- AGI President slams Ghana's VAT system
- Urgent VAT reforms needed to prevent market distortions
- VAT overhaul to support local industries
Dr. Humphrey Ayim-Darke, President of the Association of Ghana Industries (AGI), has sounded the alarm on Ghana’s current Value Added Tax (VAT) system, describing it as “the killer in the room” that is stifling local businesses.
Speaking on Joy News’ PM Express Business Edition, Dr. Ayim-Darke emphasized the need for urgent VAT reforms to prevent further market distortions and operational challenges, particularly for small and medium-sized enterprises (SMEs). “The major tax issue that we have tabled is the rationalization of VAT. We strongly believe it is distorting a lot of operations,” he stated.
Dr. Ayim-Darke highlighted the inconsistencies in the system, citing the example of two companies operating in the same sector, importing the same product, and paying the same HS code for raw materials, yet receiving different VAT treatments. “That inconsistency is distorting the market and hurting competitiveness,” he noted.
The AGI’s primary recommendation to the Finance Ministry is a complete overhaul of the VAT regime. Dr. Ayim-Darke argued, “If you want to implement a total VAT at 21%, then fine, let’s do input-output VAT properly. But don’t embed levies within it that distort our operations.”
He emphasized that VAT reform should go beyond rate adjustments to ensure fairness and compliance. “Once VAT is rationalized, it becomes the government’s responsibility, through its agencies, to oversee compliance and proper collection. Businesses shouldn’t be burdened with inefficiencies in the system,” Dr. Ayim-Darke noted.
While acknowledging the government’s removal of certain COVID-related and betting taxes, Dr. Ayim-Darke insisted that VAT remains the most pressing issue. “VAT is the biggest hurdle. It’s the elephant in the room—or as I call it, the killer in the room. If we don’t streamline it now, the repercussions for local industries will be dire,” he warned.
In conclusion, Dr. Ayim-Darke made a strong appeal to authorities: “Our message is simple: rationalize VAT. Remove the distortions, level the playing field, and let’s support local industries to thrive instead of suffocating them under unfair tax structures.”
