Series: AUGUST 2020

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  • 20 Marks

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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  • 20 Marks

STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

Some scholars argue that from a strategic tax planning perspective, debt financing provides more tax benefits to companies than equity financing for investors.

Required
With the aid of appropriate authorities, discuss the accuracy or otherwise of the above assertion.

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  • 20 Marks

STP – Aug 2020 – L2 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

Obibini Ghana Limited is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31st December each year. In order to raise additional capital to expand its activities, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with a potential investor and the parties expect the transaction to be completed on 31st January 2020. The financial statements of the company revealed that the company made a loss of GH₵2,500,000 for the period ended 31st December 2019. The company also had financial cost of GH₵100,000.00
The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH₵100,000.00. The current value of the land is GH₵500,000.00

Required
The managers of the Obibini Ghana are seeking your opinion on the following:
i. the income tax implications for the company if an investor acquires 51% of the company’s shares.

ii. The tax planning opportunities available which could reduce the income tax exposure of company if an investor acquires 51% of the company’s shares.

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  • 20 Marks

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

Mr. Kofi Opoku is the direct shareholder of Unique Farms Ghana Limited and Speed Transport Ghana Limited. Unique Farms is engaged in tree crop farming and the company harvested the tree crops for the first time in 2019. In April, 2020, he received a copy of the audited financial statements of the two companies.
An analysis of the audited financial statements of the companies revealed the Unique Farms Ghana Limited is more profitable of the two companies. Speed Transport Ghana Limited however requires a lot of money for its operating activities and it mostly resorts to borrowing from financial institutions to meet its expenditure requirements. The high borrowing costs was affecting the profitability of the company.
Mr. Opoku also noticed that tax exposure on his investments is not ideal. Mr. Kofi Opoku has been informed that you are an expert in strategic tax planning.

Required
You are required to help Mr. Kofi Opoku restructure his companies in a manner that would provide a cheaper financing option for Speed Transport Ghana Limited and reduce his overall tax exposure on the investments.

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  • 20 Marks

STP – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

The Council of the Chartered Institute of Taxation, Ghana (CITG) has invited you to speak at a Continuous Development Program (CPD) on the topic “The distinction between tax planning schemes and tax avoidance arrangements under Ghanaian tax laws”.
In the letter of invitation, the Council indicated that you are to submit a detailed write-up of your presentation.

Required
With the aid of appropriate examples and specific references to Ghanaian tax law provisions, write in sufficient detail, the content of your presentation.

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation

Compute capital allowances, crude oil distribution, income tax, and government revenue for Sapele Petroleum and Mahogany Production in 2019.

Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated are joint venture partners who have 45% and 35% interest respectively in the Upstream Fields in Ghana. They commenced exploration in 2011 and discovered hydrocarbons in commercial quantities in 2013.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 150 million, Royalty of 5%, Initial (Carried) Interest of 15%, Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Mahogany Production is the operator of the Upstream Fields. Production commenced in the Upstream Fields in 2019. Information available on the oil and gas exploration and production operations in the Upstream Fields are as follows:

Up to 31/12/2017 US$
Exploration Costs 250,000,000.00
Development Costs 2,000,000,000.00
Bonus 150,000,000.00

As at 31/12/2018 US$
Exploration Costs 100,000,000.00
Development Costs 1,500,000,000.00
Interest on loan for installation of equipment & facilities 100,000,000.00

NB. The loan was contracted by the operator on behalf of the parties that hold interest in the Upstream Fields

As at 31/12/2019 US$
Exploration Costs 40,000,000.00
Development Costs 400,000,000.00
Average production cost per barrel 15.00
Average Price of crude oil per barrel 40.00
2019 Production 50,000,000 barrels

You are required to compute the following, and also state the assumptions underlying your computations:
i. Capital allowance entitlements of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated.
ii. Distribution of crude oil.
iii. 2019 income tax liability of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated in accordance with the provisions of the Income Tax Act, 2015 (Act 896).
iv. Total revenue that will accrue to Government of Ghana.

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities

Compute tax liabilities for ABC Mines Ltd for 2019, including royalty, withholding, income, and capital gains taxes.

ABC Mines Ltd. is a mining company operating in the Underground Mine. Commercial production commenced in the Underground Mine in 2019. ABC Mines Ltd also has mineral rights in the Surface Mine which is yet to commence commercial production. In 2019, ABC Mines Ltd. disposed of its mineral rights in Surface Mine.

The highlights of 2019 revenue and expenditure disclosed in tax returns filed by ABC Mines Ltd. are as follows:

Revenue GHe
Gross income from its operations in 2019 450,000,000
Realised sum from disposal of mineral rights in Surface Mine 100,000,000
Hedging Income 40,000,000
Total Revenue 590,000,000

Expenses include but not limited to the following:

Expenses GHe
Reconnaissance & Prospecting Cost (Underground Mine) 100,000,000
Reconnaissance & Prospecting Cost (Surface Mine) 50,000,000
Depreciation 20,000,000
Expenses on Hedging transactions 10,000,000
Operating Expenses (Underground Mine) 80,000,000
General and Administration Expenses (Surface Mine) 20,000,000
Interest Expense (Underground Mine) 20,000,000
Profit before tax 200,000,000

You are required to compute the liability for each tax type that ABC Mines Ltd will pay in the 2019 year of assessment. State the underlying assumptions of your computations.

Additional Information:
Minerals produced in the Underground Mine worth GHS40,000,000 was destroyed in the leased area. An amount of GHS35,000,000 was paid as insurance claims to ABC Mines Ltd in respect of the minerals destroyed.

Tax Rates Rate
Income Tax Rate for Companies 25%
Mineral Income Tax Rate 35%
Mineral Royalty Rate 5%
Interest Withholding Tax Rate 8%
Capital Allowance Rate 20% on straight line basis
Capital Gains Tax Rate 15%

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q3 – Disposal of Petroleum Rights

Explain direct and indirect disposal of petroleum rights under the Income Tax Act.

(a). Write short notes on Direct and Indirect disposal of petroleum rights as provided for under the Income Tax Act, 2015 (Act 896).

(b). Write short notes on Pricing of Crude Oil.

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q2 – Ring Fencing

Explain Ring Fencing and its provisions under the Income Tax Act for mining operations.

(a). Explain briefly the concept of Ring Fencing and state how it is provided for in respect of Minerals and Mining Operations under the Income Tax Act, 2015 (Act 896).

(b). Write short notes on Additional Participating Interest and Additional Oil Entitlement.

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  • 20 Marks

OGMT – Aug 2020 – L1 – Q1 – Petroleum Holding Fund

Explain the Petroleum Holding Fund and its disbursement process.

(a). Write short notes on Petroleum Holding Fund (PHF) and how funds are disbursed from the PHF.

(b). The petroleum industry has three different but related operations and/or activities. Mention the three operations and explain the activities involved in each operation.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q3 – Income Tax Computation

Compute Dr Kodwo Kusi-Appiah’s tax liability for 2017, including salary and consultancy income.

Dr Kodwo Kusi-Appiah, a physically challenged, is a lecturer at University of Ghana, School of Veterinary Medicine. He dedicates most of his free time providing consultancy services in animal health biosecurity to his clients and Animal Husbandry services in his piggery. He is also a member of team of consultants who provides consultancy services to the Ministry of Food and Agriculture, Animal Production Directorate. In terms of his service contract with Animal Production Directorate, he is required to participate in all anthrax out breaks for cattle and swine fever for pigs. His service contract is for a year, subject to renewal as and when donor funds are available. All the consultancy team members of which Dr Kusi Appiah was one, were paid a predetermined monthly salary GH¢ 4,000 each and an all – inclusive field attendance allowance of GH¢ 1,000.00 each, per day at any disease outbreak site in any part of the country. During the year under review, there was no outbreak of any of the diseases that warranted their field visit.

Dr Kusi-Appiah’s private consultancy practice to Cattle, Pigs and Poultry farmers is strictly by appointment and his clientele base has been growing steadily due to his dedication to work and experience. He earned a total of GH¢12,000 during the year ended 31st December, 2017.

Dr Kusi-Appiah’s earnings and deductions from his employment at the University of Ghana for the year ended 31 December 2017 were:

Item GH¢
Basic Salary 60,000.00
Transport allowance 3,000.00
M Phil Supervision 2,500.00

10% of Basic Salary in lieu of leave

Other benefits from his Employment with the University include:

a) 5.5% of Basic Salary contributions to SSNIT and the 1st Tier Pension Fund. He also contributes 10% of his salary to Staff Savings Scheme to which his employer does not contribute.

b) Soft Furnished Accommodation at the University of Ghana.

c) He was granted two months’ salary advance on 1st February, 2017 to meet the medical treatment of his wife Mrs Rhoda Kusi-Appiah in London. The loan is repayable within one year at an interest rate 10%.

The following additional information are available on the other earnings of Dr Kusi Appiah. He started a piggery project, trading as Kusi-Appiah Farms on 1st January, 2012. The net income from the operations of the piggery for the year ended 31st December, 2017 was GH¢10,500.00

He earned GH¢24,000.00 in respect of his private consultancy services during the year ended 31st December, 2017. With the exception of a total tax of GH¢13,500.00 paid at source from his earnings as a lecturer and GH¢3,600.00 withheld by the Ministry of Agriculture, no other taxes were paid.

You are required to compute the tax liability of Mr Kodwo Kusi –Appiah for the 2017 Year of Assessment.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

Mr Paa Kwesi Arthur returned to Ghana after staying in the Netherlands for over 20 years and took up an appointment with Amanfro Limited as Investment Analyst effective 1st January 2019. His gross monthly basic salary for 2019 year of assessment was GH¢12,000.00. He contributed 5.5% and 10% of his monthly basic salary to Social Security and National Insurance Trust (SSNIT) and Goodwill Pension Trust respectively.
Mr Paa Kwesi Arthur, is a widow and all his children are schooling in the Netherlands. He is only responsible for the up keep of his biological parents, who are above seventy years of age.

Mr Paa Kwesi Arthur has investments in Germany, from which he earned a gross dividend of 12,000 Euros in 2019, from which 720 Euros was withheld as dividend tax and the balance remitted to him in Ghana. There is a Double Taxation Agreement between Ghana and Germany.

The rate of Exchange is GH¢6.2 to 1.00 Euro.

Required:

a) Compute the tax liability of Mr Paa Kwesi Arthur for 2019 Year of assessment.

b) Explain the basis of your computation.

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  • 20 Marks

TAI – Aug 2020 – L1 – Q4 – Audit Review and Reporting

Recommend examination procedures for reviewing God’s Time Ltd.’s profit forecast for COVID-19 financial assistance.

In order to assist businesses during the COVID-19 period, the Government of Ghana has announced various packages including financial assistance to various companies and other Small and Medium Enterprises. Your firm, Prosper & Co has been approached to perform an assurance engagement for God’s Time Ltd; the engagement will be a review of prospective financial information which is needed to support the company’s application for financial assistance provided under COVID-19 facilities. God’s Time Ltd had its financial year ended 31st December each year.

The operating profit forecast for the two years to 31st December 2020 prepared by a member of the accounting team of God’s Time Ltd is shown below, along with some accompanying notes.

Six months to 30th June 2019 Six months to 31st Dec. 2019 Six months to 30 June. 2020 Six months to 31st Dec. 2020
GH¢ GH¢ GH¢ GH¢
Earnings 2,801,597 3,088,680 4,210,265 4,429,728
Direct costs 2,135,938 2,315,746 3,413,711 3,618,584
Gross Profit 665,659 772,934 796,554 811,144
Operating Exp.
Wages & Salaries 168,452 184,864 209,546 218,762
Advertising 13,840 20,542 28,548 31,540
Design costs 21,580 32,456 50,452 43,546
Marketing 10,896 12,458 16,520 34,450
Interest on Loan 45,543 48,620 51,654 60,542
Other Operating Exp 266,264 309,173 318,622 324,458
Net Profit 139,084 164,821 121,212 97,846

Additional Notes: i. God’s Time Ltd is a producer of greetings cards and giftware; the demand for which is seasonal in nature.

ii. Design costs are mostly payroll costs of the staff working in the company’s design team, and the costs relate to the design and development of new product ranges.

iii. The total ‘Other expenses’ is calculated based on 40% of the projected revenue for the six-month period.

iv. In 2019, the company was granted a loan facility to complete the ongoing factory project.

Required:

Recommend the examination procedures which should be used in the review of the profit forecast.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      (B)

You are the supervisor in-charge of the audit of Titi bidi Construction Company Limited. The audit of the company is near completion, and you are finalizing the audit report. As part of your final review, you want a confirmation that, the tax liability as reported is accurate and as such there is no liability that has not been captured.

Required:

Outline the audit steps to verify that, all tax payments and tax credits has been captured and the liability as reported is accurate.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q1 – Indirect Taxes

Calculate NHIL, GET Fund, VAT, and Withholding Tax for Fafali Ghana Limited for January 2019.

Fafali Ghana Limited produces aluminium roofing sheets for both the domestic market and exports to other West African countries. The company is registered with the Ghana Revenue Authority for Value Added Tax (VAT). The company’s transactions during the month of January, 2019 were as follows:

Item GH¢
Sales (VAT Inclusive) 6,804,000.00
Exports to Sierra Leone (US Dollars) 120,000.00
Relief Supplies 148,000.00
Purchase of Modelling Equipment 160,500.00
Staff Training (VAT Inclusive) 10,800.00
Assembly of Equipment (US Dollars) 15,600.00
Alumina imported (All duties paid at importation) 141,750.00
Local Purchases 180,000.00

Unless otherwise stated, Sales and Purchases are all Value Added Tax exclusive. National Health Insurance and GET Fund Levies are also exclusive except where it has been specifically stated. The assembling of equipment was a payment made to a foreign consultant for the service rendered. The average exchange rate for the month was GH¢5.5 to one US dollar.

Required:

a) Calculate the NHIL and GET fund levies, VAT payable, if any, and Withholding Tax for January 2019.

b) State the last date when each payment is due.

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  • 20 Marks

TAI – Aug 2020 – L1 – Q3 – Audit Review and Reporting

Comment on matters and audit evidence for bad debt provisions and VAT claims of Mina Macarthy Limited for 2019.

(a) You are a tax audit team leader responsible for the audit of Mina Macarthy Limited.

Mina Macarthy Limited owns a block of flats and earns its income through rentals and general dealing. On 1st January 2019, the ledger accounts of the company included the following balances.

Debtors’ account GH¢475,000

Provision for doubtful debts account GH¢ 42,235

The balance on the provision account consisted of the following: GH¢

Specific provision of 100% against the debt of Charles Sulemana, a tenant 31,500

General provision of 1% against remaining debts
12,235

During the year ended 31st December 2019, the following events occurred.

i. Charles Sulemana paid Mina Macarthy GH¢11,150 and then vanished without trace to new world, leaving no assets.

ii. Another tenant, Antonio Banderas, who owed GH¢3,900 fell into a river and was also found to have died penniless.

iii. Azuma Nickson returned from total obscurity and paid an amount of GH¢6,450 which Mina Macarthy Ltd had written off in 2017.

iv. Credit sales for the year amounted to GH¢8,167,400 and cash received from debtors (other than Sulemana and Azuma) totaled GH¢3,150,000

v. On 31st December 2019, Mina Macarthy Ltd decided to provide in full against a disputed debt of GH¢51,200 owed by Kwesi Otoo Pratt, and to maintain the 1% general provision on other debtors.

Additional notes

The company has submitted its returns for 2019 which showed a profit before tax of GH¢375,650.

Required: Comment on the matters to be considered. In addition to your comments, explain the audit evidence expected to be obtained during your review of Mina Macarthy Limited’s audit working papers prepared by the audit team member in respect of each of the issues described above.                                                                                                                                                                                                                                                                                                                                                                                                                             (bi)

In order to claim a VAT bad debt, a business must show proof of the bad debt.

Required:

i. Explain how a bad debt may arise for VAT.

(bii) In order to claim a VAT bad debt, a business must show proof of the bad debt.

Required:

ii. Explain the circumstances under which a bad debt relief can be claimed.

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  • 20 Marks

TAI – Aug 2020 – L1 – Q2 – Taxpayer File Review

Explain six key reasons for reviewing a taxpayer’s file before a field audit.

(A) The tax auditor’s initial objective in pre-contact analysis is to collect relevant background materials and information to build a general picture of the taxpayer and its operations. Preparing for and obtaining the essential information about the taxpayer ensure that the audit is conducted efficiently and effectively.

Required: Enumerate and discuss six (6) key reasons why taxpayer’s file is reviewed prior to the field audit?

(B) Information from prior audit report and file may assist the auditor in his or her current exercise.

Required: Clearly outline and discuss any four (4) reasons why it is important to review the previous audit report or contact the previous tax auditor when preparing to undertake a current audit assignment.

(C) In the course of a tax audit, certain critical information on the audit should be communicated to the audit supervisor or manager as soon as the tax auditor took notice of them.

Required: Mention six (6) of such information that may require such action.

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  • 20 Marks

TAI – Aug 2020 – L1 – Q1 – Tax Audit Roles

Explain five roles of the tax audit and investigation program in Ghana's tax administration.

(A) The audit program of Ghana Revenue Authority performs a number of important roles that, if effectively carried out, can make a significant contribution to improve administration of the tax system in the country.

Required: Explain five roles tax audit and investigation program performs in the tax administration of Ghana.                                                                                                                                                                                                                                                                                   (B)

The efficiency and effectiveness of Ghana Revenue Authority’s audit activities depend mainly on the nature and scope of powers in the underlying legal framework in place. Among such powers includes the provision of adequate powers for obtaining information and an appropriate regime of sanctions to deter and penalize non-compliance.

Required: State and briefly describe five (5) key elements of legal framework relating to the tax audit function of Ghana Revenue Authority as under the tax laws and administration of Ghana.

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  • 20 Marks

IT – Aug 2020 – L1 – Q5 – Exchange of Information

Analyzes application of Article 26 OECD MTC on exchange of information, including relevance, bank secrecy, and trade secrets.

This question concerns the application of Article 26 OECD MTC. Sub-questions (1)-(4) will allow students to demonstrate their awareness of the major conditions envisaged by Article 26 OECD MTC and apply them in various contexts.

Part 1
a) The exchange of information is governed by Article 26 OECD MTC.
b) In a nutshell, under Article 26(1) the competent authorities of the Contracting States shall exchange such information as is foreseeably relevant to secure the correct application of the provisions of the Convention or the domestic law of the Contracting States concerning taxes of every kind and description imposed in these States.
c) The reference to “foreseeably relevant” seeks to provide for exchange of information to the widest possible extent. Yet, at the same time, Contracting States may not engage in “fishing expeditions” or request information that is unlikely to be relevant to define the tax liability of a particular taxpayer. In this respect, the Commentary recommends looking for a reasonable possibility that the requested information will be relevant.
d) On the given facts, the relevance of the open-ended request for information submitted by South Africa (SA) tax authority can be questioned. SA seems to be engaging in “fishing expeditions” (in other words, has made a speculative request that has no apparent nexus to an open inquiry or investigation).

Part 2
a) This factual scenario satisfies the conditions set out by Article 26 OECD MTC. The requested information appears to be foreseeably relevant to secure the correct application of laws in Netherland
b) Even if the information about accounts opened in the name of John Walker may turn out to be immaterial, the Commentary to Article 26(1) in paragraph 5 clarifies that it does not matter whether the information (once provided) will actually prove to be relevant.
c) Therefore, a request in an ongoing investigation, where a definite assessment of the relevance can only be made upon receipt, cannot be refused. Hence, Ghana Revenue Authority is obliged to provide the requested information. This conclusion can be supported by a similar example included in paragraph 8(e) of the Commentary to Article 26(1).
d) In relation to the possibility of refusing the request on the ground that such information is held by National development Bank, Article 26(5) stipulates that a Contracting State shall not decline to supply information to a treaty partner solely because the information is held by a bank or other financial institution.
e) In effect, paragraph 5 overrides paragraph 3 of Article 26: the latter would otherwise permit a requested Contracting State to decline to supply information on the grounds of bank secrecy (paragraph 19.11 of the Commentary to Article 26(5)). Any further comments on international developments concerning transparency and/or bank secrecy will be rewarded by a higher mark.

Part C
a) According to Article 26(3)(c), paragraphs 1 and 2 of this article cannot be construed so as to impose on a Contracting State the obligation to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process. However, secrecy in this context should not be interpreted too broadly in order to make sure that the overall effectiveness of Article 26 is not undermined.
b) A Contracting State should carefully weigh whether the interests of the given taxpayer really justify the application of this provision (Commentary to Article 26(3), paragraph 19). Ghana Revenue Athority in these circumstances is given a certain discretion as to whether it should refuse the request.
c) If it does choose to supply the information, the taxpayer cannot allege an infraction of the rules of secrecy (Commentary to Article 26(3), paragraph 19).
d) As made clear by paragraph 19.2 of the Commentary to Article 26(3), in limited circumstances the disclosure of financial information might reveal a trade, business or other secrets.

Part D
As paragraph 9 of the Commentary to Article 26(1) explains, the exchange of information can happen in three ways: (i) on request, (ii) automatically and (iii) spontaneously.

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  • 20 Marks

IT – Aug 2020 – L1 – Q4- Non-Discrimination

Discuss non-discrimination under Article 24 of MTC regarding nationality, statelessness, PE, deductions, and capital ownership.

Non discrimination

A. Article 24 of the MTC deals with the elimination of tax discrimination in certain precise circumstances. It deals with discrimination on the basis of nationality, statelessness, the permanent establishment of an enterprise, non-residence specifically in relation to the deductibility of certain payments (e.g. interest and royalties), and non-resident direct investors ( share capital)                                                                                                                                                                                                                                                                B. Bearer Shares and Bearer Banks

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  • 20 Marks

IT – Aug 2020 – L1 – Q3 – Permanent Establishment

Analyze if technical experts’ presence in Ghana constitutes a Service PE under Article 5 of Ghana-Netherlands DTA.

(A) This question must be answered within the context of permanent establishment under Article 5 (1) of DTA between Ghana and Netherland and within domestic tax law. The presence of the technical expert may likely constitute a Service PE.                                                                                                                                                                                                                                                                                        (B)This question is based on the Article 10 (Dividend) of Double Tax Agreement (DTA). It also espoused the concept of Beneficial Ownership Concept in Paragraph 2 of Art 10 of the DTA.

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