GUTA demands urgent review of new 20per cent VAT regime amid trader hardships

The Ghana Union of Traders Association (GUTA) has issued a strong appeal to the government for an immediate review of the Value Added Tax Act, 2025 (Act 1151), warning that the new 20% VAT regime is inflicting severe hardship on traders and driving up consumer prices in ways that threaten business survival and market stability.
Addressing journalists at a press conference held this morning at the GUTA secretariat in Accra, President Clement Boateng described the transition from the long-standing 4% flat rate scheme to the standard 20% VAT as overly complex and punitive, particularly for informal sector operators who form the backbone of Ghana’s retail trade.
Boateng explained that the requirement for detailed input-through-output VAT calculations and extensive documentation has left many traders confused and overwhelmed. Most lack the accounting knowledge or financial means to hire professionals, resulting in frequent unintentional non-compliance, heavy penalties and mounting pressure on already fragile businesses. He stressed that consultations across regions and trade sectors had revealed near-universal rejection of the current framework among members.
To demonstrate the real-world impact, Boateng gave a straightforward comparison. Under the previous flat-rate system, a product sold for GH¢1,000 carried an additional GH¢40 VAT, bringing the total to GH¢1,040. Under the new regime, the same item attracts 20% VAT, pushing the price to GH¢1,200. He said this sharp increase has caused many customers to abandon purchases the moment traders attempt to issue the new-format VAT receipts. In response, GUTA has advised its members to retain their old VAT booklets and refrain from surrendering them until satisfactory changes are made.
The association accused the Ghana Revenue Authority (GRA) of breaking earlier commitments. Boateng recalled that following productive discussions, both parties had agreed on sensitisation programmes and the creation of a joint technical committee to iron out implementation difficulties. Instead, he claimed, GRA has resorted to deploying a task force that is intimidating and pressuring traders, actions that contradict the promised collaborative approach and the planned joint public statement.
Although GUTA reaffirmed its support for genuine tax compliance and the government’s need to generate revenue for national development, it condemned the present arrangement as an “obnoxious tax” that disproportionately harms traders and end consumers. The group is therefore pressing for swift reforms. It wants Act 1151 revisited urgently and a simplified flat rate of between 3% and 4% restored specifically for informal sector traders to ease compliance. GUTA also called on GRA to ramp up registration exercises and educational outreach so more businesses can be brought into the tax net in an orderly manner, thereby increasing revenue without coercion.
The association further proposed that the new 20% regime be made optional, allowing traders who are comfortable with the existing GVAT structure to continue using it while others adopt the standard system if they choose. GUTA recommended that GRA offer incentives to encourage more shops and retail outlets to register for VAT collection, and that vigorous consumer awareness campaigns be launched to build the habit of requesting VAT invoices for every transaction.
Above all, GUTA demanded an immediate end to all forms of trader harassment, the disbandment of the enforcement task force, and a return to genuine, good-faith dialogue aimed at resolving the practical difficulties created by the new law. Boateng emphasised the traders’ resolve, declaring “Puta our business!” to signal that members are ready to defend their livelihoods against any aggressive tactics.
The statement comes one day after GRA publicly addressed similar complaints lodged by the Abossey Okai Spare Parts Traders Association. In its release, GRA argued that much of the current discontent arises from a misunderstanding of the new rules. The Authority insisted that once traders correctly deduct recoverable input VAT—which is now fully claimable—the effective cost of goods falls significantly, leading to lower—not higher—final prices for consumers.
Using a worked example based on a GH¢500 wholesale purchase with a 20% profit margin, GRA showed that the old flat-rate regime produced a consumer price of GH¢760.66, whereas the new system yields GH¢720, delivering a clear saving of more than GH¢40 per transaction. The difference, GRA explained, stems from the ability to reclaim the 20% input VAT paid on purchases, the abolition of the 1% COVID-19 Health Recovery Levy, and the removal of cascading tax-on-tax effects that were embedded in the previous structure.
GRA listed several additional gains from the reform, including a reduction in the overall effective tax burden from 21.9% to 20%, complete deductibility of National Health Insurance and GETFund levies, a raised registration threshold of GH¢750,000 that exempts very small operators from VAT obligations, and a clearer, more uniform compliance framework for all registered businesses.
The Authority confirmed that a joint technical team with GUTA is already in place to provide hands-on assistance during the transition period, covering proper record-keeping, input tax recovery procedures and accurate pricing methods. GRA expressed readiness to extend the same support to other trade associations and urged all stakeholders to embrace the long-term benefits of the changes through constructive engagement.
With both sides indicating openness to further discussion, there is cautious optimism that targeted adjustments and improved communication can bridge the current divide and produce a tax system that supports government revenue goals while safeguarding the viability of Ghana’s vast trading community.