The Ghana Union of Traders’ Associations (GUTA) president has warned that the government’s new value added tax restructuring will create severe distortions in the retail market and undermine compliance efforts.
Joseph Obeng, speaking on the Asaase Breakfast Show on Monday following the 2026 Budget presentation, dismissed suggestions that traders will automatically reduce prices because of the VAT rationalization. Instead, he cautioned that the new threshold and rate changes could trigger unfair competition and discourage compliance.
The shift from a four percent flat rate to the standard 20 percent VAT will significantly increase operating costs for many traders, especially since the government has raised the exemption threshold from 200,000 Ghana cedis to 750,000 cedis annual turnover, according to Dr. Obeng.
Some traders in the same market space will not pay VAT at all, while others will be forced to charge 20 percent, he explained. Taxes should not be discriminatory, with people selling the same goods in the same vicinity facing different tax treatments, he argued.
Consumers, being rational, will naturally purchase from VAT-exempt traders, leaving VAT-registered sellers victimized and unable to compete, the GUTA president warned. The consumer has discretion and will choose locations where VAT is not charged to get cheaper prices, meaning those who must charge VAT will lose customers, he noted.
Dr. Obeng argued that the government should have been bold enough to apply the modified tax system universally across the informal sector instead of creating a split market where some traders pay a 30 percent turnover tax at year-end while others face the full VAT regime.
The new threshold also incentivizes under-reporting, he added. A person selling 2,500 cedis daily must pay VAT, but someone selling 2,200 cedis is exempt, creating situations where people will manipulate figures just to remain below the threshold. This will make compliance impossible, he said.
Addressing the government’s plans to fight under-invoicing through digitized customs systems and artificial intelligence, the GUTA president insisted that without first reducing duty rates, digital enforcement will only lead to mass default and seizure of goods.
People under-declare because duties are between 55 percent and 65 percent of invoice value, he explained. If you bring AI without reforming the system, people simply cannot pay, he warned.
Dr. Obeng welcomed the recent exchange rate stability, saying it has given importers temporary relief after years of heavy capital losses.
GUTA is expected to meet the Finance Ministry to demand adjustments before implementation. Dr. Obeng cautioned that if government wants compliance, it must first create fairness. Otherwise, traders will find a way around it, which he described as human nature.
The concerns raised by GUTA highlight broader tensions between tax policy design and practical implementation in Ghana’s large informal sector. The association represents thousands of traders operating in markets across the country, making its position significant for policy success.
The Finance Ministry has not yet responded publicly to GUTA’s criticisms of the VAT restructuring announced in the 2026 Budget.
