Previous VAT system burdened both businesses and consumers – Mark Badu Aboagye

November 28, 2025

The Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu Aboagye, has expressed confidence in the recently passed Value Added Tax (VAT) Bill, noting that the previous system placed an unsustainable burden on both businesses and consumers.

According to him, the previous VAT system forced businesses to absorb significant costs that they ultimately had to pass on to consumers, creating a cycle of financial strain across the economy.

During an appearance on Joy News’ PM Express on Thursday, November 27, the GNCCI CEO explained that charging VAT on VAT under the previous system impacted consumer behavior and business operations, and noted that when consumers are faced with high VAT charges, they often change their buying patterns to avoid the additional costs.

“Most businesses at that time were struggling. There’s no way they could also absorb all this almost 6%, so we were forced to also pass on

“If there is anything that will prevent the consumer from getting more value for the money that they are paying, they will circumvent it. They come to a restaurant to eat, they look at the VAT alone and if you’re not careful, the next day they’ll prepare their own food at home and they will not come,” Badu Aboagye explained.

He further indicated that although there were different tax regimes in Africa, the combination of standard VAT and sales VAT was not common across the sub-region and continent.

“Even in Africa, I haven’t seen this kind of structure where you combine the standard VAT and the sales VAT,” he added.

The CEO also revealed that small and medium-sized enterprises (SMEs) faced particular challenges under the previous system. With a threshold of GHC200,000, many small businesses were required to collect and input VAT, a process he said proved challenging for many business operators.

Addressing concerns about tax avoidance, Mark Badu Aboagye emphasized that businesses required to pay VAT within the threshold had no choice but to comply. However, he acknowledged that the complex nature of the previous system may have accounted for noncompliance even on the part of businesses willing to honor their tax obligations.

On Wednesday, November 26, Parliament approved the new Value Added Tax (VAT) Bill, 2025, which is set to replace the existing flat-rate system with a unified structure designed to simplify the tax framework. It also raises the registration threshold for VAT-eligible businesses, a change expected to exempt many micro and small enterprises from VAT obligations altogether.