Program: PROFESSIONAL PROGRAM

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  • 20 Marks

PBL – APR 2024 – L1 – Q1 – Negligence in Consumer Product Liability

Advise Yaa Asantewaa on a negligence case against Denice Breweries after she was injured due to kerosene found in a bottle of Denice Ginger Beer.

Yaa Asantewaa bought and drank Denice Ginger Beer manufactured by Denice Breweries. She got injured because kerosene was found in the bottle of the ginger beer. Advise Yaa Asantewaa on a case of negligence against Denice Breweries.

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  • 20 Marks

STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies

Calculate Honson Plc's tax liability for Kumasi/Accra, advise on Nsawam, and discuss non-tax factors for facility location.

Honson Pic, a UK-based manufacturing company, is planning to build a new processing facility in Ghana. The Chief Executive Officer in a meeting with Management needs to decide whether to cite the facility in Accra or in Kumasi. Market intelligence has no preference for citing the facility either in Kumasi or Accra since information gathered indicate that business activities would largely be same in Kumasi and Accra for the next 10 years.

The following forecast information is relevant for the decision-making process being considered by management.

Kumasi Accra GH¢ GH¢

Required: i. Calculate Hamson Plc’s income tax liability for each proposed location for the first year. ii. Would you advise Hamson Plc to consider citing the facility in Nsawam, taking into consideration the close proximity of Nsawam to Accra? iii. Discuss three (3) non-tax factors that Hamson UK Plc may consider in the decision-making process to locate the facility either in Kumasi, Accra or elsewhere in the country.

b). With reference to the Income Tax Act, 2015 (Act 896) explain the following: i. Private Ruling issued by the Commissioner-General: (2 marks) ii. Conditions under which a Private Ruling will be binding on the Commissioner-General and on the person to whom the Private Ruling is issued.

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  • 18 Marks

STP – Feb 2018 – L2 – Q3 – Tax Administration

Explain categories of tax representatives for companies and local authorities under VAT Act 870, and their responsibilities.

The VAT Act, 2013 (Act 870) accepts that tax consultants may act in a representative capacity for and on behalf of the substantive taxpayer. This provision in the law encourages and accepts the professional development of private tax practitioners but lays down the specific parameters which would qualify such professionals to act as taxpayers’ representatives.

As the Tax Partner for ABC Practice Firm, a new entrant of the firm has approached you with a request to educate him on the types of persons who can act in a representative capacity for an on behalf of the taxpayer.

Required a) With reference to the provisions of Act 870, specify the categories of persons who qualify to be declared by the Commissioner-General as a representative person of: i. a Company; ii. a Local Authority?                                                                              b) What are the responsibilities of the tax representative of a taxable person?

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  • 20 Marks

STP – Feb 2018 – L2 – Q2 – VAT Credit Notes

Explain circumstances for issuing VAT Credit Notes and tax implications for prior period supplies.

a) As a Tax Consultant, you receive a note from Mr. Emilio Ditto, the Managing Director of a company based in the United Kingdom seeking to expand its operations in Africa through the opening of an office in Accra. He is interested in discussing with you details of some aspects of the VAT regime in Ghana particularly, the basic VAT concepts on the following:
(i) Under what circumstances can a VAT-registered person issue a Credit Note to cancel or amend a VAT invoice?
(ii) What are the tax liability implications for a VAT-registered person who issues a Credit Note to a customer for a supply that was made in a previous tax period?

Required:
Provide a brief for Mr. Emilio Ditto giving your responses to the issues raised above, with reference to the VAT Act, 2013 (Act 870) as amended.

b) Under the provisions of the Excise Duty Act, 2014 (Act 878), the Commissioner-General may, based on any information available, make an assessment of the amount of excise duty payable by a person.

Required:
State four (4) different circumstances under which the Commissioner-General may exercise the discretion to make an assessment of the excise duty payable by a person.

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  • 20 Marks

STP – Feb 2018 – L2 – Q1 – Duty Drawback

Explain "drawback" under Customs Act 2015 and circumstances for goods deemed exported for drawback.

a) In recent times the export business community has increasingly expressed concern about the issue of duty drawback management by the Ghana Revenue Authority (GRA), particularly undue delays and non-payment of duty drawback claims as accrued over the years.

As an expert tax consultant, you have been invited by the Ghana National Chamber of Commerce for a technical meeting with representatives of the business community on the duty drawback regime.

You are required to prepare a brief paper for discussion at the meeting covering the following areas:

i) An explanation of the term “drawback” as prescribed under the provisions of the Customs Act, 2015 (Act 891), including the two different categories of duty drawback that may be paid by the Commissioner-General.

ii. Under what circumstances will goods be deemed to have been exported for drawback purposes as prescribed under Act 891?

b) Corncob Industries Ltd. a company based in the Central Region of Ghana which processes agricultural products is contemplating diversifying its product lines to take advantage of an identified market potential for a particular maize-based cereal. This will require:

  • Retrofitting one of their production machines which will enhance its value and performance by about 75%.
  • Repairs to the equipment used for packaging the products. This will enhance its value by approximately 10%.
  • Servicing of a component of the sterilization unit which is still under the manufacturer’s warranty.
    Management of the company has concluded discussions with the manufacturer of the machinery, equipment and sterilization unit based in France to undertake the retrofitting, repairs and servicing, if Corncob Industries Ltd. can have the items shipped to their factory in Milan, Italy for the purpose.
    Alternatively, the manufacturer’s technicians may be brought over to Ghana with the necessary materials to undertake the retrofitting and repairs at the factory premises of Corncob Industries Ltd. Management of Corncob Ind. Ltd. is not certain of the Customs implications of shipping the items out to Italy for the works, which will take four weeks and subsequently re-importing the processed items into the country.

Required:
With reference to the Customs Act, 2015 (Act 891), explain to Management of Corncob Industries Ltd. details of the customs procedure for re-importation of goods after outward processing and the related liability to customs duty, with respect to the following issues:
i. condition under which the outward processing procedure may be used.
ii. period for discharge of the outward processing procedure.
iii. import duty liability on the goods when re-imported into Ghana after processing abroad.

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  • 20 Marks

STP – Feb 2007 – L3 – Q4 – Employee Loan Taxation

Advise on tax implications of a $300M loan and bonus for Dr. Ababio, including relevant Tax Act provisions.

(a). Dr. Ababio discusses an engagement she recently accepted with an investment banker with you for advice. She indicates that one of the recruiting inducements that convinced her to accept the position is a $300M loan from her employer. She will receive the loan proceeds on her first day of work and must sign a note to repay the loan plus accrued interest in five equal annual installments.

The employer will forgive any amount of the unpaid debt if Dr. Ababio dies, becomes disabled, or is terminated from employment through no fault of her own. Dr. Ababio’s contract provides that the employer will pay an annual bonus equal to each loan repayment. The contract stipulates that the bonus must be applied to the repayment of her loan.

Required:
i) Advise Dr. Ababio on the implications, if any, of this engagement provisions.
ii) Discuss any three provisions in the Tax Act which will support the position the Commissioner will take in respect of the taxability or otherwise of this engagement provision.

(b). The Free Zone Act declares a 10-year tax holiday for Free Zone Operators. Sweet Entities Inc. desires to set up in the Free Zone enclave but requires an understanding of the practical tax concessions granted to free operators. To this effect, the Tax Director of Sweet Entities Inc. requires that you do a practical presentation of the flow of the corporate tax-exempt concession as extended to the operator. He therefore provides you with the following business forecast for the first 10-year period as follows.
All figures in $M

Year 1 2 3 4 5 6 7 8 9 10
Adjusted Profit 10 60 150 500 1,000 1,000 1,000 520 600 620
Capital Allowance 1000 600 300 150 50 20 20 600 340 200

Compute the tax position, if any, of Sweet Entities Inc. for the exempt period.

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  • 15 Marks

STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

Although tax planners have the liberty to devise schemes which reduce the tax liability of their clients, the Income Tax Act, 2015 (Act 896) contains provisions which limit tax planning schemes.

Required:
Identify any three (3) anti-avoidance provisions in Act 896 and discuss how each of these provisions places a limitation on the ability of a person to engage in tax planning.

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  • 20 Marks

STP – Feb 2007 – L3 – Q3 – Venture Capital Taxation

Present tax concessions for Venture Capital Operators compared to traditional banks.

As part of the post qualification requirements of The Chartered Institute of Taxation, you have been invited to do a presentation on the topic “Venture Capital Fund” to a select group of business men, tax professionals, financial institutions and students.

Invitation
Members of the Ghana Institute of Taxation and the Institute of Bankers wish to use this opportunity to strengthen the cordial relationship subsisting between them and have therefore invited you to do a presentation on the tax effects of Venture Capital Operators as compared with that of the traditional financial institutions.

Required:
Please prepare a presentation as required under Invitation above clearly distinguishing between Tax concessions granted to a Venture Capital as compared with the Bank.

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  • 20 Marks

STP – Feb 2007 – L3 – Q2 – Employee Taxation

Outline Ghanaian tax and social security implications for a French employee working in Ghana under a Double Tax Treaty.

Mr. Nor Amid, the Human Capital Resource Person of Amanda Inc, an entity registered in France sends a brief note to you in respect of a duty tour of an employee as follows:
“Amanda is sending an employee to Ghana and I am hoping that you could provide guidance for Amanda. Our understanding is as that:

  • The employee is French and may be kept on the French payroll
  • The employee’s remuneration will be cross charged to Amanda in France and Ghana
  • The employee, according to French Tax Law, will be French for tax purposes
  • The employee will spend 40% or less of his time in France
  • The employee will spend between 40 to 60% of his time in Ghana and whilst in Ghana the employee will be accommodated in hotels, will have free use of car with fuel and free meal.
  • The employee will spend his time in Ghana from 7 to 25 days at a time depending on need.

Would you kindly provide us with a brief outline of the Ghanaian tax and social security implications for Amanda and the employee? Kindly note that Ghana has an operating ‘Double Tax Treaty’ with France.

Required:
(a). Please submit a memo to respond to the concerns raised by Mr. Nor Amid.

(b). Ghana has general tax-avoidance rules in the tax acts. Kindly discuss any three practice methods adopted by the Revenue Agencies to regulate transfer pricing between related parties?

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  • 22 Marks

STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications

Advise on tax implications of establishing a company, partnership, or sole proprietorship and identify which offers the least tax exposure for an investor.

As a renowned tax consultant, a potential investor in the real estate sector in Ghana is seeking your expert opinion on the tax implications of establishing a company, a partnership or a sole proprietorship and which form of the business organisations gives the least tax exposure for an investor.

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  • 25 Marks

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

The President of America Is Great (AIG) Group, a US Corporation, is exploring the possibility of acquiring a fifty-five percent stake in Fluid Logistics Ghana Limited. The stated capital of Fluid Logistics Ghana Limited is GH₵1,500,000. AIG Corporation intends providing a loan of GH₵6,500,000 to Fluid Logistics Ghana Limited when the transaction for the acquisition of the fifty-five percent stake is completed. The President of AIG Corporation is seeking your advice on the tax implications of the proposed transactions.

Required: Advise the President on: i. The income tax implications of the acquisition of a fifty-five percent stake in Fluid Logistics Ghana Limited. 9 marks ii. The income tax implications of providing the loan of GH₵6,500,000. 9 marks iii. The tax planning options available to minimize the tax effects of the proposed transactions.

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  • 20 Marks

STP – Aug 2012 – L3 – Q3 – Tax Responsibilities

Advise BIC on VAT, corporate, expatriate, and withholding tax responsibilities.

Broadway International Contractors (BIC) won the bid to construct the George Bush highway for five years but was ill advised about the tax responsibilities in respect of the construction work.

The GRA conducted a tax audit on completion of the project and noted several weaknesses in BICs tax compliance requirements.

As Tax Consultant you have been approached by BIC to advise as appropriate on the tax effects of the work. In particular Broadway International Contractors would wish to receive advice on their
a) Basic VAT responsibilities (8 marks)
b) Basic corporate tax responsibilities (8 marks)
c) Expatriate Payroll liability (4 marks)
d) Withholding tax liability on payments receivable from the Ministry of Highways and payment for services? (2 marks)

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  • 20 Marks

STP – Aug 2012 – L3 – Q2 – Partnership Taxation

Compute chargeable income and tax payable for partners Nancy and Bouncy for 2010.

Nancy and Bouncy are equal partners in a hairdo practice. Partnership profit agreed with the GRA for year 2010 is GHc12,000.
a). Records however indicate that partnership profit was net of:

  1. Drawings of GHc600 each monthly period by Nancy and Bouncy;
  2. Household allowance of GHc150 per month paid by the partnership to each partner;
  3. Salary for each partner paid during the period was GHc200 p.m. on which a withholding tax of GHC per month is paid to the GRA;
    b). Nancy failed to account for GHc1,500 which she was to use to purchase driers for the saloon.
    c). To reciprocate Nancy’s gesture, Bouncy also withdrew GHc1,800 on the pretext of buying flyers for the saloon. She failed to account for the flyers or the amount. It has been agreed that they all should treat the amounts b) and c) above as exceptional drawings from the business.

Required:
Compute the chargeable income and tax payable by each partner for the 2010 year of assessment.
Hint:
Short formula for computing an individual’s annual tax payable for year 2010 is:
Tax = T + (Y – 16,200) × 25%, where
Tax = Total tax payable per annum on annual income earnings
T = tax paid on GH16,200.00 being part of the earnings which is GHC2,574.60
Y = Annual income earned.

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  • 20 Marks

STP – Aug 2012 – L3 – Q1 – Tax Computation

Compute tax liability for Jamaa Mining Company for 2008 and 2009 based on provided financials.

The profit and loss account of Jamaa Mining Company Ltd for the years ended December 2008 and 2009 are as tabled below:

Year Ended 31 December (all amounts in ‘000)
2009 GHC 2008 GHC
Turnover 309,000 430,000
Cost of Sales (164,000)
Gross Profit 145,000
General and Admin Exp (100,000)
Operating Profit 45,000
Other Income 5,300
Net Profit before tax 50,300
Income Tax provision 12,575
Transfer to Income Surplus 37,725
Income Surplus Account
Balance brought forward 46,945
Transfer from profit and loss account 9,220
Surplus carried forward 46,945

Notes:
2. Turnover is made up as follows
For year

2009 2008
Collected for year but included in prior year a/c 291,000
Interest income received for 18 months 0 18,000
309,000
  1. Cost of sales includes:

2009 2008
Withholding taxes paid 1,500 1,000
VAT unclaimed 6,000 8,000
Depreciation 43,000 25,000

4a. Gen and Admin expenses includes

2009 2008
Rent prepaid of 3,000
Rent outstanding 500 500

4b. Includes unrealized foreign exchange gain of but realized in 2009

2009 2008
2,000 2,000

The GRA has agreed a capital allowance of GHC20,000 for year 2009 and GHC15,000 for year 2008.

Required:
Please advise management of Jamaa Mining Company Ltd on the tax due to the GRA for the years 2009 and 2008.

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  • 20 Marks

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

Gold Resources Ltd. is a mining company operating in the Sparrows Mine and Dove Mines in Ghana. Sparrows Mine shares a processing plant with Dove Mines, and both mines commenced commercial production in 2018. At the close of business on December 31, 2018, Gold Resources Ltd. acquired 20% exploration and production rights in the Eagle Mine which is a production mine for GH₵25,000,000.

The highlights of 2018 revenue and expenditure disclosed in tax returns filed by Gold Resources Ltd. include the following:

Revenue GH₵
Gross income from its operations in 2018 300,000,000
Hedging Income 3,000,000
Interest Income 1,000,000
Consideration realised from the sale of assets 800,000
Gross Dividend from a resident company in which it has 30% voting rights 200,000
Total Revenue 305,000,000

Expenses include the following:

Expenses GH₵
Reconnaissance & Prospecting Cost (Sparrows Mine) 45,000,000
Reconnaissance & Prospecting Cost (Dove Mines) 35,000,000
Depreciation 12,000,000
Exploration & Production Rights (Eagle Mine) 25,000,000
Expenses on Hedging transactions 5,000,000
Cost of the assets sold 300,000
Administrative Expenses 10,000,000
Profit before tax 120,000,000

Required: Compute the tax liability for each tax type that Gold Resources Ltd will be liable to pay in 2018.

Additional Information:

Item Rate
Income Tax Rate for companies 25%
Mineral Income Tax Rate 35%
Mineral Royalty Rate 5%
Capital Allowance Rate 20% on straight line basis
Dividend Withholding Tax Rate 8%
Interest Withholding Tax Rate 8%

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  • 20 Marks

OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights

Explain the tax treatment of assignment or disposal of petroleum rights under the Income Tax Act, 2015 (Act 896).

a) Explain the tax treatment of assignment of or disposal of petroleum rights as provided under the Income Tax Act 2016 (Act 896).

b) Deep Sea Ventures and Coastal Explorations are joint venture partners who have 45% and 40% interest respectively in the Atlantic Oil Fields in Ghana. They commenced exploration in 2010 and discovered hydrocarbons in commercial quantities in 2015. A plan of development was subsequently approved for the development of the Atlantic Oil Fields.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 100 million, Royalty of 10%, Initial (Carried) Interest of 10% Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Commercial production commenced in the Atlantic Oil Fields in 2019. Information available on the oil and gas production operations in the Atlantic Oil Fields are as follows:

Up to 31/12/2017 US$
Exploration Costs 250,000,000.00
Development Costs 2,000,000,000.00
Bonus 100,000,000.00

As at 31/12/2018 US$
Exploration Costs 15,000,000.00
Development Costs 1,500,000,000.00
Interest on loan for installations & infrastructure 100,000,000.00

NB. The loan was contracted by the operator on behalf of the parties that hold interest in the Atlantic Oil Fields

As at 31/12/2019 US$
Exploration Costs 5,000,000.00
Development Costs 430,000,000.00

Required: Compute the capital allowance entitlements of Deep Sea Ventures and Coastal Explorations and state the underlying assumptions for your computations.

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  • 20 Marks

OGMT – Feb 2020 – L1 – Q3 – Unitization and Redetermination

Explain the concepts of unitization and redetermination in the context of petroleum operations.

a) Explain the following concepts

i. Unitization; and

ii. Redetermination.

b) ABC Limited has 40% and 30% interest in Costal Reef Petroleum Agreement and Deep Sea Petroleum Agreement respectively. The contract areas of the two Petroleum Agreements have been unitised for joint operation. It has been determined that the hydrocarbon present in the unitised area is in the proportion of 40% and 60% for the Costal Reef Contract Area and Deep Sea Contract Area respectively.

Gross production of crude oil in the unitised area in 2018 year is 500,000,000 barrels. The average price of crude oil that year is $50 per barrel.

Required:

Compute the gross income of ABC Limited for the 2018 year of assessment.

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  • 20 Marks

OGMT – Feb 2020 – L1 – Q2 – Finance Lease

Explain the concept of a finance lease and its tax treatment under the Income Tax Act, 2015 (Act 896).

Explain the following concepts and their tax treatment:

a) Finance Lease;

b) Operating Lease;

c) Ring Fencing and state how it is provided for in respect of Petroleum Operations under the Income Tax Act, 2015 (Act 896).

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  • 20 Marks

OGMT – Feb 2020 – L1 – Q1 – Host Government Contracts

Identify and explain the three main Host Government Contracts for oil and gas exploration and production rights.

a) Countries grant exploration and production rights to oil and gas companies under various contractual arrangements. But there are three main ones referred to as Host Government Contracts or World Fiscal Systems for oil and gas. Identify and explain the main features of the three Host Government Contracts.

b) Ghana’s upstream petroleum fiscal regime has been described in some fora as “a hybrid of the Royalty Tax Regime and Production Sharing Contract.” Do you agree with this description? If yes, explain; and if not, explain the fiscal regime of Ghana.

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation

Compute capital allowances, crude oil distribution, income tax, and government revenue for Sapele Petroleum and Mahogany Production in 2019.

Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated are joint venture partners who have 45% and 35% interest respectively in the Upstream Fields in Ghana. They commenced exploration in 2011 and discovered hydrocarbons in commercial quantities in 2013.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 150 million, Royalty of 5%, Initial (Carried) Interest of 15%, Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Mahogany Production is the operator of the Upstream Fields. Production commenced in the Upstream Fields in 2019. Information available on the oil and gas exploration and production operations in the Upstream Fields are as follows:

Up to 31/12/2017 US$
Exploration Costs 250,000,000.00
Development Costs 2,000,000,000.00
Bonus 150,000,000.00

As at 31/12/2018 US$
Exploration Costs 100,000,000.00
Development Costs 1,500,000,000.00
Interest on loan for installation of equipment & facilities 100,000,000.00

NB. The loan was contracted by the operator on behalf of the parties that hold interest in the Upstream Fields

As at 31/12/2019 US$
Exploration Costs 40,000,000.00
Development Costs 400,000,000.00
Average production cost per barrel 15.00
Average Price of crude oil per barrel 40.00
2019 Production 50,000,000 barrels

You are required to compute the following, and also state the assumptions underlying your computations:
i. Capital allowance entitlements of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated.
ii. Distribution of crude oil.
iii. 2019 income tax liability of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated in accordance with the provisions of the Income Tax Act, 2015 (Act 896).
iv. Total revenue that will accrue to Government of Ghana.

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