GUTA Warns New VAT Regime Will Cripple SMEs
By Praisebell Rosemond Larbi
The Ghana Union of Traders’ Associations (GUTA) has raised strong concerns over the government’s newly announced Value Added Tax (VAT) reforms, cautioning that the sharp transition from the previous 4% flat rate scheme to a 20% standard VAT for many traders will severely disrupt business operations, particularly for small and medium enterprises (SMEs). The Association fears the reforms could distort market competition and threaten the survival of thousands of traders across the country.
In a statement issued on November 18, GUTA’s First Deputy Secretary General, Richard Amamoo, said the Union is observing “with grave concern” the difficulties that will emerge once the reforms take effect. While the Association acknowledged the government’s intention to enhance tax compliance and strengthen revenue collection, it stressed that the VAT overhaul carries serious unintended consequences that could undermine the business community.
According to Mr. Amamoo, one of the major challenges stems from the new VAT threshold of GH¢750,000 in annual turnover. He argued that the threshold will effectively create a divided trading environment where two businesses selling identical products in the same market could face entirely different tax obligations. “One will be compelled to charge 20% VAT because their turnover crosses the threshold,” he noted, while another with slightly lower sales will charge no VAT. This, he warned, will inevitably drive customers toward the trader not required to charge VAT, placing the other at a significant disadvantage.
GUTA fears this uneven structure will “distort fair competition,” undermine market dynamics, and push traders into survival-driven practices. The Association also expressed worry that businesses previously operating under the 4% flat rate scheme will now be automatically pushed into the 20% VAT bracket, significantly increasing their tax burden overnight.
Mr. Amamoo further pointed out that the daily turnover exemption of GHS 2,366 poses additional risks. He explained that traders whose daily sales exceed this amount even marginally, will be moved into the standard VAT regime, resulting in “higher prices for consumers and loss of business for affected traders.”
To avert widespread economic hardship, GUTA is urging the government to adopt a modified tax system that allows traders to opt into a more balanced structure. The Union believes such an approach would promote fairness, encourage voluntary compliance, and reduce the likelihood of tax evasion driven by pressure and imbalance in the marketplace.
Addressing another key policy measure, Mr. Amamoo commented on the government’s intention to introduce Artificial Intelligence (AI) systems at the ports to improve efficiency. While GUTA welcomes the use of modern technology to streamline processes, he insisted that existing tax challenges at the ports must first be addressed. He reminded the government of its earlier commitment to rationalise port taxes before any technological overhaul is implemented.
GUTA emphasised that it remains committed to constructive dialogue with policymakers but warned that the VAT reforms must not “harm the livelihood of Ghanaian traders.” The Union says it stands ready to work with government to craft a tax framework that supports revenue mobilisation without crippling the country’s vital trading sector.
