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STP – Aug 2016 – L2 – Q3 – Tax Residency

Determine if Berchem Plc is a tax resident in Ghana.

Berchem Plc UK (Berchem) is a foreign company that provides engineering services to Gritty Electricals Company Ltd (GEC) here in Ghana. Koranten Systems (Koranten) serves as a country representative for Berchem in Ghana and assists Berchem to execute their service contracts. Koranten Systems provides labour and local material support to Berchem when needed on the contract, whereas Berchem provides the prefinancing, expertise and specialized equipment for the execution of work. As compensation, Koranten is paid commission in cash and equipment.
Berchem won its first contract with GECin January 2014. To date, no VAT was ever charged on invoices billed to GEC by Berchem. GEC also failed to withhold taxes on payments made to Berchem. Both GEC and Berchem had the general belief that these taxes were not stated as part of the signed contracts and therefore were not applicable in respect of the contracts. Berchem again saw the VAT charge as rendering pricing of the projects uncompetitive.

Consultants to GEC have recently advised GEC to start withholding taxes from payments made to Berchem as required by the Income Tax Act, since Berchem has been providing service in Ghana for “at least 2 years”.

Required:
On behalf of Berchem Plc, The Chief Executive of Koranten requests you to provide tax advisory service on the new development. Koranten requests for a documented Tax expert advice to submit to Berchem in respect of
a) Whether Berchem Plc is tax resident in Ghana,

b) The relevance, the basis and application of VAT, withholding, and corporate taxes on the business dealings between Berchem and GEC.

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ATP – Aug 2015 – L2 – Q5 – Tax Compliance Framework

List three circumstances where filing a Return of Income is not required under the Internal Revenue Act.

(a). Mr. Tanko Alhassan is the Head of Customer Service Department of Saabhot Company Limited. The following information is extracted from his Tax Return for 2014 year of assessment.

GH¢
Basic salary (2014) 144,000.00
Responsibility allowance 3,600.00
Professional allowance 2,500.00
House-Help allowance 2,800.00
Entertainment allowance 4,500.00

Mr. Tanko Alhassan was paid a bonus of GH¢45,800.00 by his employer on 27th February 2015 in respect of his performance for the year 2014. He uses his own private car for official duties for which he was given a monthly reimbursable fuel allowance of GH¢1,000.00. He is a divorcee with two children who attends Christ the King Junior High School in Accra. As part of the company’s policy to support brilliant children, each of Mr. Tanko Alhassan’s children are on an annual educational bursary of GH¢3,000.00.

He contributes 5.5% of his salary to the Social Security Scheme and an additional 5% to a Staff Provident Fund Scheme under the National Pensions Act, 2008 (Act 766). His employer, Saabhot Company Limited contributes on his behalf 13% and 5% of his salary to the Social Security Scheme and the Staff Provident Fund Scheme respectively.

You are required to compute the tax liability of Mr. Tanko Alhassan for the 2014 year of assessment.

(b). Under section 72 of the Internal Revenue Act, 2000 (Act 592) as amended, persons are generally required to furnish Returns of Income to the Ghana Revenue Authority. Except as may be required by the Commissioner-General by notice in writing that a person files a return, the Internal Revenue Act, 2000 (Act 592) as amended, provides exception from filing of Return of Income.

You are required to indicate only three circumstances where the filing of a Return of Income is not required under the Internal Revenue Act, 2000 (Act 592) as amended.

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TAX – Nov 2015 – L2 – Q4a – International Taxation

This question explains the tax treatment of income earned by a non-resident individual who has spent time in Nigeria.

Mr. Alexis Sanchez was employed by Zenon Ltd as Director Commercial, West and Central Africa with effect from 1 March 2011. He entered Nigeria on the date his employment became effective and remained in Nigeria till 25 August 2011. He returned to Nigeria on 15 January 2012, and remained in Nigeria till 31 July 2012.

Required:
Explain the basis for the taxation of income earned by Mr. Alexis Sanchez in Nigeria for the relevant tax years.

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PT – May 2020 – L2 – Q2a – Value-Added Tax (VAT),

Examines the VAT implications for a non-resident company's purchase and servicing of vehicles in Ghana.

Pamela Noi Ltd is a non-resident person. The Company’s Procurement Officer came down to Ghana to buy Ten (10) Toyota Vehicles manufactured by Safo Kantanka to be delivered in Mali. The vehicles are going to be used in Mali. The management of Pamela Noi Ltd requested that the vehicles be serviced in Ghana by High Class Mechanic, a popular mechanic in Accra-Ghana.

Required:

i) What is the Value Added Tax (VAT) implication on the vehicle to be acquired by Pamela Noi Ltd?
(2.5 marks)

ii) What is the VAT implication of the servicing of the vehicle in Ghana?
(2.5 marks)

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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.

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)

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

Calculate taxes and determine whether each is final based on various transactions provided.

The following information is available to you as a tax consultant:

Description Amount (GH¢)
Dividend paid to resident person 100,000
Dividend paid to non-resident person 200,000
Payment of goods to resident person 300,000
Payment of goods to non-resident person 400,000
Rent – residential property 150,000
Rent – commercial property 300,000
Natural Resource Payment 1,000,000
Management and Technical Service fees to non-resident 400,000
Interest paid to resident financial institution 20,000,000
Royalty paid to non-resident person 400,000

Required: Compute taxes from the above information and indicate whether the tax is final or not final.

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STP – Aug 2016 – L2 – Q3 – Tax Residency

Determine if Berchem Plc is a tax resident in Ghana.

Berchem Plc UK (Berchem) is a foreign company that provides engineering services to Gritty Electricals Company Ltd (GEC) here in Ghana. Koranten Systems (Koranten) serves as a country representative for Berchem in Ghana and assists Berchem to execute their service contracts. Koranten Systems provides labour and local material support to Berchem when needed on the contract, whereas Berchem provides the prefinancing, expertise and specialized equipment for the execution of work. As compensation, Koranten is paid commission in cash and equipment.
Berchem won its first contract with GECin January 2014. To date, no VAT was ever charged on invoices billed to GEC by Berchem. GEC also failed to withhold taxes on payments made to Berchem. Both GEC and Berchem had the general belief that these taxes were not stated as part of the signed contracts and therefore were not applicable in respect of the contracts. Berchem again saw the VAT charge as rendering pricing of the projects uncompetitive.

Consultants to GEC have recently advised GEC to start withholding taxes from payments made to Berchem as required by the Income Tax Act, since Berchem has been providing service in Ghana for “at least 2 years”.

Required:
On behalf of Berchem Plc, The Chief Executive of Koranten requests you to provide tax advisory service on the new development. Koranten requests for a documented Tax expert advice to submit to Berchem in respect of
a) Whether Berchem Plc is tax resident in Ghana,

b) The relevance, the basis and application of VAT, withholding, and corporate taxes on the business dealings between Berchem and GEC.

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You're reporting an error for "STP – Aug 2016 – L2 – Q3 – Tax Residency"

ATP – Aug 2015 – L2 – Q5 – Tax Compliance Framework

List three circumstances where filing a Return of Income is not required under the Internal Revenue Act.

(a). Mr. Tanko Alhassan is the Head of Customer Service Department of Saabhot Company Limited. The following information is extracted from his Tax Return for 2014 year of assessment.

GH¢
Basic salary (2014) 144,000.00
Responsibility allowance 3,600.00
Professional allowance 2,500.00
House-Help allowance 2,800.00
Entertainment allowance 4,500.00

Mr. Tanko Alhassan was paid a bonus of GH¢45,800.00 by his employer on 27th February 2015 in respect of his performance for the year 2014. He uses his own private car for official duties for which he was given a monthly reimbursable fuel allowance of GH¢1,000.00. He is a divorcee with two children who attends Christ the King Junior High School in Accra. As part of the company’s policy to support brilliant children, each of Mr. Tanko Alhassan’s children are on an annual educational bursary of GH¢3,000.00.

He contributes 5.5% of his salary to the Social Security Scheme and an additional 5% to a Staff Provident Fund Scheme under the National Pensions Act, 2008 (Act 766). His employer, Saabhot Company Limited contributes on his behalf 13% and 5% of his salary to the Social Security Scheme and the Staff Provident Fund Scheme respectively.

You are required to compute the tax liability of Mr. Tanko Alhassan for the 2014 year of assessment.

(b). Under section 72 of the Internal Revenue Act, 2000 (Act 592) as amended, persons are generally required to furnish Returns of Income to the Ghana Revenue Authority. Except as may be required by the Commissioner-General by notice in writing that a person files a return, the Internal Revenue Act, 2000 (Act 592) as amended, provides exception from filing of Return of Income.

You are required to indicate only three circumstances where the filing of a Return of Income is not required under the Internal Revenue Act, 2000 (Act 592) as amended.

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TAX – Nov 2015 – L2 – Q4a – International Taxation

This question explains the tax treatment of income earned by a non-resident individual who has spent time in Nigeria.

Mr. Alexis Sanchez was employed by Zenon Ltd as Director Commercial, West and Central Africa with effect from 1 March 2011. He entered Nigeria on the date his employment became effective and remained in Nigeria till 25 August 2011. He returned to Nigeria on 15 January 2012, and remained in Nigeria till 31 July 2012.

Required:
Explain the basis for the taxation of income earned by Mr. Alexis Sanchez in Nigeria for the relevant tax years.

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You're reporting an error for "TAX – Nov 2015 – L2 – Q4a – International Taxation"

PT – May 2020 – L2 – Q2a – Value-Added Tax (VAT),

Examines the VAT implications for a non-resident company's purchase and servicing of vehicles in Ghana.

Pamela Noi Ltd is a non-resident person. The Company’s Procurement Officer came down to Ghana to buy Ten (10) Toyota Vehicles manufactured by Safo Kantanka to be delivered in Mali. The vehicles are going to be used in Mali. The management of Pamela Noi Ltd requested that the vehicles be serviced in Ghana by High Class Mechanic, a popular mechanic in Accra-Ghana.

Required:

i) What is the Value Added Tax (VAT) implication on the vehicle to be acquired by Pamela Noi Ltd?
(2.5 marks)

ii) What is the VAT implication of the servicing of the vehicle in Ghana?
(2.5 marks)

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You're reporting an error for "PT – May 2020 – L2 – Q2a – Value-Added Tax (VAT),"

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.

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)

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You're reporting an error for "PT – May 2020 – L2 – Q5b – Special considerations for taxation of gifts and capital allowances."

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

Calculate taxes and determine whether each is final based on various transactions provided.

The following information is available to you as a tax consultant:

Description Amount (GH¢)
Dividend paid to resident person 100,000
Dividend paid to non-resident person 200,000
Payment of goods to resident person 300,000
Payment of goods to non-resident person 400,000
Rent – residential property 150,000
Rent – commercial property 300,000
Natural Resource Payment 1,000,000
Management and Technical Service fees to non-resident 400,000
Interest paid to resident financial institution 20,000,000
Royalty paid to non-resident person 400,000

Required: Compute taxes from the above information and indicate whether the tax is final or not final.

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You're reporting an error for "PT – July 2023 – L2 – Q5a – Withholding Tax Administration"

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