The Ghana Union of Traders’ Associations is pressing government to restore a flat VAT regime for the informal sector when Finance Minister Dr Cassiel Ato Forson presents the 2027 Budget to Parliament on Thursday.
GUTA President Clement Boateng says traders have struggled with the standard VAT system introduced in January and wants government to reconsider concerns the association raised before the current law was passed.
The Value Added Tax Act, 2025, Act 1151, abolished the previous flat rate system and placed VAT registered businesses under a unified structure with an effective rate of 20%.
“When the new VAT law took effect in January, it did away with the flat rates, and everybody had to go on the standard rate, which is 20%,” Boateng said.
GUTA says earlier proposal was ignored
Boateng said GUTA had argued during stakeholder consultations that a simplified flat rate remained better suited to Ghana’s largely informal trading environment.
The association proposed raising the rate it previously paid to somewhere between 5% and 6%, while some members were prepared to consider as much as 7%.
“But in the new law, the flat rate was taken out completely, and the standard rate emerged,” he said.
GUTA raised similar concerns shortly after implementation began, complaining about record keeping, input VAT claims and the technical requirements involved in moving traders onto the standard regime.
The Ghana Revenue Authority and GUTA subsequently set up a technical process to address implementation problems.
Traders look to 2027 Budget for relief
Boateng said traders initially understood that implementation would be reviewed after several months if problems persisted.
GUTA expected some response during the Mid Year Budget Review, but the flat rate issue was not addressed.
“We are now to contend with the main budget. So one of our requests to the Minister was to make room for this flat rate,” he said.
GUTA maintains that a simpler tax structure would improve compliance among informal businesses that may lack the accounting systems and technical expertise required under the standard VAT regime.
“As far as GUTA is concerned, we think it is good for the informal sector,” Boateng said.
The association says it will continue engaging government within the existing legal framework rather than encouraging traders to disregard the law.
Attention now turns to the 2027 Budget to see whether government will revisit the VAT structure or maintain the system introduced at the beginning of the year.
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