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STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

Question

(a). The Chief Executive Officer (CEO) of Dana, a meat processing company based in the United Arab Emirates is exploring the possibility of expanding the operations of the company to Ghana. The CEO intends to establish a cattle farm and an ultra-modern meat processing which would process the meat for export to the Middle East. His initial inquiries revealed that Ghana has tax incentives for investors who seek to establish businesses which produce items for export.

Required: As the preferred tax advisor, provide an opinion on the income tax consequences of establishing a cattle farm indicating whether the location of the farm impacts on the tax incentives available to an investor.

(b). Based on your knowledge of the Free Zone Act, 1995 (Act 504) state and discuss five (5) tax incentives which the investor can obtain if he registers the meat processing factory as a Free Zone Enterprise.

Answer

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Tags: Export, Free Zone Act, Meat Processing, Tax Incentives, Withholding Tax
Level: Level 2

Topic: Tax Incentives
Series: AUG 2018

STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

Question

(a). CinequaNon Plc, a UK entity, is planning to build a new processing facility in Ghana. The Chief Executive in a meeting with Management needs to decide either to cite the facility in Accra or Kumasi. Market intelligence has no preference for citing the facility 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 process being considered by management.

	Kumasi GH $\phi$	Accra GH $\phi$
Expected Gross Receipts	$2,500,000$	$2,500,000$
Payroll Expenses	200,000	250,000
Production costs including depreciation.	850,000	800,000

The erection of the factory structures and installation of equipment will cost GH $2,000,000 with attributable labour cost of GH $200,000. CinequaNon Inc intends to depreciate the equipment over a ten (10) year period.

Required: Calculate CinequaNon’s income tax liability for each proposed location for the first year.

(b). Would you advice for the facility to be cited in Nsawan taking into consideration the fact that Nsawam, it very close to Accra.

(c). Discuss three (3) non tax factors that CinequaNon UK Plc may consider in the decision process to locate either in Kumasi or in Accra.

(d). As a Chartered Tax Advisor, you receive a note from a client who requires to seek clarification on some tax issues relating to his line of business. The note is as detailed below.

Facts:

Company X has purchased a teak concession from the Forestry Commission to fell for the logs.
Company Y has contracted to purchase the teak timber from company X.
Company Y pays VAT on the local purchase of teak on invoices issued by Company X.
Company Y exports 100% of the teak to Company Z Overseas Plc., registered and operating in the Netherlands.

Query: Can company Y claim refund of such input VAT from the VAT authorities since company Y does not have any other business other than exporting of teak.

Required: As a Chartered Tax Advisor, kindly respond to the concerns raised by the client.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Export, Teak Timber, VAT Refund
Level: Level 2

Topic: Strategic Indirect Tax Management
Series: AUG 2013

TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

Question

A company engages in exports of non-traditional products and makes local sales of its products. It has as recently, as of 2018, recorded huge losses on the exports but makes gains on the local sales and intends to offset the loss against the profit from the local sales as both represent its business activities.

Required: Evaluate the above statement critically in light of the tax provisions and its effect, if any, on revenue.
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business income, Export, Local sales, Losses, Non-Traditional Products, Revenue
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2019

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

Question

Free Zone means area or building declared as a free zone by publication in commercial and industrial bulletins. It includes Single Factory Zones, Free Ports, Free Airports, and other specified areas. Free Zone operations are export-led and aimed at promoting foreign earnings for Ghana.

Required:
What mitigation measures will a Free Zone Enterprise adopt to reduce its tax liabilities and raise enough benefits to the shareholders?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Export, Free Zone, Tax Mitigation
Level: Level 3

Topic: Tax planning
Series: APR 2022

STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Export, Free Zone Act, Meat Processing, Tax Incentives, Withholding Tax
Level: Level 2

Topic: Tax Incentives
Series: AUG 2018

STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

Question

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

	Kumasi GH $\phi$	Accra GH $\phi$
Expected Gross Receipts	$2,500,000$	$2,500,000$
Payroll Expenses	200,000	250,000
Production costs including depreciation.	850,000	800,000

Required: Calculate CinequaNon’s income tax liability for each proposed location for the first year.

(b). Would you advice for the facility to be cited in Nsawan taking into consideration the fact that Nsawam, it very close to Accra.

(c). Discuss three (3) non tax factors that CinequaNon UK Plc may consider in the decision process to locate either in Kumasi or in Accra.

(d). As a Chartered Tax Advisor, you receive a note from a client who requires to seek clarification on some tax issues relating to his line of business. The note is as detailed below.

Facts:

Company X has purchased a teak concession from the Forestry Commission to fell for the logs.
Company Y has contracted to purchase the teak timber from company X.
Company Y pays VAT on the local purchase of teak on invoices issued by Company X.
Company Y exports 100% of the teak to Company Z Overseas Plc., registered and operating in the Netherlands.

Query: Can company Y claim refund of such input VAT from the VAT authorities since company Y does not have any other business other than exporting of teak.

Required: As a Chartered Tax Advisor, kindly respond to the concerns raised by the client.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Export, Teak Timber, VAT Refund
Level: Level 2

Topic: Strategic Indirect Tax Management
Series: AUG 2013

TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

Question

Required: Evaluate the above statement critically in light of the tax provisions and its effect, if any, on revenue.
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business income, Export, Local sales, Losses, Non-Traditional Products, Revenue
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2019

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

Question

Required:
What mitigation measures will a Free Zone Enterprise adopt to reduce its tax liabilities and raise enough benefits to the shareholders?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Export, Free Zone, Tax Mitigation
Level: Level 3

Topic: Tax planning
Series: APR 2022

Question Tag: Export

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STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

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STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

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STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

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TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

You're reporting an error for "TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax"

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

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STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors

Discuss tax consequences of establishing a cattle farm in Ghana and the impact of location on incentives.

You're reporting an error for "STP – Aug 2018 – L2 – Q5 – Taxation of Specialized Business Sectors"

STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation

Calculate income tax liability for a new processing facility in Kumasi or Accra.

You're reporting an error for "STP – Aug 2013 – L2 – Q3 – Tax Strategies for New Business Formation"

TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax

Evaluate the statement regarding offsetting losses from export of non-traditional products against profits from local sales.

You're reporting an error for "TX – May 2019 – L3 – Q5c – Business Income – Corporate Income Tax"

AT – April 2022 – L3 – Q2b – Tax planning

Explain how a Free Zone Enterprise can mitigate its tax liabilities and benefit shareholders.

You're reporting an error for "AT – April 2022 – L3 – Q2b – Tax planning"

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