VAT hike hurting spare parts dealers, GRA accused of inefficiency – PRO

The Abossey Okai Spare Parts Dealers Association has accused the Ghana Revenue Authority (GRA) of unfairly shifting the burden of revenue mobilisation onto traders following the sharp increase in Value Added Tax (VAT) on spare parts.

Speaking on Adom FM’s morning show Dwaso Nsem, the Association’s Public Relations Officer, Kwadwo Takyi Addo, criticised the GRA for raising VAT on spare parts from 4 per cent to 20 per cent under the new Value Added Tax Act, 2025 (Act 1151). He described the move as unjustified and harmful to traders, despite acknowledging that President John Dramani Mahama is performing well.

“The President is performing, but the percentage increase they are bringing is not helping us. For GRA to increase the VAT to this level is simply not fair,” he said.

Mr Takyi Addo explained that repeated attempts by the association to engage government officials and politicians on the matter have been unsuccessful, leaving them with no option but to speak out publicly.

“Even when we try to contact government officials or politicians to draw attention to our concerns, nobody listens. That is very worrying. That is why we are speaking on radio, so the President will hear us,” he stated.

He argued that the GRA could generate substantial revenue from Abossey Okai without imposing such a steep tax increase, citing the large number of businesses operating in the area.

“If Abossey Okai has about 20,000 shops and each shop pays just GH¢500 a year, you can imagine how much revenue GRA would raise annually from Abossey Okai alone,” he said.

Mr Takyi Addo further accused the GRA of failing to enforce tax compliance nationwide, alleging that many registered taxpayers do not pay taxes without facing consequences.

“Many Ghanaians are registered with the GRA, but only a few actually pay their taxes. What is GRA doing about that? They are too lazy. They’ve been given targets, so they are forcing us to help them meet those targets,” he claimed.

He also questioned the handling of surplus revenue when the GRA exceeds its revenue targets, calling for greater transparency.

“When they even get surplus after meeting their targets, what do they do with the surplus? They should come and tell us,” he added.

Under the previous tax system, spare parts attracted 4 per cent VAT, helping to keep prices relatively stable. However, under the new regime, an item that previously sold for GH¢500 with GH¢20 VAT now attracts GH¢100 in tax, increasing the final price to GH¢600.

The Association also raised concerns about what it described as unequal treatment of businesses, noting that companies with annual turnovers above GH¢750,000 are required to register for VAT and charge 20 per cent, while smaller operators selling similar goods can charge lower prices despite sourcing from the same suppliers.

“This system penalises growth, efficiency and compliance, while unintentionally rewarding informality,” Mr Takyi Addo said.

The Abossey Okai Spare Parts Dealers Association has warned that it may embark on a one-week strike if the government fails to urgently review the new VAT policy.