Current VAT system too complicated for small traders - GUTA

The Ghana Union of Traders Associations (GUTA) has raised concerns over the difficulties traders face under the current Value Added Tax (VAT) system, warning that complicated tax procedures could discourage businesses from paying their taxes.

GUTA President Clement Boateng says many small businesses, particularly those in the informal sector, struggle to understand the current VAT system, making it difficult for them to meet their tax obligations.

Speaking on Adom FM ahead of the 2027 Budget presentation, Boateng called on the government to restore the flat-rate VAT system, which was abolished earlier this year.

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He explained that the previous system allowed eligible traders to pay a flat 4% VAT without going through complicated calculations involving taxes paid on purchases and taxes charged on sales.

According to him, the current arrangement places additional pressure on traders, who must spend more time and resources managing their tax obligations.

Boateng stated that GUTA was prepared to accept a higher flat rate of between 6% and 7% if that would convince the government to bring back the simpler system.

“We want the flat rate to be brought back. It was previously 4%, but we are prepared to accept an increase to about 6% or 7% if that is what it takes to restore it,” he said.

He argued that making tax payments easier would encourage more businesses to comply with tax laws rather than struggle with procedures they do not fully understand.

The GUTA President also expressed concern that the current system could increase business costs, which may eventually be passed on to consumers through higher prices.

He further noted that the VAT system under which a business operates could affect its ability to secure certain opportunities, including government contracts.

GUTA is therefore urging the government to review the Value Added Tax Act, 2025 (Act 1151), and introduce a system that better reflects the needs of small businesses and informal sector operators.

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The association maintains that simplifying VAT administration would help more traders meet their tax obligations while supporting government efforts to increase revenue collection.

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