PT – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

Question

Knaah-Shormeh Ltd has to settle Ghana Revenue Authority on the following tax liabilities:

Tax Liabilities Amount (GH¢)
Custom duties 1,000,000
Withholding Tax Surcharge 80,000
Value Added Tax 500,000
Corporate Tax 100,000
Total Liability 1,680,000
Additional Information:

50% of the Value Added Tax relates to imports.
The above came about from an adjusted assessment through an audit conducted and a report submitted on 31 January 2019.
The company has engaged Miracle Consultants, a firm of Tax Practitioners, to help it object to the assessment, claiming it is excessive and erroneous based on its facts and circumstances.
Required:
What conditions must be met by Knaah-Shormeh Ltd before the Commissioner-General makes a determination on the objection? (8 marks)

Answer

Knaah-Shormeh Ltd will need to meet the following conditions before the Commissioner-General makes a determination on their objection:

Filing an Objection:
Knaah-Shormeh Ltd must object to the tax decision in writing within 30 days from the receipt of the notice of assessment, stating the grounds on which the objection is made.

Extension of Time:
The Commissioner-General may grant an extension if the company applies for it before the expiry of the 30 days.

Payment of Taxes Before Objection:
The objection will not be entertained unless:

Custom Duties and Related Taxes: The company must fully pay all import duties and taxes associated with imports.
Other Taxes: The company must pay all outstanding taxes, including 30% of the taxes in dispute.
Custom Duties and VAT on Imports:
In summary, it will pay the custom duty fully and 50% of the value added tax before the determination:

Total payment before the objection is determined is 30% of GH¢ 430,000 which is
GH¢ 129,000.00
(8 marks)