The response comes just days after the Association, led by Head of Communications Takyi Addo, threatened a one-week strike.
The traders argued that shifting from a 4% flat rate to a 20% standard rate would force them to hike prices, claiming a GH¢500 item would jump from GH¢520 to GH¢600 for consumers.
In a detailed rebuttal, the GRA clarified that while the sticker rate of 20% appears higher, the full deductibility of input VAT actually lowers the cost of doing business. Under the old flat rate, traders paid a non-deductible 21.9% tax on purchases, which was baked into their costs.
Using the same GH¢500 base price, the GRA illustrated the difference:
• Old Regime: Traders faced a total cost of GH¢609.50, resulting in a final consumer price of GH¢760.66.
• New Regime: Traders claim back the 20% input tax, lowering their cost base to GH¢500. Even with a 20% profit margin and 20% output VAT, the final price is GH¢720—nearly GH¢41 cheaper for the customer.
Addressing Competition and Compliance
The GRA also dismissed claims that raising the VAT registration threshold to GH¢750,000 creates unfair competition.
The Authority explained that while non-registered small traders are exempt from charging VAT, they cannot claim back the 20% they pay on purchases, keeping their pricing naturally aligned with registered businesses.
The Authority attributed current price spikes to “transitional pricing errors” where traders are incorrectly applying the new 20% tax on top of costs that still include old, non-deductible levies.
To facilitate the transition, the GRA has established a joint technical team with GUTA and extended an invitation to the Abossey Okai leadership for practical guidance on correct pricing and tax recovery.
