GUTA Warns New VAT Creates Market Distortion, Harming Traders

The Ghana Union of Traders’ Associations (GUTA) warns the GUTA warns new VAT reforms will severely hurt small and medium enterprises. Furthermore, the association predicts the change will distort fair competition across Ghana’s markets. The government implemented a sudden shift from the 4% flat rate to a 20% Value Added Tax (VAT) for many traders. GUTA says this jump will prove devastating.

Richard Amamoo, GUTA’s First Deputy Secretary General, issued a statement on November 18. He explained the Union observes these emerging challenges with grave concern. Mr. Amamoo acknowledges and welcomes measures aimed at boosting tax compliance. In addition, he supports improving revenue collection efforts. Nevertheless, he stressed that the reforms come with serious unintended consequences for its members.

Specifically, Mr. Amamoo noted the new GH¢750,000 turnover threshold. Thus, this high threshold creates an immediate market split. He said this split will “segregate” traders unnecessarily. He cited an example: two traders selling identical products in the same market will now operate differently. One trader will charge 20% VAT because their turnover exceeds the set threshold. Conversely, the second trader, with a lower turnover, will charge nothing. Consequently, GUTA fears customers will simply choose the non-VAT charging trader. This leaves the first trader at a huge disadvantage. The Union firmly believes this disparity will “distort fair competition” and cause huge problems.

Moreover, GUTA warned that traders previously using the 4% flat rate scheme will now move into the full 20% VAT bracket. Mr. Amamoo also detailed the small daily turnover exemption. This exemption stands at GHS 2,366. Any excess will quickly push a trader into the standard tax regime. He predicts this move will cause higher prices for consumers. Ultimately, it will lead to significant loss of business for affected traders.

Therefore, he called on the government to allow traders to choose a modified tax system. Such a system, GUTA believes, must ensure parity across the market. A fairer structure will help promote compliance. It will also reduce the risk of non-compliance fueled by market pressure and imbalance. Mr. Amamoo also mentioned the government’s planned Artificial Intelligence (AI) deployment at the ports. GUTA supports technology that improves efficiency. However, it insists that government must first rationalize port taxes, “as promised,” before deploying new AI systems. GUTA remains committed to dialogue. But it insists the reforms must not “harm the livelihood of Ghanaian traders.” The GUTA warns new VAT measures must balance revenue needs with economic reality.

Source: MyJoyOnline News