The Abossey Okai Spare Parts Dealers Association has raised concerns over the newly implemented Value Added Tax (VAT) regime under the Value Added Tax Act, 2025 (Act 1151), warning that the sector may embark on a one-week strike if urgent reviews are not undertaken.
In a press statement on February 8, 2026, and signed by the Head of Communications, Takyi Addo, the Association said the new VAT rate of 20 percent is significantly affecting pricing, competitiveness, and compliance among spare parts dealers.
According to the group, under the previous arrangement, spare parts attracted only 4% VAT, allowing dealers to maintain competitive prices. The Association highlighted that an item previously sold for GH¢500 with GH¢20 VAT now attracts GH¢100 in tax, pushing the total cost to GH¢600 — an additional GH¢80 burden on consumers for the same product.
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The group also raised concerns about the unequal treatment of dealers depending on their VAT registration status. Dealers with annual turnover above GH¢750,000 are required to register for VAT and charge 20% at the point of sale, while those below the threshold can sell at lower prices despite sourcing from the same importer.
“This imbalance penalizes 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.
While supporting the government’s efforts to broaden the tax base and improve revenue mobilization, the Association proposed either a reduced VAT rate of 5–8 percent for spare parts or a simplified sector-specific VAT scheme at a flat rate of 3 percent, applied uniformly regardless of whether goods are imported or sourced locally.
The group argued that such measures would restore price competitiveness, encourage voluntary compliance, protect formal businesses, and ultimately increase net revenue by reducing tax leakage through informality.
The Association concluded by urging the government to review the VAT rate and structure for the spare parts sector, emphasizing 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.
CNR