GRA Directly Rebuts Trader Claims
The Ghana Revenue Authority has responded forcefully to the Abossey Okai Spare Parts Traders Association regarding the new VAT regime Ghana under Act 1151.
The GRA stated the Association fundamentally misunderstood how the system works.
Consequently, the Authority has provided clear evidence to correct the record.
20% Rate Actually Reduces Final Prices
The GRA has proved the new VAT regime Ghana and claim it lowers consumer prices.
Using a GH¢500 base price with 20% profit:
Old system: Traders pay GH¢109.50 input VAT, cannot deduct it, and incur GH¢609.50 actual cost. Final customer price: GH¢760.66.
New system: Traders pay GH¢100 input VAT, claim it back fully, and incur GH¢500 actual cost. Final customer price: GH¢720.00.
Therefore, customers save GH¢40.66 per transaction. This advantage holds at any profit margin.
Threshold Increase Helps Small Traders
Furthermore, the GH¢750,000 registration threshold deliberately frees smaller traders from VAT obligations.
Critically, both registered and unregistered traders using the same GH¢500 item with 20% profit sell at identical final prices: GH¢720.00. Thus, no competitive distortion exists.
Five Key Benefits for Businesses
Additionally, the new VAT regime Ghana delivers measurable advantages:
First, the effective tax rate drops from 21.9% to 20%.
Second, the 1% COVID-19 levy disappears permanently.
Third, businesses claim back all 20% input VAT, including NHIL and GETFund levies previously excluded.
Fourth, cascading tax-on-tax effects disappear entirely.
Fifth, trader costs drop from GH¢609.50 to GH¢500.00—an 18% reduction.
Current Price Hikes Stem from Transitional Errors
Nevertheless, the GRA acknowledges some traders charge higher prices. The cause: transitional pricing errors, not policy defects.
Traders mistakenly apply 20% output VAT on cost bases still including non-deductible input VAT. Once businesses correctly account for deductibility, prices naturally fall.
GRA Offers Direct Support
Consequently, the Authority established a joint technical team with GUTA. This team provides practical guidance on record-keeping, input tax claims, and correct pricing.
The GRA explicitly invites the Abossey Okai Association to receive this same support.
Officials Call for Constructive Engagement
Finally, the GRA appeals to all stakeholders. Mathematical evidence clearly demonstrates consumer benefits, cost reductions, and genuine relief for smaller traders.
“We call on all stakeholders to engage constructively and take full advantage of the benefits this reform offers.”
The Bottom Line
The new VAT regime Ghana delivers lower consumer prices, reduced trader costs, administrative relief for small businesses, and simpler compliance. Properly applied, this reform saves everyone money.
