Question Tag: Excise Duties

A) In relation to customs and excise duties, explain how the “value for duty purposes” is calculated on the following:

i. Imports

ii. Locally manufactured goods and services

iii. Export

(B) As part of the revenue mobilization campaign of the Ghana Revenue Authority, your firm, Messrs. Skin Pain & Co. has been contracted to carry out tax audit on the 2018 published accounts of a member of a group companies engaged in the importation of used spare parts. One of the audit teams has just returned to the office and submitted their audit file on Tom and Jerry Company Limited to you for review. The team has made the following findings:

1. The total IDF value of imports was $5,330,844.56, Import Duty and VAT paid were GH¢7,475,654.23 and GH¢6,546,689.04 respectively.
2. Total amount transferred to Okamoto Trading Corporation of Japan; the main suppliers was $9,182,250.00. This transfer included $1,237,500 allegedly transferred from the Managing Director’s own resources. The company has a ninety-day credit facility with Okamoto Trading Corporation.
3. Statement of account for the year ended 31/12/18 from Okamoto Trading Corporation indicated opening and closing balances as $540,690.60 and $708,732.02 respectively.
4. The account audited which had been filed with Ghana Revenue Authority indicated purchases of GH¢509,552.03 is local purchases from other importers.
5. Amount of Import Duty and VAT charged in the published accounts amounted to GH¢710,068.11 and GH¢461,544.51 respectively.
6. Note that import duty rate is 20%; VAT rate is 17½%; and $1.00=GH¢4.20.

You are required to:
i. Analyze the findings of the Audit Team and present a report to your Audit Manager indicating any tax implications of their findings.
ii. What further audit work would you advise the audit team to undertake on the transfer by the managing director to assure yourself that is not business income of funds belonging to the company or from a taxable source.