at a time when government is seeking to broaden the tax base.
Under the previous tax structure, spare parts attracted a VAT rate of four per cent, which allowed dealers to keep prices relatively stable and predictable for customers.
The Association explained that an item previously sold at GH¢500, which attracted GH¢20 VAT under the old regime, now incurs GH¢100 in tax under the 20 per cent flat rate.
This pushes the final selling price to GH¢600, translating into an additional GH¢80 burden on consumers.
Unequal treatment among businesses
The dealers also raised concerns about what they described as unequal treatment under the new VAT structure.
Businesses with an annual turnover exceeding GH¢750,000 are required to register for VAT and charge 20 per cent at the point of sale.
Smaller operators below that threshold are not subject to the same obligation and can sell at lower prices, despite sourcing goods from the same importers.
“This imbalance penalises growth, efficiency and compliance, while unintentionally rewarding fragmentation and informality,” the statement noted.
Challenges with input VAT
The Association further complained that some businesses are unable to claim input VAT on locally sourced products, forcing them to sell at higher prices and putting compliant dealers at a disadvantage.
Calls for govt action
While expressing support for government’s efforts to widen the tax net and improve revenue mobilisation, the Association proposed alternative measures.
These include reducing the VAT rate on spare parts to between five and eight per cent or introducing a simplified sector-specific scheme at a flat rate of three per cent.
Such reforms, the group argued, would restore price competitiveness, encourage voluntary compliance, protect formal businesses, and reduce tax leakages within the sector.
Formal businesses should not be penalised
The spare parts dealers stressed that compliant businesses should not be punished for operating within the law.
“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,” the statement said.
Economic impact of a possible strike
Abossey Okai, widely regarded as the heart of Ghana’s spare parts trade, supplies components to mechanics, transport operators, and vehicle owners nationwide.
Any prolonged shutdown of businesses in the enclave could disrupt supply chains and affect transportation services across the country.
The Association indicated that unless the government responds promptly to their concerns, members may have no option but to embark on a one-week strike to draw attention to the issue.
Stakeholders await engagement
The development sets the stage for possible engagement between the dealers and the Ministry of Finance, as stakeholders weigh the balance between revenue mobilisation and sustaining business growth in one of the country’s most vibrant commercial sectors.
