Question Tag: Tax Compliance

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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).

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

AT – Nov 2024 – L3 – Q3b – Prohibitions on Representation and Tax Advice

Explain the prohibitions on representation and tax advice in relation to tax consultants under the Revenue Administration Act, 2016 (Act 915).

Question

With reference to the Revenue Administration Act, 2016 (Act 915), what constitutes prohibitions on representation and tax advice in relation to tax consultants?

Answer

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Tags: ICAG Regulations, Legal Framework, Revenue Administration Act, Tax advice, Tax Compliance, Tax Consultants, Tax Representation
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

AT – Nov 2024 – L3 – Q2a – Tax Treatment of Decommissioning Funds in Petroleum Operations

Explain the tax treatment of decommissioning funds in petroleum operations.

Question

A Decommissioning Fund has been created to help restore the environment to its original state after petroleum operations. The upstream contractors are required to contribute towards the fund, while the government takes up the responsibility of the decommissioning activities after the operations.

Required:
Explain the tax treatment of decommissioning funds in petroleum operations.

Answer

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Tags: Allowable Deductions, Decommissioning Fund, Environmental Restoration, Escrow Account, Petroleum taxation, Tax Compliance
Level: Level 3

Topic: Petroleum operations
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 – Q5b – Withholding Tax & VAT Calculation

Compute VAT and direct tax withheld on a taxable supply of medical consumables to a tax withholding agent.

Question

Charley Chemist LTD made a taxable supply of medical consumables amounting to GH¢750,000 exclusive of VAT and levies on 23 November 2023 to the University of Ghana Medical Centre. The University of Ghana Medical Centre is a withholding tax agent for both VAT withholding and Direct Tax withholding.

Required:
i) Compute the amount of VAT withheld by the University of Ghana Medical Center.
ii) Compute the amount of direct tax withheld by the University of Ghana Medical Centre.

Answer

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Tags: Direct Tax, Medical Supplies, Tax Agent, Tax Compliance, Tax computation, Tax deduction, VAT, VAT Withholding, Withholding Tax
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties, Withholding Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q5a – Notification to Commissioner-General for Non-Resident Contracts

Requirements for notifying the Commissioner-General when a resident contracts a non-resident.

Question

For the purpose of withholding tax, the Income Tax Act, 2016 (Act 896) requires a resident person who enters into a contract with a non-resident person which gives rise to income from Ghana to notify the Commissioner-General within thirty (30) days.

Required:

State the items that must be detailed in the notification to the Commissioner-General.

Answer

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Tags: Commissioner-General Notification, Income Tax Act, Non-resident taxation, Tax Compliance, Withholding Tax
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q2e – Tax Audit and Under-declaration of Sales

Action to be taken regarding an under-declared sales revenue during a tax audit.

Question

You have been engaged as an Accounts Officer in Abokobi LTD. Sales of GH¢10,000,000 were inadvertently under-declared. A team from the Ghana Revenue Authority (GRA) is at your premises conducting an audit. The GRA Audit Team did not review the sales revenue. After the audit, you noted that the amount constituting the under-declaration of the sales was mistakenly credited to the suppliers’ account in the ledger.

Required:

Detail out your position on the above as to what action to take.

Answer

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Tags: Financial Ethics, Financial Reporting, Ghana Revenue Authority (GRA), Tax Audit, Tax Compliance, Tax Penalty, Tax Regulations, Under-declared Sales
Level: Level 2

Topic: Tax Administration
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

ATAX – May 2019 – L3 – Q3 – Taxation of Companies

Prepare capital allowance computations and tax liabilities for Pardo Nigeria Limited based on its financial data and asset acquisitions.

Question

Pardo Nigeria Limited is a manufacturer of polythene bags. It was incorporated on January 1, 2013, but commenced business operations on March 1, 2013. The following is the summary of its adjusted profits for the respective years:

Period Ended	Adjusted Profit (₦’000)
December 31, 2013	7,200
December 31, 2014	10,700
December 31, 2015	12,650
December 31, 2016	15,220
December 31, 2017	19,850

The company acquired the following assets:

Date	Asset Type	Amount (₦’000)
April 5, 2013	Factory building	5,400
January 17, 2014	Office furniture	2,750
December 1, 2014	Motor vehicle	4,500
January 3, 2015	Production plant	1,820

The company sold some of its assets on December 31, 2017 as follows:

Asset Type	Cost (₦’000)	Proceeds (₦’000)
Office furniture	250,000	35
Production plant	650,000	60

As the newly appointed tax consultant to the company, the managing director sought your advice on both capital allowances available to the company and the tax liabilities resulting from them for the relevant years. He, however, informed you during the finalization of the engagement that the factory building was purchased second-hand from a company that had ceased operation six months earlier.

Required:
Prepare a report addressed to the managing director of the company showing, for all the relevant years:

a. Capital allowance computations (9 Marks)
b. Tax liabilities payable (11 Marks)

Answer

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Tags: Asset Disposal, Capital Allowance, Corporate Tax, Tax Compliance, Tax liabilities
Level: Level 3

Topic: Taxation of Companies

TAX – May 2023 – L2 – SC – Q7 – Tax Incentives and Reliefs

Explain tax incentives and penalties for enterprises in export processing zones.

Question

The Federal Government in a bid to further boost the growth in foreign exchange earnings, create new jobs, facilitate economic diversification, industrialization, and provide access to foreign technology, came up with its export processing zones (EPZs) policy.

EPZ is regarded as a customs area where an enterprise is allowed to import plant, machinery, equipment, and raw materials, process them, and then export them to the world market, under security and without paying duty.

To facilitate a better understanding of the above assertions, the Managing Director of a would-be client approached you for explanations of the relevant provisions of the Nigerian Export Processing Zones Act Cap. N107 LFN 2004 (as amended) and Companies Income Tax Act Cap. C21 LFN 2004 (as amended).

Required:

a. Discuss SIX special tax incentives for enterprises operating in an export processing zone. (12 Marks)

b. Explain the penalties for non-compliance with section 55(1) of CITA (as amended). (3 Marks)

Answer

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Tags: CITA Penalties, Export Processing Zones, Foreign Investment, Tax Compliance
Level: Level 2

Topic: Tax Incentives and Reliefs
Series: MAY 2023

TAX – Nov 2020 – L1 – SA – Q4 – Tax Incentives and Reliefs

Identify which taxpayers are not eligible to participate in VAIDS.

Question

Which of the following is NOT eligible to participate in the voluntary assets and income declaration scheme (VAIDS)?
A. Those that earned income or owned assets but were yet to register with the relevant tax authorities
B. Registered taxpayers who had additional disclosures to make or needed to amend prior disclosures; and/or were registered but were not filing returns
C. Taxpayers that were not fully declaring their taxable income and assets
D. Taxpayers that were underpaying or under remitting their taxes
E. Taxpayers that were engaged in tax disputes with the relevant tax authorities but were not prepared to settle the tax disputes out of court

Answer

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Tags: Tax Compliance, Taxpayer Eligibility, VAIDS, Voluntary Disclosure
Level: Level 1

Topic: Tax Incentives and Reliefs
Series: NOV 2020

TAX – May 2021 – L1 – SB – Q4a – Companies Income Tax (CIT)

Conditions for the allowability of donations under the Companies Income Tax Act.

Question

Under the provisions of Companies Income Tax Act Cap C21 LFN 2004 (as amended), for an expenditure to be allowable for tax purposes, it should be an expenditure incurred wholly, exclusively, necessarily, and reasonably in earning the income of the company. Despite the above-stated assertion, some donations are still allowable for tax purposes.

Required:
State the conditions that must be met before a donation is allowed for tax purposes.

Answer

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Tags: Companies Income Tax, Donations, Tax Allowability, Tax Compliance
Level: Level 1

Topic: Companies Income Tax (CIT)
Series: MAY 2021

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

Question

The Personal Income Tax Act Cap P8 LFN 2004 (as amended) defines employment to include any appointment or office whether public or otherwise for which remuneration is payable. An employer shall register with the relevant tax authority for the purposes of deducting income tax from its employees with or without formal notification or direction by the relevant tax authority.

Required:
a. Define an “itinerant worker”. (2 Marks)
b. Explain the conditions for taxation of income from employment. (10 Marks)
c. State the penalties payable by employers who failed to file returns of emoluments paid to employees in the preceding year on January 31, of each year, with the relevant tax authority. (8 Marks)

Answer

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Tags: Employment, Itinerant Workers, Personal income tax, Tax Compliance, Tax Penalties
Level: Level 1

Topic: Personal Income Tax
Series: MAY 2021

TAX – May 2018 – L2 – Q5b – Tax Administration and Enforcement

Explain briefly conditions for granting capital allowances.

Question

Explain briefly THREE conditions for granting capital allowances.

Answer

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Tags: Capital allowances, Tax Compliance, Tax deductions
Level: Level 2

Topic: Taxation of Specialized Businesses
Series: MAY 2018

TAX – May 2018 – L2 – Q5a – Tax Administration and Enforcement

Explain rules that guide the determination of residence for individuals.

Question

Identify and explain FIVE rules that guide the determination of residence for different categories of individuals.

Answer

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Tags: Capital allowances, Tax Compliance, Tax deductions
Level: Level 2

Topic: Taxation of Specialized Businesses
Series: MAY 2018

TAX – May 2018 – L2 – Q4b – Tax Administration and Enforcement

Explain the rules guiding the cessation of business for Jobi Nig. Enterprises.

Question

State the rules guiding the cessation of business.

Answer

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Tags: Business Discontinuation, Cessation of Business, Tax Compliance
Level: Level 2

Topic: Taxation of Specialized Businesses
Series: MAY 2018

TAX – May 2019 – L2 – Q7b – Tax Administration and Enforcement

Identify the types of information disclosed in a tax clearance certificate.

Question

Identify four types of information that are expected to be disclosed in a tax clearance certificate.

Answer

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Tags: Disclosure Requirements, Tax Clearance Certificate, Tax Compliance
Level: Level 2

Topic: Tax Administration and Enforcement
Series: MAY 2019

FR – April 2022 – L2 – Q5c – Professional and Ethical Issues in Financial Reporting

Discuss safeguards for mitigating threats to ethical behavior in the context of tax compliance.

Question

Question:
Michael Onipa, a Chartered Accountant, is under pressure from his employees to under declare sales for the year ended 2021 to save the company from paying the due tax for the year. He has evaluated the threat to his professional obligations to comply with the fundamental principles of good ethical behavior, as significant. He has therefore considered safeguards to eliminate or reduce the threat to an acceptable level.

Required:
Discuss TWO (2) safeguards Michael Onipa could consider to either eliminate or reduce the threats to an acceptable level.
(5 marks)

Answer

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Tags: Ethical Dilemmas, Professional Ethics, Safeguards, Tax Compliance
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: APR 2022

TXF – May 2020 – L2 – Q2b – Value-Added Tax (VAT)

This question asks for the computation of VAT withholding taxes for goods invoiced to a VAT Withholding Agent.

Question

Mutumna Ltd is a manufacturer and invoiced goods valued at GH¢20,000,000 to Lamlam Ltd, a resident company located in the Western Region of Ghana. Lamlam Ltd has been appointed as a Value Added Tax Withholding Agent.

Required:
Compute the VAT withholding taxes.
(3 marks)

Answer

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Tags: Tax Agents, Tax Compliance, VAT, Withholding Taxes
Level: Level 2

Topic: Value-Added Tax (VAT)
Series: MAY 2020

Question Tag: Tax Compliance

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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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AT – Nov 2024 – L3 – Q3b – Prohibitions on Representation and Tax Advice

Explain the prohibitions on representation and tax advice in relation to tax consultants under the Revenue Administration Act, 2016 (Act 915).

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AT – Nov 2024 – L3 – Q2a – Tax Treatment of Decommissioning Funds in Petroleum Operations

Explain the tax treatment of decommissioning funds in petroleum operations.

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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 – Q5b – Withholding Tax & VAT Calculation

Compute VAT and direct tax withheld on a taxable supply of medical consumables to a tax withholding agent.

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PT – Nov 2024 – L2 – Q5a – Notification to Commissioner-General for Non-Resident Contracts

Requirements for notifying the Commissioner-General when a resident contracts a non-resident.

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PT – Nov 2024 – L2 – Q2e – Tax Audit and Under-declaration of Sales

Action to be taken regarding an under-declared sales revenue during a tax audit.

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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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ATAX – May 2019 – L3 – Q3 – Taxation of Companies

Prepare capital allowance computations and tax liabilities for Pardo Nigeria Limited based on its financial data and asset acquisitions.

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TAX – May 2023 – L2 – SC – Q7 – Tax Incentives and Reliefs

Explain tax incentives and penalties for enterprises in export processing zones.

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TAX – Nov 2020 – L1 – SA – Q4 – Tax Incentives and Reliefs

Identify which taxpayers are not eligible to participate in VAIDS.

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TAX – May 2021 – L1 – SB – Q4a – Companies Income Tax (CIT)

Conditions for the allowability of donations under the Companies Income Tax Act.

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TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

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TAX – May 2018 – L2 – Q5b – Tax Administration and Enforcement

Explain briefly conditions for granting capital allowances.

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TAX – May 2018 – L2 – Q5a – Tax Administration and Enforcement

Explain rules that guide the determination of residence for individuals.

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TAX – May 2018 – L2 – Q4b – Tax Administration and Enforcement

Explain the rules guiding the cessation of business for Jobi Nig. Enterprises.

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TAX – May 2019 – L2 – Q7b – Tax Administration and Enforcement

Identify the types of information disclosed in a tax clearance certificate.

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FR – April 2022 – L2 – Q5c – Professional and Ethical Issues in Financial Reporting

Discuss safeguards for mitigating threats to ethical behavior in the context of tax compliance.

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TXF – May 2020 – L2 – Q2b – Value-Added Tax (VAT)

This question asks for the computation of VAT withholding taxes for goods invoiced to a VAT Withholding Agent.

You're reporting an error for "TXF – May 2020 – L2 – Q2b – Value-Added Tax (VAT)"

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