The President of the Association of Ghana Industries (AGI), Dr. Humphrey Ayim-Darke, has issued a strong warning to the government over the current Value Added Tax (VAT) system, describing it as a major threat to local businesses.
Speaking on Joy News’ PM Express Business Edition on Thursday, February 20, Dr. Ayim-Darke emphasized the urgent need for a comprehensive VAT overhaul to prevent market distortions and operational difficulties, particularly for small and medium-sized enterprises (SMEs).
“The major tax issue we have raised is the rationalization of VAT. We strongly believe it is distorting many business operations,” he stated.
He highlighted the inconsistencies in the current system, citing how businesses operating within the same sector and importing the same raw materials under identical HS codes face different VAT treatments. This, he argued, creates an uneven playing field and reduces market competitiveness.
Dr. Ayim-Darke stressed that AGI’s top recommendation to the Finance Ministry is a complete restructuring of the VAT regime.
“If you want to implement a total VAT at 21%, then let’s ensure proper input-output VAT application,” he suggested. “But embedding additional levies within it only distorts business operations, forcing companies to transfer costs to consumers, which ultimately stifles economic growth.”
According to him, VAT reform should go beyond rate adjustments to focus on fairness and efficiency. He urged the government to take responsibility for compliance and collection, rather than placing the burden on businesses.
While acknowledging the government’s efforts in addressing certain taxes, such as the removal of COVID-related and betting taxes, Dr. Ayim-Darke insisted that VAT remains the biggest challenge.
“The VAT system is the elephant in the room—or as I call it, the killer in the room. If we don’t streamline it now, the consequences for local industries will be severe,” he warned.
He concluded with a call for decisive action, urging policymakers to remove distortions, ensure fair taxation, and create an environment where local industries can thrive.
“Our message is simple: rationalize the VAT, level the playing field, and support local businesses rather than suffocating them under an unfair tax structure,” he urged.
Source:Mybrytfmonline.com/Gumedzo Isaac Acheampong
