The Ghana Union of Traders Association (GUTA) has raised serious concerns over the implementation of the new Value Added Tax regime under the Value Added Tax Act, 2025 (Act 1151), which took effect on January 1, 2026.
At a press conference held at its secretariat today in Accra, the President of GUTA, Clement Boateng, described the transition from the previous four per cent flat rate scheme to the standard 20 per cent VAT system as burdensome and detrimental to traders, particularly those operating within the informal sector.
Mr Boateng said the new regime introduces complex input-through-output calculations, excessive paperwork and what he termed cascading price effects that are pushing up costs for businesses and consumers alike.
He argued that many traders lack the technical expertise and administrative capacity to handle the new computation requirements, exposing them to unintentional non-compliance and possible penalties.
“Our analysis shows that the system is cumbersome… causing confusion and difficulties for traders,” he said, adding that regional engagements with members had revealed widespread opposition to the reforms.
He illustrated the practical implications by comparing the old and new systems. Under the previous flat rate scheme, he explained, an item priced at GH¢1,000 attracted a four per cent flat VAT of GH¢40, resulting in a final price of GH¢1,040. Under the new regime, applying 20 per cent VAT pushes the price to GH¢1,200. According to him, this sharp increase has led to customers rejecting purchases or demanding adjustments when traders attempt to issue new VAT receipts.
Mr Boateng urged traders not to surrender their old VAT booklets until an amicable resolution is reached.
GUTA also accused the Ghana Revenue Authority of reneging on earlier understandings reached after stakeholder meetings, including agreements on trader education and the establishment of a joint technical committee. Instead, Mr Boateng claimed that the Authority had deployed a task force to compel compliance.
“GRA has not respected the resolution… they have formed a task force to harass and coerce traders into submission,” he said.
He called for urgent government intervention and proposed a review of Act 1151 to restore a simplified three to four per cent flat rate VAT system for the informal sector. He further suggested intensified trader registration and education to broaden the tax base, the option for traders to choose between the old and new systems, and incentives for shops to register and collect VAT, alongside stronger consumer awareness campaigns.
While reiterating GUTA’s support for tax compliance, Mr Boateng rejected what he described as an “obnoxious tax” regime that places undue strain on both traders and consumers.
The press conference followed a statement issued by the Ghana Revenue Authority a day earlier in response to similar concerns raised by the Abossey Okai Spare Parts Traders Association.
In its rebuttal dated February 10, 2026, the GRA maintained that the criticisms were based on a misinterpretation of how the new VAT system operates.
“The GRA takes the concerns of all taxpayers seriously and remains open to constructive engagement. However, the claims made in the Association’s statement reflect a fundamental misunderstanding of how the new VAT system operates,” the Authority stated.
At the centre of the disagreement is the treatment of input VAT. The GRA explained that under the abolished Flat Rate Scheme, traders paid a non-recoverable 21.9 per cent input VAT, which became embedded in their cost structure. Under the new standard regime, although traders charge a 20 per cent output VAT on sales, they are permitted to fully deduct the 20 per cent input VAT paid on purchases.
Providing a comparative example, the Authority said that for an item with a base cost of GH¢500 and a 20 per cent profit margin, the final consumer price under the old regime was GH¢760.66. Under the new system, after deducting input VAT, the final price would be GH¢720.
“When input VAT deductibility is properly accounted for, the customer’s final price under the new regime (GH¢720) is GH¢40.66 lower than under the old regime (GH¢760.66),” the release asserted.
The GRA attributed perceived price increases to transitional errors, arguing that some traders were applying the 20 per cent output VAT on cost bases that still included non-deductible input VAT from the old regime.
The Authority also defended the upward revision of the VAT registration threshold to GH¢750,000, describing it as “a deliberate relief measure” designed to ease the compliance burden on smaller traders. It further cited the removal of the one per cent COVID-19 Health Recovery Levy, full deductibility of NHIL and GETFund levies, and the “elimination of cascading taxes” as key benefits of the reform.
According to the GRA, the new framework ultimately leads to a “reduced cost of doing business,” estimating that on a GH¢500 purchase, a trader’s cost base could fall by nearly 18 per cent.
Despite the escalating rhetoric, both sides have signalled willingness to engage. The GRA says it remains open to dialogue and continues to work with GUTA through a joint technical team to guide businesses on record-keeping and pricing adjustments. GUTA, for its part, has called for urgent and constructive engagement to ensure a fair and workable tax regime that safeguards revenue mobilisation without stifling trade.
Source:
www.graphic.com.gh
