By Adnan Adams Mohammed
The Ghana Revenue Authority (GRA) has launched a strategic pushback against growing public anxiety over the newly implemented Value Added Tax Act, 2025 (Act 1151), insisting that the shift to a 20% unified rate is designed to reduce, not inflate, the cost of doing business.
This clarification comes as the Abossey Okai Spare Parts Dealers Association one of the country’s most vocal trade groups suspended a planned strike following a high-level engagement with the GRA. Both parties have agreed to a six-month monitoring period to assess the policy’s real-world impact on the market.
Consolidating a “Patchwork” System
During a policy sensitization on Thursday, February 19, Dominic Adamnor Nartey, Chief Revenue Officer at the GRA, explained that the new Act was a necessary “cleanup” of a tax system that had become a fragmented patchwork of laws since 2013.
The 2026 reform introduces several landmark changes:
Abolition of the Flat Rate Scheme: The 4% flat rate (previously 3% VAT + 1% COVID Levy) is gone.
Unified 20% Rate: This comprises a 15% standard VAT, 2.5% NHIL, and 2.5% GETFund Levy.
Increased Threshold: Only businesses with an annual turnover exceeding GH₵750,000 (up from GH₵200,000) are now required to register for VAT, effectively exempting thousands of small-scale traders.
The Input Credit Advantage
The GRA’s core argument is that while 20% looks higher than the old 4%, the Standard Rate allows businesses to claim Input Tax Credits. Under the old flat rate, any VAT paid by a trader to a supplier was a “sunk cost” that was passed on to the consumer. Now, that tax is deductible.
“If you build your price according to what the GRA expects you to do, there is no difference in the final price,” Mr. Nartey asserted. “The credit system ensures tax is only paid on the ‘Value Added’ at each stage, eliminating the cascading ‘tax-on-tax’ effect.”
Abossey Okai’s 180-Degree Turn
The spare parts hub of Abossey Okai, which had initially threatened a one-week strike, has urged its members to remain calm. Following a meeting with Commissioner-General Anthony Kwesi Sarpong, the Association agreed to participate in a joint six-member committee with the GRA and GUTA to monitor price trends.
Takyi Addo, Communications Officer for the Association, noted that while concerns remain about competition from unregistered traders, the GRA’s assurance of a six-month review provides a window for potential legislative adjustment in the mid-year budget.
“Our shops will remain open,” the Association stated. “The objective is to ensure that taxes are properly paid without imposing hardship. We are optimistic that the monitoring period will inform the necessary refinements.”
Old Flat Rate vs. New Standard Rate (Act 1151)
Feature Old Flat Rate (4%) – New Standard Rate (20%)
Input Tax Credit Not allowed (became a cost) Fully Deductible
Cascading Effect High (Tax added to tax) Eliminated
Registration Threshold GH₵200,000 GH₵750,000
COVID-19 Levy 1% (Included) Abolished
