GRA: VAT registration threshold increase will not distort market prices

The Ghana Revenue Authority (GRA) has dismissed claims that the increase in the VAT registration threshold under the new Value Added Tax Act, 2025 (Act 1151), will distort prices and create unfair competition in the spare parts market.

Responding to concerns raised by the Abossey Okai Spare Parts Traders Association, the Authority said the revised threshold does not disadvantage registered traders nor give non-registered traders an undue edge.

In a statement issued on Tuesday, February 10, 2026, the GRA explained that a non-registered trader still pays 20 percent VAT on every purchase but cannot reclaim it, meaning the tax becomes permanently embedded in the trader’s cost.

“VAT is permanently embedded in their cost,” the Authority stated.

By contrast, a VAT-registered trader is able to claim back the full input VAT and therefore operates on a lower cost base before applying profit margins.

Using a GH¢500 item with a 20 percent profit margin as an illustration, the GRA said a non-registered trader would incur a cost of GH¢600, add GH¢120 as profit, and sell at GH¢720 without charging output VAT.

A registered trader, on the other hand, would retain a cost of GH¢500 after deducting input VAT, add a GH¢100 profit margin, and sell at the same final price of GH¢720, made up of GH¢600 plus GH¢120 output VAT.

“The final price to the customer is identical: GH¢720,” the statement emphasised.

The Authority noted that the VAT threshold has always been part of Ghana’s tax structure and described its increase to GH¢750,000 as a deliberate relief measure.

“The increase to GH¢750,000 is a deliberate relief measure to free smaller traders from the administrative burden of VAT registration and filing,” the GRA said.

The statement added that it “does not create a meaningful competitive distortion.”

The GRA reiterated that when properly understood and applied, the new VAT regime does not lead to price hikes or market imbalances. It attributed market concerns to misconceptions about how input VAT deductibility works under the revised system.

The Authority called on stakeholders to engage constructively and take advantage of the reforms, assuring traders that it remains open to dialogue and technical support during the transition.