Gov’t considers restoring 20% VAT exemption on locally assembled vehicles

Government is considering restoring the Value Added Tax (VAT) exemption on locally assembled vehicles. The review follows concerns from vehicle assemblers that the removal of the tax incentive has slowed production and threatens investments in the automotive industry.

Head of Strategic Manufacturing at the Ministry of Trade, Agribusiness and Industry, Kwasi Ofori-Antwi made this known during the Citi Business Festival 2026 Roundtable on Thursday June 25. 2026 on Channel One TV.

It was held under the theme, “Driving Ghana Forward: The State of the Automotive Assembly Industry and Its Contribution to the Economy.”

“There was an assessment on the industry by the Ministry of Finance and the Ministry felt that the VAT which was to be enjoyed by consumers was not trickling down to industry so that was put on hold. The industry people have engaged the Ministry of Finance to that effect.

“Government didn’t want industry to hold on to that perception. So government will be reviewing that and we are very hopeful that it will be restored.”

Industry players have said the introduction of a 20% VAT on locally assembled vehicles has reduced their competitiveness relative to imported vehicles.

For these assemblers, maintaining the tax could force local assemblers to scale back operations and place hundreds of skilled engineering and technical jobs at risk.

They have also argued that the tax undermines the broader objectives of the Ghana Automotive Development Policy.

Background

In 2018, the Government of Ghana launched the Ghana Automotive Development Policy to attract global vehicle manufacturers to establish assembly plants in the country.

The policy formed part of a wider industrialisation strategy aimed at promoting local manufacturing, technology transfer, skills development and job creation.

Government introduced a package of incentives including a zero-rated VAT regime on locally assembled vehicles and import duty concessions ranging between five and 10% on components and parts used in assembly operations to encourage investment.

The incentives helped attract several global automotive brands to establish assembly facilities in Ghana, creating new opportunities within the manufacturing value chain.

Stakeholders have consistently argued that maintaining policy consistency is critical to sustaining investor confidence and supporting the long-term viability of the sector.

Industry players contend that Ghana’s automotive assembly industry remains in its early stages and requires continued support to achieve scale, deepen local content participation and compete effectively within the African Continental Free Trade Area (AfCFTA).

The possible restoration of the VAT exemption is therefore likely to be welcomed by assemblers to support demand for locally assembled vehicles and make Ghana a competitive automotive production hub in West Africa.