The Abossey Okai Spare Parts Dealers Association has threatened to embark on a one-week strike if government fails to urgently review the newly implemented Value Added Tax (VAT) regime, warning that the policy is already disrupting pricing, competitiveness and business sustainability within Ghana’s largest auto spare parts hub.
In a statement issued on Sunday, February 8, 2026, and signed by its Head of Communications, Takyi Addo, the Association expressed strong dissatisfaction with the implementation of the Value Added Tax Act, 2025 (Act 1151), which introduced a flat VAT rate of 20 percent on spare parts. The group said the new tax structure represents a sharp and sudden increase from the previous system, under which spare parts attracted a reduced VAT rate of 4 percent.
According to the Association, the change has significantly raised the cost of spare parts for consumers while squeezing profit margins for compliant dealers. To illustrate the impact, the group explained that an item that previously sold for GH¢500, inclusive of GH¢20 VAT, now attracts GH¢100 in VAT alone under the new law, pushing the final price to GH¢600. This, it said, places an additional GH¢80 burden on customers for the same product, at a time when vehicle maintenance costs are already rising due to inflation and currency pressures.
The dealers warned that the situation could reduce demand, slow business activity, and negatively affect thousands of traders and workers who depend on the Abossey Okai market for their livelihoods. Abossey Okai, located in Accra, is widely regarded as West Africa’s largest spare parts market and plays a critical role in the transport and logistics value chain.
Beyond the price hikes, the Association raised concerns about what it described as structural inequities in the VAT system. Under current regulations, businesses with an annual turnover exceeding GH¢750,000 are required to register for VAT and charge the full 20 percent at the point of sale. However, smaller dealers below the threshold are not required to register and can sell similar products at lower prices, despite sourcing from the same importers.
“This imbalance penalizes growth, efficiency and compliance, while unintentionally rewarding fragmentation and informality,” the statement said. The Association argued that the policy discourages businesses from expanding and formalising their operations, as doing so would automatically expose them to higher tax obligations and make them less competitive.
The group also pointed out challenges related to input VAT claims. Dealers who source spare parts locally, rather than importing directly, often struggle to claim input VAT credits, forcing them to absorb higher costs or pass them on to consumers. This, the Association said, further widens the competitive gap between different categories of traders operating within the same market.
While expressing support for the government’s broader objective of expanding the tax base and improving domestic revenue mobilisation, the Association stressed that tax policy must be balanced and sector-sensitive. It warned that an overly burdensome VAT regime could drive more traders into informality, ultimately undermining revenue collection rather than strengthening it.
As alternatives, the Association proposed a review of the VAT rate for spare parts to between 5 and 8 percent, or the introduction of a simplified, sector-specific VAT scheme at a flat rate of 3 percent. Under such a system, the tax would apply uniformly to both imported and locally sourced spare parts, reducing complexity and ensuring a level playing field for all dealers.
According to the group, these measures would help restore price competitiveness, encourage voluntary compliance, protect larger formal businesses, and reduce tax leakage caused by underreporting and informal trading practices.
The Association said it remains open to dialogue with the Ministry of Finance, the Ghana Revenue Authority and other stakeholders, but warned that failure to address the concerns promptly could lead to industrial action.
“We respectfully request an urgent review of the VAT rate and structure as applied to the spare parts sector,” the statement said. “Larger, compliant businesses should not be disadvantaged by a system that ultimately weakens the formal economy.”
As of Sunday, there had been no official response from government, but the threat of a strike raises concerns about potential disruptions to vehicle repairs, transportation services and supply chains nationwide if the dispute is not resolved.
Source: Africa Publicity
