Ghana Revenue Authority – Page 4

AT – Nov 2024 – L3 – Q5a – Transfer Pricing Documentation and Compliance

Explain the required transfer pricing documentation and exemptions under Ghana’s Transfer Pricing Regulations, 2020 (L.I. 2412).

Question

You are a Senior Transfer Pricing Associate of Fameye and Associates. You have received the following email from a former client, Asew LTD, who has received a Transfer Pricing audit assessment from the Ghana Revenue Authority (GRA) for the 2021, 2022, and 2023 years of assessment.

Subject: Transfer Pricing Compliance Assistance

Hello Team,

I came to the office today and received a letter from the GRA regarding a tax assessment on transfer pricing issues. According to the letter, our company owes the GRA some penalties for non-compliance with the transfer pricing regulations. I am confused as to what our compliance obligations are. I would need your assistance on how we can comply with the transfer pricing laws of Ghana.

I hope to hear from you soon.

Kind regards,

Nii Armaah
Managing Director, Asew LTD

Required:

In line with the provisions of the Transfer Pricing Regulations, 2020 (L.I. 2412), draft a response for the review of your Tax Partner, covering the following:

(i) The required transfer pricing documentation that must be maintained by companies in Ghana under the three-tier transfer pricing documentation requirements, including the time by which these must be filed with the GRA, where applicable. (ii) TWO conditions or circumstances under which a company may be exempted from compliance with any of the above documentation requirements.

Answer

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Tags: Documentation, Ghana Revenue Authority, Multinational Entities, Tax Compliance, Tax Regulations, Transfer Pricing
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

Question

GRA’s use of data analytics has become increasingly important in identifying tax evasion and improving compliance.

Required:
i) Explain how data analytics can be used to detect tax evasion.
ii) Provide TWO examples of how GRA might use data analytics to enhance tax compliance.

Answer

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Tags: AI in Taxation, Data Analytics, Fraud Detection, Ghana Revenue Authority, Predictive Analytics, Tax Compliance, Tax Enforcement, Tax Evasion
Level: Level 2

Topic: Application of Information Technology in Taxation
Series: Nov 2024

PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

Question

The integration of Information Technology in tax administration has enabled the Ghana Revenue Authority (GRA) to adopt e-auditing processes, allowing for the remote examination of taxpayers’ records. Required:
i) Describe the process of e-auditing and how it differs from traditional tax audits.
ii) Discuss TWO advantages of e-auditing for both the taxpayer and the tax authority.

Answer

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Tags: Data Analytics, Digital Taxation, E-Auditing, Ghana Revenue Authority, Tax Compliance
Level: Level 2

Topic: Application of Information Technology in Taxation
Series: Nov 2024

PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

Question

In 2009, the former revenue agencies (VAT, IRS, and CEPS) were consolidated into the Ghana Revenue Authority (GRA). This integration was anticipated to provide certain benefits to both taxpayers and the overall tax administration.

Required:

State FOUR benefits resulting from the integration of the revenue agencies into the GRA

Answer

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Tags: Ghana Revenue Authority, Revenue Agencies Integration, Tax Administration, Tax Compliance
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2023 – L2 – Q1c – Overview of the Ghanaian Tax System and Fiscal Policy

State five functions performed by the Ghana Revenue Authority.

Question

Ghana Revenue Authority has been charged to perform certain functions as enacted by Ghana Revenue Authority Act, 2009 (Act 791).

Required:
State FIVE (5) functions performed by Ghana Revenue Authority.

Answer

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Tags: Ghana Revenue Authority, Tax Administration, Tax Functions
Level: Level 2

Topic: Tax Administration
Series: NOV 2023

PT – Nov 2023 – L2 – Q5a – Withholding Tax Administration

Explanation of the obligations of a withholding agent under the Ghanaian tax system.

Question

The retention of tax by one person when making payment to another person regarding the obligations of a withholding agent is sometimes described as an easy way of tax administration.

Required:
Explain the obligations of a withholding agent.
(5 marks)

Answer

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Tags: Compliance, Filing Requirements, Ghana Revenue Authority, Tax law, Withholding Tax
Level: Level 2

Series: NOV 2023

PT – May 2020 – L2 – Q5c – Withholding Tax Administration

This question requires the computation of the penalty for late filing of withholding tax returns by Adamu Ltd.

Question

The following unstructured invoice has been forwarded to Adamu Ltd from Asigra Ltd, a standard rated supplier:
Goods invoiced (VAT inclusive) GH¢3,000,000 The above transactions relate to payment for goods in January 2019.
Required:
i) Compute the withholding tax payable by Adamu Ltd.
(2 marks)
Assuming Adamu Ltd filed the withholding tax return 12 days after the due date,
ii) compute the penalty payable.
(3 marks)

Answer

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Tags: Ghana Revenue Authority, Late Filing Penalty, Withholding Tax
Level: Level 2

Topic: Penalties, Tax administration in Ghana
Series: MAY 2020

PT – May 2020 – L2 – Q5b – Special considerations for taxation of gifts and capital allowances.

This question asks to compute the tax payable by Mr. Nyametse John on gifts received from his pastor in 2018, considering the exchange rate for foreign currency.

Question

Mr. Nyametse John is a member of Community Christ Church. Mr. Nyametse does not run a business, nor is he employed. In the 2018 year of assessment, he received the following from his Pastor, who just returned from the United Kingdom:

Item Value (£)
Wristwatch 100
Shoes 120
Mobile Phone 150
Exchange rate: GH¢6 – £1

Required:
Compute any tax payable for the 2018 year of assessment. (5 marks)

Answer

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Tags: Ghana Revenue Authority, Gift tax, Gifts, Income Tax, Non-resident
Level: Level 2

Topic: Income Tax Liabilities
Series: MAY 2020

PT – May 2020 – L2 – Q3a – Income Tax Liabilities

This question involves computing the assessable income for each partner in a partnership based on profit-sharing ratios and additional benefits.

Question

During the year ended 31 December 2018, the partnership of David, Stella, and Percy reported an adjusted profit of GH¢951,000 before charging partners’ salaries, interest on capital, and costs of traveling for leave.

Partner Profit/Loss Sharing Ratio Salaries (GH¢) Interest on Capital (GH¢) Cost of Traveling for Leave (GH¢)
David 3 48,000 30,000 20,000
Stella 2 72,000 20,000 30,000
Percy 1 96,000 10,000 25,000
Required:
Compute the assessable income for each partner.
(7 marks)

Answer

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Tags: Assessable Income, Ghana Revenue Authority, Income Tax, Partnership
Level: Level 2

Topic: Income Tax Liabilities
Series: MAY 2020

PT – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

Question

Knaah-Shormeh Ltd has to settle Ghana Revenue Authority on the following tax liabilities:

Tax Liabilities Amount (GH¢)
Custom duties 1,000,000
Withholding Tax Surcharge 80,000
Value Added Tax 500,000
Corporate Tax 100,000
Total Liability 1,680,000
Additional Information:

50% of the Value Added Tax relates to imports.
The above came about from an adjusted assessment through an audit conducted and a report submitted on 31 January 2019.
The company has engaged Miracle Consultants, a firm of Tax Practitioners, to help it object to the assessment, claiming it is excessive and erroneous based on its facts and circumstances.
Required:
What conditions must be met by Knaah-Shormeh Ltd before the Commissioner-General makes a determination on the objection? (8 marks)

Answer

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Tags: Corporate Tax, Ghana Revenue Authority, Tax Administration, Tax Objection
Level: Level 2

Topic: Tax Administration
Series: MAY 2020

AT – May 2017 – L3 – Q1a – Tax Administration in Ghana

Discuss the governance structure of the Ghana Revenue Authority as part of tax administration reforms in Ghana.

Question

a) Tax reforms have characterised global taxation. Countries have embarked on various reforms geared towards improvement in tax revenue to help provide the basis for infrastructure and guarantee sustainable development. Ghana has not been left out in these critical tax reforms.

Tax administration in Ghana therefore has seen a number of reforms since the 1960s, with the most recent being the integration of the Revenue Agencies to an Authority to act as a one-stop shop as per the Ghana Revenue Authority Act, 2009 (Act 791).

Required: Discuss the governance structure of the Ghana Revenue Authority.
(5 marks)

Answer

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Tags: Ghana Revenue Authority, Governance structure, Revenue Agencies, Tax Administration, Tax reforms
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2017

AT – Nov 2016 – L3 – Q1a&b – Business income – Corporate income tax

Calculate the tax due to GRA for the year 2014 based on the income statement of Samada Insurance Company.

Question

You have been appointed as the Tax Manager of Samada Insurance Company. The Executive Director has expressed his persistent worry with the Chief Accountant to accurately calculate the company’s tax obligations to agree with what is assessed by the Ghana Revenue Authority each year. He has thus, provided you with the Income Statement below for your consideration and advice.

SAMANDA INSURANCE COMPANY LIMITED
Income Statement for the years ended 2013 and 2014

Additional Information:
i) Capital allowance agreed for the year 2014 was GH¢2,450,000
ii) Reserve is calculated at 40% of Net premium.

Required:
a) Compute the tax due to the GRA for 2014 year of Assessment. (8 marks)

b) Support your computations with relevant explanations. (2)

Answer

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Tags: Corporate Income Tax, Ghana Revenue Authority, Insurance Company, Tax computation, Tax Obligations
Level: Level 3

Series: NOV 2016

AT – Nov 2023 – L3 – Q3 – Business income – Corporate income tax

Compute the capital allowance and taxable income for AquaFresh Ltd for the 2022 year of assessment.

Question

AquaFresh Ltd is a company based in Osu in Accra, and produces clean water through a desalination process and, as a by-product, produces salt for sale in Ghana.

Desalination is a process that extracts salts and minerals from seawater so that the water becomes fit for human consumption. This desalination process has been declared by the Ghana Revenue Authority (GRA) as a manufacturing process.

During the 2022 year of assessment, AquaFresh Ltd recorded the following transactions:

i) Sale of desalinated water made to private domestic homes totaled GH¢120,000,000 while salt totaled GH¢15,000,000.

ii) Operating costs in respect of AquaFresh Ltd’s manufacturing and processing plant amounted to GH¢50,000,000.

iii) AquaFresh Ltd maintains a stock/inventory of spare components/parts for its processing and manufacturing plants. The inventory includes a special inventory called ‘membranes’ which are used in the desalination process. The company had ten membranes in inventory, at a cost of GH¢250,000 each, at the start of the year 2022. During the year 2022, AquaFresh Ltd purchased an additional two membranes at a cost of GH¢300,000 each. Due to wear and tear, six membranes from the manufacturing plant needed to be replaced during the year. The six torn membranes were accordingly removed and destroyed during the year.

iv) A holding tank for the salt broke and flooded the manufacturing plant. The cost of cleaning the plant was GH¢3,000,000. The holding tank had to be replaced and the replacement holding tank cost AquaFresh Ltd GH¢10,000,000, which was funded mainly by insurance proceeds of GH¢7,000,000. The original holding tank had cost GH¢6,000,000 and had a tax written down value on 1 January 2022 (the start of its last year of tax useful life) of GH¢1,000,000. These tanks are not considered part of the process of manufacture as they merely hold the salt.

v) The water produced is pumped into two temporary holding tanks. These tanks had been purchased by AquaFresh Ltd on 1 June 2022, the same date it acquired some vacant land in James Town in Accra. The land cost GH¢9,000,000 and the two tanks cost GH¢5,000,000 each. These tanks are not considered part of the process of manufacture as they merely hold the desalinated water.

vi) In 2022 AquaFresh Ltd installed sea-based wind and energy turbines along the length of its water pipelines. This was done to offset the high energy requirements for the desalination process. These wind and energy turbines cost a total of GH¢6,000,000. The wind and energy turbines have been certified by Ghana Revenue Authority as manufacturing assets.

vii) Specific bad debts written off amounted to GH¢4,000,000. A further GH¢10,000,000 is listed by AquaFresh Ltd as a general provision for doubtful debts in its accounting provision for the year ended 31 December 2022. The list for the general provision for doubtful debts was GH¢9,000,000 at the start of the tax year.

viii) Wages and salaries paid amounted to GH¢30,500,000.

ix) The written down values of pools of assets as of January 1, 2022, were:

Pool 1: GH¢250,000
Pool 2: GH¢48,000,000
Pool 3: GH¢13,000,000

x) Cost of Buildings as of January 1, 2022, was GH¢5,000,000.

Required:
a) Compute capital allowance of AquaFresh Ltd for the 2022 year of assessment using all the available information. (5 marks)
b) Compute the taxable income of AquaFresh Ltd for the 2022 year of assessment. (15 marks)

Answer

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Tags: axable Income, Capital Allowance, Corporate Tax, Ghana Revenue Authority, Manufacturing
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2023

AT – Nov 2023 – L3 – Q2a – Permanent establishment

Explain four scenarios where a permanent establishment may be created in Ghana and how they may be taxed.

Question

There are many ways non-resident entities may launch their presence into a country. Some of the ways include the establishment of subsidiaries, licensing, and permanent establishment.

Required:
Explain FOUR (4) different scenarios a permanent establishment may be created in Ghana and how they may be subject to tax in Ghana by the Commissioner-General. (8 marks)

Answer

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Tags: Ghana Revenue Authority, Non-resident Entities, Permanent Establishment, Taxation
Level: Level 3

Topic: Permanent establishment
Series: NOV 2023

AT – Nov 2023 – L3 – Q1c – Tax planning

Advise on tax strategies to reduce advertising and marketing costs while creating value for shareholders.

Question

Zantem Ltd has equity of GH¢10,000,000 while Bonty Ltd has equity of GH¢12,000,000. The two companies are in competition for the same market space. This has increased their advertising and marketing costs. The Ghana Revenue Authority (GRA) has threatened to disallow a portion of their advertising and marketing costs, which appear astronomically high.

The Management of the two companies have invited you, a tax expert, to be part of a discussion to look at the possible ways the two companies can eliminate or reduce any tax exposure to their shareholders with the potential threat from the GRA.

Required:
Advise the Management on the tax strategy(ies) to adopt to reduce their cost while creating value for their shareholders. (6 marks)

Answer

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Tags: Advertising Costs, Ghana Revenue Authority, Marketing Costs, Shareholder Value, Tax Strategies
Level: Level 3

Topic: Tax planning
Series: NOV 2023

Question Tag: Ghana Revenue Authority

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AT – Nov 2024 – L3 – Q5a – Transfer Pricing Documentation and Compliance

Explain the required transfer pricing documentation and exemptions under Ghana’s Transfer Pricing Regulations, 2020 (L.I. 2412).

PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

PT – Nov 2023 – L2 – Q1c – Overview of the Ghanaian Tax System and Fiscal Policy

State five functions performed by the Ghana Revenue Authority.

PT – Nov 2023 – L2 – Q5a – Withholding Tax Administration

Explanation of the obligations of a withholding agent under the Ghanaian tax system.

PT – May 2020 – L2 – Q5c – Withholding Tax Administration

This question requires the computation of the penalty for late filing of withholding tax returns by Adamu Ltd.

PT – May 2020 – L2 – Q5b – Special considerations for taxation of gifts and capital allowances.

This question asks to compute the tax payable by Mr. Nyametse John on gifts received from his pastor in 2018, considering the exchange rate for foreign currency.

PT – May 2020 – L2 – Q3a – Income Tax Liabilities

This question involves computing the assessable income for each partner in a partnership based on profit-sharing ratios and additional benefits.

PT – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

AT – May 2017 – L3 – Q1a – Tax Administration in Ghana

Discuss the governance structure of the Ghana Revenue Authority as part of tax administration reforms in Ghana.

AT – Nov 2016 – L3 – Q1a&b – Business income – Corporate income tax

Calculate the tax due to GRA for the year 2014 based on the income statement of Samada Insurance Company.

AT – Nov 2023 – L3 – Q3 – Business income – Corporate income tax

Compute the capital allowance and taxable income for AquaFresh Ltd for the 2022 year of assessment.

AT – Nov 2023 – L3 – Q2a – Permanent establishment

Explain four scenarios where a permanent establishment may be created in Ghana and how they may be taxed.

AT – Nov 2023 – L3 – Q1c – Tax planning

Advise on tax strategies to reduce advertising and marketing costs while creating value for shareholders.

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AT – Nov 2024 – L3 – Q5a – Transfer Pricing Documentation and Compliance

Explain the required transfer pricing documentation and exemptions under Ghana’s Transfer Pricing Regulations, 2020 (L.I. 2412).

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PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

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PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

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PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

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PT – Nov 2023 – L2 – Q1c – Overview of the Ghanaian Tax System and Fiscal Policy

State five functions performed by the Ghana Revenue Authority.

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PT – Nov 2023 – L2 – Q5a – Withholding Tax Administration

Explanation of the obligations of a withholding agent under the Ghanaian tax system.

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PT – May 2020 – L2 – Q5c – Withholding Tax Administration

This question requires the computation of the penalty for late filing of withholding tax returns by Adamu Ltd.

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PT – May 2020 – L2 – Q5b – Special considerations for taxation of gifts and capital allowances.

This question asks to compute the tax payable by Mr. Nyametse John on gifts received from his pastor in 2018, considering the exchange rate for foreign currency.

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PT – May 2020 – L2 – Q3a – Income Tax Liabilities

This question involves computing the assessable income for each partner in a partnership based on profit-sharing ratios and additional benefits.

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PT – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

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AT – May 2017 – L3 – Q1a – Tax Administration in Ghana

Discuss the governance structure of the Ghana Revenue Authority as part of tax administration reforms in Ghana.

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AT – Nov 2016 – L3 – Q1a&b – Business income – Corporate income tax

Calculate the tax due to GRA for the year 2014 based on the income statement of Samada Insurance Company.

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AT – Nov 2023 – L3 – Q3 – Business income – Corporate income tax

Compute the capital allowance and taxable income for AquaFresh Ltd for the 2022 year of assessment.

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AT – Nov 2023 – L3 – Q2a – Permanent establishment

Explain four scenarios where a permanent establishment may be created in Ghana and how they may be taxed.

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AT – Nov 2023 – L3 – Q1c – Tax planning

Advise on tax strategies to reduce advertising and marketing costs while creating value for shareholders.

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