Abossey Okai spare parts dealers warn of strike over VAT hike

In a press statement issued on February 8, 2026, and signed by the Head of Communications, Takyi Addo, the Association said the new VAT rate of 20 percent is having a significant impact on pricing, competitiveness, and compliance within the spare parts sector.

According to the Association, the current VAT structure places compliant dealers at a disadvantage, particularly those who are unable to claim input VAT on locally sourced products.

“This imbalance penalizes growth, efficiency, and compliance, while unintentionally rewarding fragmentation and informality,” the statement noted.

The group explained that dealers who cannot offset input VAT are compelled to sell at higher prices, making it difficult to compete with informal operators and those who do not fully comply with tax obligations.

While expressing support for the government’s efforts to broaden the tax base and improve revenue mobilization, the Association proposed alternatives aimed at balancing tax compliance with business sustainability.

Among the proposals are a reduced VAT rate of between 5 and 8 percent specifically for spare parts, or the introduction of a simplified, sector-specific VAT scheme at a flat rate of 3 percent, applied uniformly whether goods are imported or sourced locally.

The Association argued that these measures would help restore price competitiveness, encourage voluntary tax compliance, protect formal businesses, and ultimately increase net government revenue by reducing tax leakages through informality.

“We respectfully request a review of the VAT rate and structure as applied to the spare parts sector and remain open to further engagement on this matter,” the statement said.

The group emphasized that larger and more compliant businesses should not be disadvantaged under the current tax regime, warning that failure to address their concerns could result in a temporary shutdown of operations across the Abossey Okai spare parts enclave.