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STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies

Calculate Honson Plc's tax liability for Kumasi/Accra, advise on Nsawam, and discuss non-tax factors for facility location.

Honson Pic, a UK-based manufacturing company, is planning to build a new processing facility in Ghana. The Chief Executive Officer in a meeting with Management needs to decide whether to cite the facility in Accra or in Kumasi. Market intelligence has no preference for citing the facility either 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-making process being considered by management.

Kumasi Accra GH¢ GH¢

Required: i. Calculate Hamson Plc’s income tax liability for each proposed location for the first year. ii. Would you advise Hamson Plc to consider citing the facility in Nsawam, taking into consideration the close proximity of Nsawam to Accra? iii. Discuss three (3) non-tax factors that Hamson UK Plc may consider in the decision-making process to locate the facility either in Kumasi, Accra or elsewhere in the country.

b). With reference to the Income Tax Act, 2015 (Act 896) explain the following: i. Private Ruling issued by the Commissioner-General: (2 marks) ii. Conditions under which a Private Ruling will be binding on the Commissioner-General and on the person to whom the Private Ruling is issued.

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STP – Feb 2007 – L3 – Q3 – Venture Capital Taxation

Present tax concessions for Venture Capital Operators compared to traditional banks.

As part of the post qualification requirements of The Chartered Institute of Taxation, you have been invited to do a presentation on the topic “Venture Capital Fund” to a select group of business men, tax professionals, financial institutions and students.

Invitation
Members of the Ghana Institute of Taxation and the Institute of Bankers wish to use this opportunity to strengthen the cordial relationship subsisting between them and have therefore invited you to do a presentation on the tax effects of Venture Capital Operators as compared with that of the traditional financial institutions.

Required:
Please prepare a presentation as required under Invitation above clearly distinguishing between Tax concessions granted to a Venture Capital as compared with the Bank.

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STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

The Swiss-Ghanaian Chamber of Commerce is organising a fair for some Swiss investors who intend to establish a chocolate manufacturing plant in Ghana. The investors intend to manufacture chocolates for the domestic and international markets.

Required
As an expert in strategic tax planning, the Chamber has invited you to speak on the tax incentives available for such investments and whether the location of the factory would have an impact on the tax incentives the investors can enjoy.

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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.

(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.

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STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

(b). A Ghanaian entrepreneur is looking for an ideal location to establish an orange juice processing facility. The initial feasibility studies conducted by consultants for the entrepreneur indicate that Tema, Takoradi and Nsawam have comparable economic conditions which will make an investment in any of these cities financially prudent. With reference to the provisions of the Income Tax Act, 2015 (Act 896) discuss the tax implications of establishing a manufacturing entity in Tema, Takoradi and Nsawam and advise the entrepreneur on the most tax efficient location to establish the entity.

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STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives

Advise on income tax benefits of coconut farming and processing factory.

a) Mr. Kwame Berko graduated from the University of Ghana in 2017. In 2019, he secured a Government of Ghana scholarship to pursue a master’s program in Agricultural Science at the University of Alabama in the United States of America. During the course of the master’s program, he developed unique ideas on how to establish a commercial farm and also engage in the processing of the farm products. On his return to Ghana, he decided to implement the ideas developed during his time at the University of Alabama. His business plan shows that he intends to: i. establish a farm to grow coconut and as well as an associated factory to process the coconut into milk for domestic consumption. ii. establish a poultry farm to produce chicken and eggs for domestic consumption.

Mr. Berko has submitted his business plan to you for tax advice.

Required: As a tax advisor of high repute, advise Mr. Kwame Berko on the following: a. the income tax benefits of farming coconut and establishing a processing factory.

b. the income tax benefits of establishing a poultry farm.

c. the most suitable place in Ghana to establish the farms and the factory in order to derive maximum tax benefits.

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AT – Mar 2025 – L3 – Q5 – Transfer Pricing

Prepare a functional analysis for a multinational group's entities from a transfer pricing perspective.

a) The global mobile technology industry is rapidly growing and Amega Cell LTD (AMC), has established itself as a leading Multinational Entity (MNE) in this industry. The AMC group is made up of entities involved in the manufacture, distribution and sale of media and communications processors (MCPs) that deliver advanced technologies and unmatched performance to desktop, mobile and professional systems.

Sarpeiman Technologies LTD (STL), in country A is responsible for conducting research and development, creating new MCPs for use in the telecommunication and mobile technology industry, as well as improvements in the design of MCPs. STL employs a number of highly skilled technical staff, including qualified software and electronic engineers. All of the AMC group’s intellectual property is legally owned by STL.

Resident in Country B is STL-Sub1, a wholly owned subsidiary of STL. STL-Sub1 is the entity in charge of manufacturing all of AMC’s products, making use of the know-how and intellectual property of STL. STL-Sub1 makes royalty payments to STL for the use of know-how in the manufacturing process for the MCPs. STL-Sub1 sells finished products to STL-Sub2 and STL-Sub3.

Resident in Country C is STL-Sub2, an entity which purchases finished goods from STL-Sub1 which it then distributes to end customers in the Country C. STL-Sub2 makes royalty payments to STL for use of the intellectual property attached to the products it sells to end customers.

Resident in Country D is STL-Sub3, an entity which purchases finished goods from STL-Sub1, which it then distributes to end customers in Country D. STL-Sub3 makes royalty payments to STL for the use of the intellectual property attached to the products it sells to end customers.

Each distributor entity within the group has an office, and employs highly-skilled staff involved in activities including administration, procurement, marketing and sales. Marketing and sales staff employed in this industry need to possess strong technical knowledge and communicate this to potential customers.

Required:

From a transfer pricing perspective, prepare a functional analysis of the parent company, indicating the entity characterisation for each group entity.

b) Chariston LTD, a US based company intends investing in Ghana for the first time. In the evaluation of the acquisition proposal, the following options are offered:

i) To acquire 50%

ii) To acquire 51%

The Ghanaian company identified as the target is into ceramic manufacturing and is located at Adukrom, a district capital in the Eastern Region of Ghana.

Required:

With practical illustrations, explain what Chariston LTD stands to benefit from both acquisition and also the implication for holding either option.

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ATAX – May 2016 – L3 – Q3 – Petroleum Profits Tax (PPT)

Analyze the taxation effects of incentives on Joint Ventures vs. Sole Risk operations, compute Tax Inversion Penalty, and explain Mineral Rights Acquisition Costs.

Ugheli Limited is operating a Joint Venture with NNPC under the Year 2000 Memorandum of Understanding, while Eket Limited operates under the Sole Risk Operation agreement.

The following information reflects the two companies’ operations for the month of July 2014:

Required:

(a)
i. Using the above information, compare the effects of Incentives on Joint Venture Operation as against the Sole Risk Operation using the two companies’ operations. (7 Marks)

ii. What is the purpose of Tax Inversion Penalty (TIP)? (4 Marks)

iii. Determine the Tax Inversion Penalty and the Revised Government Take from the operations of the two companies. (Tax Inversion Rate is 35%) (3 Marks)

(b) Explain the term “Mineral Rights Acquisition Costs.” (3 Marks)

(c) Explain briefly the differences between Joint Venture and Sole Risk Agreements under the Year 2000 Memorandum of Understanding. (3 Marks)

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ATAX – May 2017 – L3 – Q4a – Tax Incentives and Reliefs

List five incentives provided by the Federal Government of Nigeria to attract investors to the solid minerals sector.

Oil and Gas are major sources of revenue for the Federal Government of Nigeria (FGN). This has become a burden to the government due to its inability to control the volume of production and price. To ameliorate this burden, the FGN is seeking alternative sources of revenue, and solid minerals have been identified.

Required:
State FIVE incentives put in place by the Federal Government of Nigeria (FGN) to attract potential investors to the solid minerals sector. (5 Marks)

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ATAX – May 2017 – L3 – Q2b – Tax Incentives and Reliefs

List five tax incentives for companies utilizing associated gas in downstream operations.

State FIVE incentives available to a company engaged in the utilization of associated gas. (5 Marks)

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STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies

Calculate Honson Plc's tax liability for Kumasi/Accra, advise on Nsawam, and discuss non-tax factors for facility location.

Honson Pic, a UK-based manufacturing company, is planning to build a new processing facility in Ghana. The Chief Executive Officer in a meeting with Management needs to decide whether to cite the facility in Accra or in Kumasi. Market intelligence has no preference for citing the facility either 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-making process being considered by management.

Kumasi Accra GH¢ GH¢

Required: i. Calculate Hamson Plc’s income tax liability for each proposed location for the first year. ii. Would you advise Hamson Plc to consider citing the facility in Nsawam, taking into consideration the close proximity of Nsawam to Accra? iii. Discuss three (3) non-tax factors that Hamson UK Plc may consider in the decision-making process to locate the facility either in Kumasi, Accra or elsewhere in the country.

b). With reference to the Income Tax Act, 2015 (Act 896) explain the following: i. Private Ruling issued by the Commissioner-General: (2 marks) ii. Conditions under which a Private Ruling will be binding on the Commissioner-General and on the person to whom the Private Ruling is issued.

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STP – Feb 2007 – L3 – Q3 – Venture Capital Taxation

Present tax concessions for Venture Capital Operators compared to traditional banks.

As part of the post qualification requirements of The Chartered Institute of Taxation, you have been invited to do a presentation on the topic “Venture Capital Fund” to a select group of business men, tax professionals, financial institutions and students.

Invitation
Members of the Ghana Institute of Taxation and the Institute of Bankers wish to use this opportunity to strengthen the cordial relationship subsisting between them and have therefore invited you to do a presentation on the tax effects of Venture Capital Operators as compared with that of the traditional financial institutions.

Required:
Please prepare a presentation as required under Invitation above clearly distinguishing between Tax concessions granted to a Venture Capital as compared with the Bank.

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STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

The Swiss-Ghanaian Chamber of Commerce is organising a fair for some Swiss investors who intend to establish a chocolate manufacturing plant in Ghana. The investors intend to manufacture chocolates for the domestic and international markets.

Required
As an expert in strategic tax planning, the Chamber has invited you to speak on the tax incentives available for such investments and whether the location of the factory would have an impact on the tax incentives the investors can enjoy.

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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.

(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.

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STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

(b). A Ghanaian entrepreneur is looking for an ideal location to establish an orange juice processing facility. The initial feasibility studies conducted by consultants for the entrepreneur indicate that Tema, Takoradi and Nsawam have comparable economic conditions which will make an investment in any of these cities financially prudent. With reference to the provisions of the Income Tax Act, 2015 (Act 896) discuss the tax implications of establishing a manufacturing entity in Tema, Takoradi and Nsawam and advise the entrepreneur on the most tax efficient location to establish the entity.

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STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives

Advise on income tax benefits of coconut farming and processing factory.

a) Mr. Kwame Berko graduated from the University of Ghana in 2017. In 2019, he secured a Government of Ghana scholarship to pursue a master’s program in Agricultural Science at the University of Alabama in the United States of America. During the course of the master’s program, he developed unique ideas on how to establish a commercial farm and also engage in the processing of the farm products. On his return to Ghana, he decided to implement the ideas developed during his time at the University of Alabama. His business plan shows that he intends to: i. establish a farm to grow coconut and as well as an associated factory to process the coconut into milk for domestic consumption. ii. establish a poultry farm to produce chicken and eggs for domestic consumption.

Mr. Berko has submitted his business plan to you for tax advice.

Required: As a tax advisor of high repute, advise Mr. Kwame Berko on the following: a. the income tax benefits of farming coconut and establishing a processing factory.

b. the income tax benefits of establishing a poultry farm.

c. the most suitable place in Ghana to establish the farms and the factory in order to derive maximum tax benefits.

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AT – Mar 2025 – L3 – Q5 – Transfer Pricing

Prepare a functional analysis for a multinational group's entities from a transfer pricing perspective.

a) The global mobile technology industry is rapidly growing and Amega Cell LTD (AMC), has established itself as a leading Multinational Entity (MNE) in this industry. The AMC group is made up of entities involved in the manufacture, distribution and sale of media and communications processors (MCPs) that deliver advanced technologies and unmatched performance to desktop, mobile and professional systems.

Sarpeiman Technologies LTD (STL), in country A is responsible for conducting research and development, creating new MCPs for use in the telecommunication and mobile technology industry, as well as improvements in the design of MCPs. STL employs a number of highly skilled technical staff, including qualified software and electronic engineers. All of the AMC group’s intellectual property is legally owned by STL.

Resident in Country B is STL-Sub1, a wholly owned subsidiary of STL. STL-Sub1 is the entity in charge of manufacturing all of AMC’s products, making use of the know-how and intellectual property of STL. STL-Sub1 makes royalty payments to STL for the use of know-how in the manufacturing process for the MCPs. STL-Sub1 sells finished products to STL-Sub2 and STL-Sub3.

Resident in Country C is STL-Sub2, an entity which purchases finished goods from STL-Sub1 which it then distributes to end customers in the Country C. STL-Sub2 makes royalty payments to STL for use of the intellectual property attached to the products it sells to end customers.

Resident in Country D is STL-Sub3, an entity which purchases finished goods from STL-Sub1, which it then distributes to end customers in Country D. STL-Sub3 makes royalty payments to STL for the use of the intellectual property attached to the products it sells to end customers.

Each distributor entity within the group has an office, and employs highly-skilled staff involved in activities including administration, procurement, marketing and sales. Marketing and sales staff employed in this industry need to possess strong technical knowledge and communicate this to potential customers.

Required:

From a transfer pricing perspective, prepare a functional analysis of the parent company, indicating the entity characterisation for each group entity.

b) Chariston LTD, a US based company intends investing in Ghana for the first time. In the evaluation of the acquisition proposal, the following options are offered:

i) To acquire 50%

ii) To acquire 51%

The Ghanaian company identified as the target is into ceramic manufacturing and is located at Adukrom, a district capital in the Eastern Region of Ghana.

Required:

With practical illustrations, explain what Chariston LTD stands to benefit from both acquisition and also the implication for holding either option.

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ATAX – May 2016 – L3 – Q3 – Petroleum Profits Tax (PPT)

Analyze the taxation effects of incentives on Joint Ventures vs. Sole Risk operations, compute Tax Inversion Penalty, and explain Mineral Rights Acquisition Costs.

Ugheli Limited is operating a Joint Venture with NNPC under the Year 2000 Memorandum of Understanding, while Eket Limited operates under the Sole Risk Operation agreement.

The following information reflects the two companies’ operations for the month of July 2014:

Required:

(a)
i. Using the above information, compare the effects of Incentives on Joint Venture Operation as against the Sole Risk Operation using the two companies’ operations. (7 Marks)

ii. What is the purpose of Tax Inversion Penalty (TIP)? (4 Marks)

iii. Determine the Tax Inversion Penalty and the Revised Government Take from the operations of the two companies. (Tax Inversion Rate is 35%) (3 Marks)

(b) Explain the term “Mineral Rights Acquisition Costs.” (3 Marks)

(c) Explain briefly the differences between Joint Venture and Sole Risk Agreements under the Year 2000 Memorandum of Understanding. (3 Marks)

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ATAX – May 2017 – L3 – Q4a – Tax Incentives and Reliefs

List five incentives provided by the Federal Government of Nigeria to attract investors to the solid minerals sector.

Oil and Gas are major sources of revenue for the Federal Government of Nigeria (FGN). This has become a burden to the government due to its inability to control the volume of production and price. To ameliorate this burden, the FGN is seeking alternative sources of revenue, and solid minerals have been identified.

Required:
State FIVE incentives put in place by the Federal Government of Nigeria (FGN) to attract potential investors to the solid minerals sector. (5 Marks)

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ATAX – May 2017 – L3 – Q2b – Tax Incentives and Reliefs

List five tax incentives for companies utilizing associated gas in downstream operations.

State FIVE incentives available to a company engaged in the utilization of associated gas. (5 Marks)

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