Imagine walking through your local market and seeing two traders selling the same goods side by side, but one charges more, and customers start drifting toward the cheaper option. This is the reality Ghanaian traders could face under the new VAT rules, according to the Ghana Union of Traders’ Associations (GUTA).
In a statement, GUTA said that while it welcomes government efforts to improve tax compliance and revenue collection, the reforms could create unintended consequences, particularly for small and medium enterprises (SMEs).
One of the key concerns highlighted in the statement is the unequal treatment of traders under the new VAT threshold. GUTA explained: “The new VAT threshold creates a situation where two traders dealing in the same commodity line in the same marketplace are treated differently.”
Traders whose turnover exceeds GH¢750,000 are required to charge 20% VAT, while those below the threshold remain exempt. The union said this disparity could distort competition, as customers naturally gravitate toward lower-priced goods, leaving higher-threshold traders at a disadvantage.
The impact is especially pronounced for traders who were previously on the 4% flat VAT rate. Crossing the turnover threshold moves them into the standard 20% VAT regime, even if the excess is small. The statement notes:
“The daily turnover exemption of GH¢25.00 means that any excess pushes the trader into the standard VAT regime, resulting in higher prices for consumers and loss of business for affected traders.”
To address these challenges, GUTA called for a modified VAT system that ensures fairness and parity among traders. In its statement, the union urged the government to consider:
“To promote compliance and fairness, GUTA urges the government to allow traders to opt for a modified tax system that ensures parity.”
GUTA also addressed the government’s plan to introduce Artificial Intelligence (AI) at the ports to improve trade efficiency. While welcoming the initiative, the union emphasized that all taxes at the port must first be rationalised. The statement said:
“We support the adoption of technology that improves trade facilitation. However, we reiterate our request that all taxes at the port be rationalised before the implementation of AI systems, as promised.”
GUTA reaffirmed its commitment to constructive dialogue with the government, stressing that VAT reforms should achieve their intended objectives without harming the livelihoods of Ghanaian traders.
The union emphasized that fair treatment, a level playing field, and the careful implementation of technology are essential to ensuring that traders can thrive while the economy benefits from improved compliance and efficiency.
