STP – Aug 2012 – L3 – Q3 – Tax Responsibilities

Advise BIC on VAT, corporate, expatriate, and withholding tax responsibilities.

Question

Broadway International Contractors (BIC) won the bid to construct the George Bush highway for five years but was ill advised about the tax responsibilities in respect of the construction work.

The GRA conducted a tax audit on completion of the project and noted several weaknesses in BICs tax compliance requirements.

As Tax Consultant you have been approached by BIC to advise as appropriate on the tax effects of the work. In particular Broadway International Contractors would wish to receive advice on their
a) Basic VAT responsibilities (8 marks)
b) Basic corporate tax responsibilities (8 marks)
c) Expatriate Payroll liability (4 marks)
d) Withholding tax liability on payments receivable from the Ministry of Highways and payment for services? (2 marks)

Answer

a). i) Register as required with the GRA and to charge the VAT as required.
ii) To submit monthly VAT returns to the GRA in the form prescribed by regulations and to state the amount of tax payable for the period, the amount of input tax credit refund claimed and such others matters as may be prescribed.
iii) To keep VAT records as require by Act 564 supported by VAT invoices and to keep such invoices for at least 6 yrs and not to destroy any such book, document, account or record without the express permission of the CG.
iv) To display registration certificate conspicuously in office.
v) To charge the VAT as required by the VAT Act.
vi) Where registered, to notify the CG if
(a) Business ceases to operate or is sold or moves
(b) If there is material change in the ownership of the business
(c) Of any change

In the address of that person, or
In circumstances which makes the person no longer qualified for registration
Of a material nature in the business activities or in the nature of taxable supplies being made.
(Any 8 listing for 8 marks)

b)
a. Registration with the GRA
b. Furnishing of returns in the form required
c. To submit a self assessment, to receive a provisional assessment, a final assessment, and additional assessment.
d. Withholding tax responsibilities
e. Employee tax returns
f. To pay all taxes assessed or collected on behalf of the CG to the CG.
g. Object or appeal on an assessment raised by the CG on the company.
h. Notifying CG of additions to fixed assets.
i. Sec 86. Entering into contracts for the supply of goods and services.
(any 8 listing for 8 marks)

c)
a. Deduct withholding taxes on expatriate employees each monthly period.
b. Filling tax returns on behalf of the expatriate
c. Registration with the tax office
d. Object or appeal on an assessment raised by the CG on the expatriate.
e. Keep records in respect of the employment of the expatriate.
f. Pay tax due to the CG.
(any 4 listings for 4 marks)

d)
a. To deduct WHT on payments made and submit such payment to the CG on the 15th day following the month in which the deduction was made.
b. To pay such taxes withheld to the CG.
c. Submit returns iro the withholding taxes.
(Any 2 listings for 2 marks)

Tags: Corporate Tax, Expatriate Payroll, Tax Compliance, VAT Responsibilities, Withholding Tax
Level: Level 3

Topic: Strategic Indirect Tax Management
Series: AUG 2012

Uploader: Samuel Duah