The President of the Association of Ghana Industries (AGI), Dr. Humphrey Ayim-Darke, has called on the government to reform the country’s VAT (Value Added Tax) system. He describes it as “the killer in the room” stifling local businesses.
Speaking to the media on Thursday, February 20, Dr. Ayim-Darke stressed the urgent need for VAT reforms to prevent market distortions and operational challenges. He also emphasized that it should be done particularly for small and medium-sized enterprises (SMEs).
“The major tax issue we have tabled is the rationalization of Value Added Tax. It is distorting a lot of operations,” he stated.
He highlighted inconsistencies in the system, illustrating how VAT regulations create an uneven playing field for businesses.
“Imagine two companies operating in the same sector, importing the same product, and paying the same HS code for raw materials. Yet, because of how VAT is applied, their treatments are completely different. That inconsistency is distorting the market and hurting competitiveness.” he explained.
Dr. Ayim-Darke emphasized that AGI’s top recommendation to the Finance Ministry is a complete overhaul of the Value Added Tax regime.
“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. When you do that, businesses have no choice but to pass the cost onto consumers. And this defeats the purpose of fair taxation and stifles economic growth.” he argued.
He underscored that VAT reform must go beyond rate adjustments to ensure fairness and compliance.
“Once VAT is rationalized, the government, through its agencies, must ensure compliance and proper collection. Businesses shouldn’t be burdened with inefficiencies in the system,” he noted.
He acknowledged the government’s efforts in removing certain COVID-related and betting taxes. Dr. Ayim-Darke also insisted that the Value Added Tax remains the most pressing concern.
“Yes, we welcome the steps taken on those taxes—it’s a 60% pick of our concerns—but let’s not kid ourselves. 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.
He concluded by urging the government to act decisively. “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,” he said.
, Dr Humphrey Ayim-Darke, has called on the government to reform the country’s VAT...){kind=link}