The Abossey Okai Spare Parts Dealers Association has issued a threat to commence a one-week strike action in response to the newly implemented Value Added Tax (VAT) regime, as stipulated in the Value Added Tax Act, 2025 (Act 1151).
The Association is demanding an immediate review of the tax regime, failing which they will be compelled to proceed with the strike.
This ultimatum was contained in a press release dated Sunday, February 8, 2026, signed by Takyi Addo, Head of Communications.
According to the dealers, the new VAT rate of 20 per cent is having a significant impact on pricing, competitiveness, and compliance within the spare parts industry.
They explained that previously, spare parts attracted a VAT rate of only 4%, which enabled dealers to maintain competitive pricing.
The Association highlighted that an item previously sold for GH¢500 with a VAT of GH¢20 now incurs a tax of GH¢100, resulting in a total cost of GH¢600, representing an additional tax burden of GH¢80 for consumers purchasing the same product.
Furthermore, concerns were raised regarding the uneven treatment of dealers based on their VAT registration status, where dealers with an annual turnover exceeding GH¢750,000 are required to register for VAT and charge 20% VAT at the point of sale, whereas those below the threshold can sell at lower prices despite sourcing products from the same importer.
“This imbalance penalises growth, efficiency, and compliance, while unintentionally rewarding fragmentation and informality.” Dealers unable to claim input VAT on locally sourced products are forced to sell at higher prices, putting them at a competitive disadvantage.
The Association has therefore proposed either a reduced VAT rate of 5–8 per cent for spare parts or a simplified sector-specific VAT scheme at a flat rate of 3 per cent, applied uniformly regardless of whether goods are imported or sourced locally.
In their view, these measures would restore price competitiveness, encourage voluntary compliance, protect formal businesses, and ultimately increase net revenue by reducing tax leakage through informality.
It additionally advised the government to review the VAT rate and structure for the spare parts sector, emphasising that larger, compliant businesses should not be disadvantaged.
“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.
By: Rainbowradioonline.com/Ghana
