Question Tag: Indirect Taxes

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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 – Aug 2016 – L2 – Q1 – Duty Drawback Management

Discuss duty drawback regime, eligibility, export conditions, competitiveness, and mismanagement advantages.

In recent times the most topical tax issue confronting the export business community is the issue of duty drawback management. The concerns expressed has non-payment of the duty by the GRA as accrued over the years.
As an expert tax consultant with the special port duty portfolio, the Ghana National Chamber of Commerce has invited you to speak to the business community on the duty drawback regime.
You are required to present a paper to the business community covering the following areas:

  1. Generally what a duty drawback as prescribed by the Customs Act, Act 891 is
    (2 Marks)
  2. When does an importer/exporter qualify to claim duty drawback?
    (4 marks)
  3. Indicate the circumstance as prescribed by Act 981, when goods are deemed to have been exported.
    (5 marks)
  4. How is the duty drawback regime expected to make Ghanaian exports competitive?
    (5 marks)
  5. Discuss three advantages which good mismanagement of the duty drawback regime could bring to claimants.
    (4 marks)
    (Total: 20 marks)

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  • 20 Marks

ATP – Aug 2020 – L2 – Q1 – Indirect Taxes

Calculate NHIL, GET Fund, VAT, and Withholding Tax for Fafali Ghana Limited for January 2019.

Fafali Ghana Limited produces aluminium roofing sheets for both the domestic market and exports to other West African countries. The company is registered with the Ghana Revenue Authority for Value Added Tax (VAT). The company’s transactions during the month of January, 2019 were as follows:

Item GH¢
Sales (VAT Inclusive) 6,804,000.00
Exports to Sierra Leone (US Dollars) 120,000.00
Relief Supplies 148,000.00
Purchase of Modelling Equipment 160,500.00
Staff Training (VAT Inclusive) 10,800.00
Assembly of Equipment (US Dollars) 15,600.00
Alumina imported (All duties paid at importation) 141,750.00
Local Purchases 180,000.00

Unless otherwise stated, Sales and Purchases are all Value Added Tax exclusive. National Health Insurance and GET Fund Levies are also exclusive except where it has been specifically stated. The assembling of equipment was a payment made to a foreign consultant for the service rendered. The average exchange rate for the month was GH¢5.5 to one US dollar.

Required:

a) Calculate the NHIL and GET fund levies, VAT payable, if any, and Withholding Tax for January 2019.

b) State the last date when each payment is due.

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  • 20 Marks

ATP – Feb 2016 – L2 – Q4 – Transaction Value and Goods Classification

Explain transaction value and distinguish between identical and similar goods for customs purposes under PNDCL 330.

a). Section 30 of the Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended provides, among other things, that the transaction value of an item is to be used for Customs purposes.

i) What is “transaction value”? (3 marks)

ii) Distinguish between “identical goods” and “similar goods” in the ascertainment of transaction value. (8 marks)

b). In what circumstances shall excise duty not be paid on goods as provided for in section 57(2) of Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended. (9 marks)

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  • 20 Marks

TAX – May 2019 – L2 – Q2 – Introduction to Taxation

Explain the objectives of taxation, compare direct and indirect taxes, and outline tax filing requirements for Nigerian companies.

Mr. Ade is a Nigerian who has lived in Europe for a very long time. He is now planning to return to Nigeria to set up a business which he considers to be profitable in a developing country like Nigeria. Despite the appeal of the business in terms of profitability, he is skeptical about the perceived harsh tax environment in the country. He has approached you to explain some fundamental areas of taxation in Nigeria.

You are required to:

(a) Identify five major objectives and purposes of taxation. (5 Marks)
(b) Compare direct and indirect taxes, giving four examples of each. (6 Marks)
(c) In relation to an incorporated company carrying on business in Nigeria, explain to Mr. Ade the:
(i) Documents to be filed as annual returns to the Federal Inland Revenue Services (FIRS). (3 Marks)
(ii) Time limit for filing annual tax returns. (3 Marks)
(iii) Penalties prescribed by law for a company which failed to file its income tax returns on the due date. (3 Marks)

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  • 5 Marks

PT – March 2023 – L2 – Q1b – Overview of the Ghanaian Tax System and Fiscal Policy

Differentiate between the features of direct and indirect taxes.

Distinguish between the features of direct taxes and indirect taxes.

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  • 5 Marks

PSAF – May 2018 – L2 – Q3a – Public sector fiscal planning and budgeting

Explain the difference between direct and indirect taxes and suggest three ways to improve tax collection.

Both direct and indirect taxes are critical components of government revenue as they are intricately linked with the overall economy. Collection of these taxes is important for the government as well as the well-being of the country.

Required:
Distinguish between direct taxes and indirect taxes and suggest THREE ways by which tax collection can improve.

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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 – Aug 2016 – L2 – Q1 – Duty Drawback Management

Discuss duty drawback regime, eligibility, export conditions, competitiveness, and mismanagement advantages.

In recent times the most topical tax issue confronting the export business community is the issue of duty drawback management. The concerns expressed has non-payment of the duty by the GRA as accrued over the years.
As an expert tax consultant with the special port duty portfolio, the Ghana National Chamber of Commerce has invited you to speak to the business community on the duty drawback regime.
You are required to present a paper to the business community covering the following areas:

  1. Generally what a duty drawback as prescribed by the Customs Act, Act 891 is
    (2 Marks)
  2. When does an importer/exporter qualify to claim duty drawback?
    (4 marks)
  3. Indicate the circumstance as prescribed by Act 981, when goods are deemed to have been exported.
    (5 marks)
  4. How is the duty drawback regime expected to make Ghanaian exports competitive?
    (5 marks)
  5. Discuss three advantages which good mismanagement of the duty drawback regime could bring to claimants.
    (4 marks)
    (Total: 20 marks)

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  • 20 Marks

ATP – Aug 2020 – L2 – Q1 – Indirect Taxes

Calculate NHIL, GET Fund, VAT, and Withholding Tax for Fafali Ghana Limited for January 2019.

Fafali Ghana Limited produces aluminium roofing sheets for both the domestic market and exports to other West African countries. The company is registered with the Ghana Revenue Authority for Value Added Tax (VAT). The company’s transactions during the month of January, 2019 were as follows:

Item GH¢
Sales (VAT Inclusive) 6,804,000.00
Exports to Sierra Leone (US Dollars) 120,000.00
Relief Supplies 148,000.00
Purchase of Modelling Equipment 160,500.00
Staff Training (VAT Inclusive) 10,800.00
Assembly of Equipment (US Dollars) 15,600.00
Alumina imported (All duties paid at importation) 141,750.00
Local Purchases 180,000.00

Unless otherwise stated, Sales and Purchases are all Value Added Tax exclusive. National Health Insurance and GET Fund Levies are also exclusive except where it has been specifically stated. The assembling of equipment was a payment made to a foreign consultant for the service rendered. The average exchange rate for the month was GH¢5.5 to one US dollar.

Required:

a) Calculate the NHIL and GET fund levies, VAT payable, if any, and Withholding Tax for January 2019.

b) State the last date when each payment is due.

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  • 20 Marks

ATP – Feb 2016 – L2 – Q4 – Transaction Value and Goods Classification

Explain transaction value and distinguish between identical and similar goods for customs purposes under PNDCL 330.

a). Section 30 of the Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended provides, among other things, that the transaction value of an item is to be used for Customs purposes.

i) What is “transaction value”? (3 marks)

ii) Distinguish between “identical goods” and “similar goods” in the ascertainment of transaction value. (8 marks)

b). In what circumstances shall excise duty not be paid on goods as provided for in section 57(2) of Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended. (9 marks)

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  • 20 Marks

TAX – May 2019 – L2 – Q2 – Introduction to Taxation

Explain the objectives of taxation, compare direct and indirect taxes, and outline tax filing requirements for Nigerian companies.

Mr. Ade is a Nigerian who has lived in Europe for a very long time. He is now planning to return to Nigeria to set up a business which he considers to be profitable in a developing country like Nigeria. Despite the appeal of the business in terms of profitability, he is skeptical about the perceived harsh tax environment in the country. He has approached you to explain some fundamental areas of taxation in Nigeria.

You are required to:

(a) Identify five major objectives and purposes of taxation. (5 Marks)
(b) Compare direct and indirect taxes, giving four examples of each. (6 Marks)
(c) In relation to an incorporated company carrying on business in Nigeria, explain to Mr. Ade the:
(i) Documents to be filed as annual returns to the Federal Inland Revenue Services (FIRS). (3 Marks)
(ii) Time limit for filing annual tax returns. (3 Marks)
(iii) Penalties prescribed by law for a company which failed to file its income tax returns on the due date. (3 Marks)

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  • 5 Marks

PT – March 2023 – L2 – Q1b – Overview of the Ghanaian Tax System and Fiscal Policy

Differentiate between the features of direct and indirect taxes.

Distinguish between the features of direct taxes and indirect taxes.

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  • 5 Marks

PSAF – May 2018 – L2 – Q3a – Public sector fiscal planning and budgeting

Explain the difference between direct and indirect taxes and suggest three ways to improve tax collection.

Both direct and indirect taxes are critical components of government revenue as they are intricately linked with the overall economy. Collection of these taxes is important for the government as well as the well-being of the country.

Required:
Distinguish between direct taxes and indirect taxes and suggest THREE ways by which tax collection can improve.

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