Past Questions & Answers
- 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.
Question
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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- Tags: Corporate Taxation, Income Tax, Location Decision, Non-Tax Factors, Tax computation, Tax Incentives
- Level: Level 2
- Topic: Taxation and Operating Strategies in Business
- Series: FEBRUARY 2018
- 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.
Question
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.
Question
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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- Tags: Credit Notes, Ghana Revenue Authority, Indirect Taxes, Tax Compliance, VAT, VAT Act
- Level: Level 2
- Topic: Strategic Indirect Tax Management
- Series: FEBRUARY 2018
- 20 Marks
STP – Feb 2018 – L2 – Q1 – Duty Drawback
Explain "drawback" under Customs Act 2015 and circumstances for goods deemed exported for drawback.
Question
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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- Tags: Customs Act, Duty Drawback, Export Procedures, Ghana Revenue Authority, Indirect Taxes
- Level: Level 2
- Topic: Strategic Indirect Tax Management
- Series: FEBRUARY 2018
- 20 Marks
STP – Feb 2007 – L3 – Q5 – VAT Apportionment
Explain VAT rules for goods on sale or return and input tax apportionment for taxable and exempt supplies.
Question
a) Tanji Enterprises Ltd. operates a Fuel Filling Station and a huge Supermarket in Tamale within the same premises. A joint tax audit team from the LTU Office visited Tanji and noted that Tanji supplies taxable and non-taxable goods and services to customers but fails to notice the split distinction between these services. The VAT team therefore has disallowed some claims and apportioned others to reflect the true VAT claimable.
Required:
i. Explain the VAT rules for goods supplied on sale or return.
ii. Discuss the apportionment of input tax for taxable and exempt supplies.
(b).Required:
Discuss the VAT rules on the timing of supply for the following:
i. Goods or services applied to own use, gifted, or supplied under hire purchase or finance lease.
ii. Continuous or metered supplies like electricity.
iii. Goods supplied under a hire purchase agreement or finance lease.
iv. Goods or services supplied under rental agreements or periodic payments.
v. Ancillary supplies.
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- Tags: Continuous Supplies, Hire Purchase, Own Use, Time of Supply, VAT
- Level: Level 3
- Topic: Strategic Indirect Tax Management
- Series: FEB 2007
