Government, Restore 20% VAT Waiver On Locally Assembled Vehicles

The Automobile Assemblers Association of Ghana (AAAG) has appealed to government to reinstate the 20% Value Added Tax (VAT) waiver on locally assembled vehicles, arguing that the incentive is critical to sustaining growth in Ghana’s automotive industry.

The call was made by the Association’s President, Jeffrey Peprah, ahead of the 2026 Mid-Year Budget Review, which Finance Minister Dr Cassiel Ato Forson is expected to present to Parliament on Thursday, July 23.

The VAT waiver, which was introduced to support local vehicle assembly and attract investment into the sector, was removed at the beginning of 2026.

Speaking on Channel One TV’s The Point of View, Mr Peprah said restoring the tax incentive would provide immediate relief to local assemblers and help position Ghana as a competitive automobile manufacturing hub in the sub-region. He acknowledged government’s need to raise revenue but argued that economic growth could not be driven by taxation alone, stressing the importance of creating jobs and attracting investors.

“Mr Finance Minister, Dr Ato Forson, we know the government needs money; we don’t run the economy by only taxes; we have to create jobs, we have to create an enabling environment for more investors. That is where we will see what we want Ghana to be,” he said.

Mr Peprah said the automotive sector was close to achieving Ghana’s ambition of becoming a major automobile manufacturing centre and urged government to maintain policies that encourage expansion.

“Ghana being the hub of the automotive industry, these are the things that will grow us. And we will see the vision of Ghana being the hub of the automobile. We are almost there, and we just have to make sure this industry grows,” he stated.

He noted that the withdrawal of the VAT waiver had affected the competitiveness of locally assembled vehicles, making it necessary for government to provide urgent support to enable the industry to recover momentum.

“We need to start from somewhere. It’s immediate support that we need to get us back on our feet,” he added.

According to the Association, maintaining incentives such as the VAT waiver would not only strengthen local automobile assembly but also promote job creation, increase investment and support Ghana’s broader industrialisation agenda.

Credit: Channel One Tv
By: Joyce Owusu