Abossey Okai Spare Parts Dealers Threaten Strike Over VAT Increase

The Abossey Okai Spare Parts Dealers Association has warned of a possible one-week strike if government fails to review the new Value Added Tax (VAT) structure introduced under the Value Added Tax Act, 2025 (Act 1151). 

In a statement issued on February 2, 2026, the Association said the new tax regime has increased the effective VAT rate on spare parts from 4% to 20%, leading to significant price hikes and reduced competitiveness in the sector. 

According to the group, under the previous system, spare parts were relatively affordable, and most dealers complied with their tax obligations. However, the VAT increase has pushed prices sharply upward. 

“An item that previously sold for GH¢520, including VAT, now goes for GH¢600 — an additional cost of GH¢80 per product,” the Association noted, stressing the burden this places on consumers and small-scale businesses. 

The dealers also raised concerns over what they described as unequal treatment among traders operating in the same market. Currently, dealers with annual sales above GH¢750,000 are required to register and charge VAT, while those below the threshold remain exempt. 

This, they argue, has created a competitive imbalance since VAT-registered dealers sourcing products locally are unable to claim input VAT, forcing them to sell at higher prices than non-registered dealers who buy from the same suppliers. 

The Association warned that this disparity is pushing customers toward non-VAT sellers, promoting market distortions and encouraging informality, which could ultimately undermine overall tax compliance in the sector. 

While expressing support for government’s tax reforms and efforts to broaden the revenue base, the group described the current VAT structure as unsustainable for spare parts dealers, given the sector’s thin profit margins. 

To address the issue, the Association is urging government to reduce the VAT rate on spare parts to between 5% and 8% or consider instituting a flat, sector-specific VAT rate of about 3% to ensure fairness and compliance. 

The Association reaffirmed its willingness to engage in constructive dialogue with the authorities but warned that if government fails to respond to their concerns, members may have no choice but to halt operations in protest. 

“Our doors remain open for discussion, but if there is no urgent action, we will embark on a week-long strike to press home our demands,” the statement concluded.