- 21 Marks
Question
Due to the recent oil discovery in Ghana, many oil related companies continue to seek tax advice on doing oil related business in Ghana. As the Tax Partner for XYZ Consult, you receive a note from the Chief of Finance (Tax), Mauuwli Inc. Bubai as follows: “Mauuwli Inc. intends to supply parts of Gas turbines in Ghana. In addition, we shall provide maintenance services on these turbines. This is the business we do in Saudi and will do all the time across nations as the opportunity opens up to us. In view of this, we want to be 100% tax compliant in your country as there is no tax for my company in Saudi. We want to know whether as foreign company ordinarily resident in Dubai, we will be subject to the following taxes:
- Corporate tax (4 Marks)
- Withholding tax(WHT) and at what rate (8 Marks)
- Valued Added Tax(VAT) and National Health Insurance Levy (NHIL) (3 marks)
- Employee taxes” (4 marks)
Required As Tax Partner for XYZ Consult, provide your answer to the Chief of Finance, Mauuwli Inc., as requested for.
Answer
Assumption 1 Mauuwli will be resident in Ghana during the supply and service phases and will be subject to pay:
- Corporate tax
- The corporate tax rate will be 25%
- There is a requirement to pay advance quarterly tax based on company’s own self assessed expected profit for the year,
- At year end, company expected to file tax return and pay any taxes outstanding from the final assessment.
- Any withholding taxes paid is a credit towards the final tax payable
- Register with the GRA. (4 marks)
- Withholding tax Mauuwli will suffer tax and act as agent to deduct the following taxes where established as a branch or local subsidiary of its parent company.
Payments Mauuwli makes to non-resident persons, if any, attract withholding tax as follows:
| Type of Payment | Rate | Status |
|---|---|---|
| Dividend paid to HO | 8 | Final |
| Interest paid to any non-resident person | 8 | Final |
| Supply of Goods & Provision of Services purchased from HO or any non-resident person. | 15 | Final |
| Management and Technical Service paid to HO | 10 | Final |
| Insurance Premium paid to a foreign insurance coy | 5 | Final |
| Payment to Non-Resident Individuals | 15 | Final |
Payments to Mauuwli or received by other Residents, where applicable:
| Type of Payment | Rate (%) | Status |
|---|---|---|
| Dividend | 8 | Final |
| Rent | 8 | Final |
| Interest charge | 8 | Not Final |
| Supply of Goods & Provision of Services (exceeding GHC500) | 5 | Not Final |
| Fees to part-time teacher, lecturer, examiner, examinations invigilator or supervisor employed by Mauuwli staff | 10 | Final |
| Fees, emoluments to director, manager or board member of a company or body of persons | 10 | Not Final |
| Commission to insurance, sales and canvassing agents | 10 | Not Final |
| Endorsement Fees | 10 | Final |
(Any 4 on each side for 4 marks)
- VAT Mauuwli expects to make revenue in excess of GHC120,000 in a year and therefore will register with the GRA and charge VAT at 15%, Mauuwli will have the opportunity to claim any VAT paid against VAT collected,
Mauuwli has the opportunity to register and charge VAT at 3% if Mauuwli believes it would not make revenue exceeding GHC120,000 a year, In this case Mauuwli does not have the opportunity to take a refund for any VAT paid.
The import of Gas Turbines in zero rated whilst maintenance services will attract VAT. (3 marks)
- Employee taxes
- Mauuwli has the responsibility to withhold every monthly period taxes at specified rates from each employee and pay such amounts to the GRA by the 15th day of the month following the month in which the deduction was made.
- Mauuwli again has the responsibility to register all employees with the GRA on employment and when they leave.
- Mauuwli has a responsibility to file annual employee tax return for all employees. (4 marks)
- Tags: Corporate Tax, Employee Taxes, Oil Industry, VAT, Withholding Tax
- Level: Level 2
- Topic: Taxation of Specialized Business Sectors
- Series: AUG 2013
- Uploader: Samuel Duah