- 20 Marks
AT – Mar 2025 – L3 – Q4 – VAT Cancellation
Explain the process for Batakari LTD to cancel its voluntary VAT registration under the Value Added Tax Act, 2013.
Question
a) Batakari LTD was incorporated on 1 January 2024, and has since accumulated a lot of input VAT credit it could not deduct because the company was not registered for VAT. The company had not yet registered for VAT because it was yet to start generating revenue, and did not expect any revenue in the 2024 financial year. The company therefore applied for voluntary VAT registration under the Value Added Tax Act, 2013 (Act 870 as amended) on 1 March 2024. However, the Finance Manager of the company upon registering for VAT, and noticing the need to still file monthly VAT returns, intends to apply for cancellation of the company’s VAT registration on 31 March 2025. Required: Batakari LTD needs your assistance on how to go about the VAT cancellation process.
b) As a tax expert, you have been approached by the Junior Accountants you work with in the Finance Department of Mando Advisors. They have been debating all morning on the exempt supplies and zero-rated supplies. According to the Junior Accountants, “exempt supplies and zero-rated supplies are similar, and there is no material difference, if any, between the two, since in both cases, there is no output tax charged”. Required: As an expert, explain to the Junior Accountants the difference between exempt supplies and zero-rated supplies. Your answer should focus on tax accounting and compliance obligations regarding exempt and zero-rated supplies.
c) Dekyiwaa LTD has been registered as a VAT Withholding Agent. The company has received three (3) invoices, and needs your assistance on the amount of withholding VAT to be withheld and remitted to the GRA. Assume the taxes charged on these invoices are in full compliance with the provisions of the Value Added Tax Act, 2013 (Act 870 as amended). Invoice 1 (for the supply of stationery for the business)
| GHc | |
|---|---|
| Invoice amount | 15,000 |
| VAT @ 3% | 450 |
| COVID Levy @ 1% | 150 |
| Tax-inclusive value | 15,600 |
Invoice 2 (for the supply of immovable property from an estate developer)
| GHc | |
|---|---|
| Invoice amount | 570,000 |
| VAT @ 5% | 28,500 |
| COVID Levy @ 1% | 5,700 |
| Tax-inclusive value | 604,200 |
Invoice 3 (for the supply of internet broadband services from an internet service provider)
| GHc | |
|---|---|
| Invoice amount | 500,000 |
| NHIL @ 2.5% | 12,500 |
| GETFL @ 2.5% | 12,500 |
| COVID Levy @ 1% | 5,000 |
| CST @ 5% | 25,000 |
| 555,000 | |
| VAT @ 15% | 83,250 |
| Tax-inclusive value | 638,250 |
Required: For each of the three (3) invoices above, calculate and justify the amount of Withholding VAT that Dekyiwaa LTD should withhold and remit to the Ghana Revenue Authority in line with the provisions of the Value Added Tax Act, 2013 (Act 870 as amended).
d) Fiscal policy measures are tools for economic management. These are meant to stabilise the economy and minimise distortions. One of such measures is contractionary fiscal policy. Required: Explain how the Government of Ghana could use contractionary fiscal policy to fight inflation. (5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Contractionary Policy, Fiscal Policy, Inflation, Tax Management
- Level: Level 3
- Topic: Tax Planning and Management
- Series: MAR 2025
