The Abossey Okai Spare Parts Dealers Association has called on government to review the recently implemented Value Added Tax (VAT) regime under the Value Added Tax Act, 2025 (Act 1151), warning that the policy is eroding competitiveness, distorting prices, and weakening compliance within the spare parts trade.

The Association has cautioned that it could embark on a one-week strike if authorities fail to address concerns over the effective VAT rate, which it says has increased sharply from about four percent under the previous system to 20 percent under the current regime.

In a press statement issued on February 8, 2026, and signed by the Association’s Head of Communications, Takyi Addo, the dealers said the tax hike has significantly altered pricing structures and placed an additional burden on traders and consumers.

To demonstrate the impact, the Association explained that a spare part previously sold at GH¢500 attracted GH¢20 in VAT, bringing the final price to GH¢520. Under the new regime, the same item now attracts GH¢100 in VAT, pushing the retail price to GH¢600—an additional GH¢80 cost to consumers for the same product.

According to the dealers, the sharp increase is driving customers toward informal sellers who do not charge VAT, thereby disadvantaging compliant businesses and potentially reducing overall tax revenue.

The Association also raised concerns about unequal treatment among traders who source goods locally from the same importers. It noted that while some dealers are required to register for VAT and charge the 20 percent rate due to higher annual turnover, others operating below the GH¢750,000 threshold are exempt and can sell identical products without charging VAT.

“A VAT-registered dealer who purchases goods locally cannot claim input VAT but is still required to add 20 percent at the point of sale, making his products more expensive than those of a non-registered competitor,” the statement said. “This discourages growth, efficiency, and compliance, while unintentionally rewarding informality.”

The group warned that the current VAT structure incentivises businesses to remain below the registration threshold, discourages formalisation and expansion, and weakens compliance across the sector.

While affirming its support for government’s efforts to broaden the tax base and enhance domestic revenue mobilisation, the Association argued that the 20 percent VAT rate is unsustainable for the spare parts trade, which typically operates on thin profit margins.

As an alternative, the dealers proposed either a reduced VAT rate of between five and eight percent for spare parts businesses or the introduction of a sector-specific simplified VAT scheme with a flat rate of about three percent, applied uniformly to all dealers regardless of whether goods are imported directly or purchased locally.

The Association said such measures would promote fairness, encourage voluntary compliance, protect jobs, and ultimately boost government revenue by reducing tax leakages.

It added that it remains open to dialogue with authorities but warned that failure to review the VAT regime could trigger a one-week industrial action.