By Francis Kobena Tandoh
The Abossey Okai Spare Parts Dealers Association has threatened to embark on a one-week strike over the 20% increase in the Value Added Tax (VAT) rate on taxable supplies, according to a statement on Sunday.
The statement, signed by Takyi Addo, Head of Communications of the Association, said the 20% increase in VAT has significantly disrupted their businesses in recent times.
“The Abossey Okai Spare Parts Dealers Association wishes to formally express its deep concern over the recent increase in the effective Value Added Tax (VAT) rate on taxable supplies to twenty per cent (20%), a policy which has significantly disrupted business operations within the spare parts sector,” read the statement.
“Since the implementation of the new VAT regime, VAT-registered dealers have recorded an average decline in sales of approximately fifteen per cent (15%). This sharp drop has negatively affected livelihoods, reduced compliance, and forced many customers to shift purchases to informal and non-compliant sellers, thereby undermining government revenue mobilisation efforts,” it added.
According to the Association, the current tax structure has created unfair market conditions, where compliant businesses are placed at a competitive disadvantage compared to informal operators who do not charge VAT.
This situation, the Association noted, threatens the sustainability of legitimate enterprises within the Abossey Okai trading enclave and beyond.
“In light of these challenges, we respectfully call on the Ghana Revenue Authority (GRA) to urgently withdraw the 20% VAT increase and engage stakeholders to develop a more practical and business-friendly taxation framework,” it further stated.
The Association proposed the adoption of a simplified VAT scheme for the spare parts sector. Our analysis indicates that such a system could increase revenue collection by at least 10% through improved compliance and formalisation, reduce tax evasion and broaden the tax net, create fair competition within the market, and align Ghana’s VAT rate with regional competitors through a proposed 5–8% rate, thereby enhancing the competitiveness of Ghanaian spare parts businesses.
The Association warned that if the GRA failed to address their concerns and initiate constructive dialogue, they would have no option but to embark on a one-week industrial action to protect the interests of our members and the sustainability of the sector.
The spare parts dealers reiterated their commitment to working collaboratively with the government to achieve a solution that balances revenue generation with business growth and job protection. Enditem
Source: Ghana Eye Report
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