Spare parts dealers at Abossey Okai are threatening a one week strike over the newly implemented Value Added Tax regime, saying the changes are increasing prices, distorting competition, and placing compliant businesses at a disadvantage.
The Abossey Okai Spare Parts Dealers Association, in a statement issued on February 8, 2026, said the new VAT structure under the Value Added Tax Act, 2025 (Act 1151) has raised the effective tax rate on spare parts to 20 percent, compared to the previous 4 percent.
The statement, signed by the Association’s Head of Communications, Takyi Addo, said the jump in VAT has significantly affected pricing and sales across the market. It explained that an item that previously sold for GH¢500 attracted GH¢20 in VAT, bringing the total to GH¢520. Under the new regime, the same item now attracts GH¢100 in VAT, pushing the final price to GH¢600.
According to the Association, the new system is also creating disparities among dealers based on VAT registration thresholds. Businesses with annual turnover above GH¢750,000 are required to register and charge 20 percent VAT at the point of sale, while those below the threshold are not required to do so. This means smaller or unregistered traders can sell at lower prices, even when sourcing from the same importers.
The group says the arrangement undermines fairness in the sector and discourages compliance.
“This imbalance penalizes growth, efficiency, and compliance, while unintentionally rewarding fragmentation and informality,” the statement noted. It added that dealers who are unable to claim input VAT on locally sourced products are forced to sell at higher prices, further weakening their competitive position.
While backing government’s broader objective of expanding the tax base and improving domestic revenue, the Association is proposing adjustments to the policy. It is calling for either a reduced VAT rate of between 5 and 8 percent for spare parts, or a simplified sector specific VAT scheme with a flat rate of 3 percent applied uniformly to both imported and locally sourced goods.
The dealers argue that such reforms would help stabilize prices, improve voluntary tax compliance, protect formal businesses, and increase overall tax revenue by limiting leakages linked to informal trading.
The Association is urging government to urgently review the VAT rate and structure for the spare parts sector and says it remains open to dialogue with the authorities.
“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.