(a). To: The Human Capital Resource Person, Amanda Inc.

From: WW

Date: 7/2/2007

Subject: Employee Taxation in Ghana.

We refer to your memo dated 7 February 2007 and respond as follows: The Ghana Tax Act requires that any person who makes income in Ghana should pay tax on such income in Ghana. In this respect, Amanda’s employee who expects to perform assigned duties in Ghana is expected to pay tax as follows:

a) Where the employee stays in Ghana for a period equal in total to less than 183 days in the year, he pays tax at 20% on the entire income earned as an employee of Amanda. This income will be increased by the hotel bills paid for by his employer and the free use of vehicles extended to him.

b) Where the employee stays in Ghana for a period which in total equals more than 183 days in the year, he pays tax at the regular employee tax rate scaled between 5% and 25%. The taxable income will be increased by the hotel bill paid for by his employer and the free use of vehicles, if any, extended to him.

c) Both a) and b) above indicate that the employee will be subject to tax on one part of his income in Ghana and the other part in France. In both cases, however, the full income earned in the relevant period will be taxed in the respective jurisdictions.

d) The DTA between France and Ghana stipulates that where an employee exercises employment in the other contracting state, the employee exercises the employment. The employee therefore will pay tax on the income earned in Ghana whilst exercising employment in Ghana.

(b).

• At the ports, Custom Officials have a prelisted price list they refer to. In the specific case where import prices are unreasonably low, Customs will use their own valuation for duties and VAT.
• The Income Tax Office will use the Customs valuations as well or use their own valuation as accords with their preferred price list.
• In a transaction between persons who are associates, Ghana’s Tax Act permits the Commissioner to distribute, apportion, or allocate inclusions to income, deductions, credits, or reliefs between persons as is necessary to the chargeable income or tax payable which would have arisen for these persons if the transactions had been conducted at arm’s length.
• The Commissioner of Internal Revenue Service has power (Sec 112) to re-characterize or disregard an arrangement or part of an arrangement that is entered into or carried out as part of a tax avoidance scheme which is
  a. Fictitious or does not have a substantial economic effect, or
  b. A form which does not reflect its substance.