Topic: Indirect Taxes

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  • 20 Marks

ATP – Aug 2019 – L2 – Q4 – Notice of Assessmen

Explain Commissioner-General’s rights to issue Notice of Assessment and its contents.

a). You are a trainee in the office in Brown Green and Associates, a firm of Tax Practitioners. A gentleman, identified later as Mr Kwesi Sikasem walked in to the office fuming with anger saying that he had received a Notice of Assessment from the Ghana Revenue Authority demanding the payment of a total tax liability of 1.2 million Ghana cedis for 2017 and 2018 Years of Assessment. In the course of discussion you realised that he has been in business since October 2016.

Required:

Explain to Mr Kwesi Sikasem the rights of the Commissioner-General to issue a Notice of Assessment and state what is expected in a Notice of Assessment.

b). Mr Thomas Smith a retired employee of the US Border Security has approached you seek your advice on the possibility of forming a company as a Customs House Agent in Tema.

Required:

With reference to the Customs Act, 2015 (Act 891) as amended, advise Mr Thomas Smith on the categories of persons that can engage in the business of customs house agent

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  • 20 Marks

ATP – Feb 2020 – L2 – Q1 – Indirect Taxes

Compute GET Fund, NHIL, and VAT payable for Nyameaye Limited for January 2019.

a) Nyameaye Limited is a company registered under the Companies Act 1963, Act 179 and has been in consultancy business over the years. The company has been registered to operate as a Value Added Tax (VAT) registered company, since it deals in both taxable and non-taxable supplies.

The company’s operations for January, 2019 were as follows:

GH¢
Total value of taxable supplies invoiced (VAT inclusive) 4,353,372
Input Tax on Taxable Supplies 460,317
Value of Exempt Supplies 360,000
Purchase of double cabin Toyota Pick Up (VAT exclusive) 240,000
Value of relief Supplies 108,400

Your review of the invoices showed that VAT and other levies on the Toyota pick-up and hotel bills of GH¢1,880.00 were included in the Input Tax on Taxable supplies.

Required:
Compute the GET Fund Levy, National Health Insurance Levy (NHIL) and VAT payable for the month of January, 2019.

b)i. State and explain the treatments of transactions and filing of returns in respect of the following legislations: Value Added Tax Act, (Act 870); GET Fund levy Act, 2000 (Act 581) and National Health Insurance Levy Act, 2003 (Act 650).

ii. Concisely, outline how taxes are computed and filed under the following Amendment Acts: VAT (Amendment) Acts, 2018 (Act 970), and National Health Insurance Levy (Amendment) Act, 2018 (Act 971); GET Fund (Amendment) Act, 2018 (Act 972).

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  • 20 Marks

ATP – Feb 2017 – L3 – Q2 – VAT Returns

Explain what VAT Returns are for a newly registered company.

The Managing Director of EDVALLEY (Ghana) Limited, a newly registered company, has approached you to assist their company to comply with the Value Added Tax law in Ghana. They have asked you specifically to assist in the area of VAT Return and payment of the related tax.

Required:

a) Explain what VAT Returns are (4 Marks)

b) Advise the Managing Director company with respect to registration, submission of returns and the payment of the tax. (10 Marks)

c) A person with turnover below the registrable level could apply voluntarily to the Commissioner-General to be registered as a taxable person.

Required:

Outline the circumstances under which the Commissioner–General could refuse the request to register a taxable person. (6 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q1 – Tax Avoidance

Explain arrangement and tax avoidance with examples under Income Tax Act 2015.

a). Section 34 (i) of the Income Tax Act, 2015 (Act 896) states that:

“For the purpose of determining liability of tax under this Act, the Commissioner-General may re-characterize or disregard an arrangement or part of an arrangement that is entered into or carried out as part of tax avoidance scheme:

a. Which is fictitious or does not have a substantial economic effect, or

b. Whose form does not reflect its substance’’

Required:

Briefly explain with two examples for each of the following:

i. Arrangement (5 Marks)

ii. Tax avoidance (5 Marks)

b). Under the Customs, Excise and Preventive Service (Management) Law, 1993 PNDCL 330; explain the following:

i) Quarantine (2 Marks)

ii) Drawback (2 Marks)

iii) Excisable goods (2 Marks)

iv) Uncustomed goods (2 Marks)

v) Rummaging (2 Marks)

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  • 20 Marks

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Tosese Limited is a company registered in Ghana under the Companies Act 1963, Act 179 and has been in operation for several years. The company has been noted by the Tax Authorities for being non tax compliant and no returns were submitted and paid for direct taxes in the 2015 year of assessment. However, after much Tax Education with the support of his Tax Practitioner, the Finance Manager presented the financial statement to the GRA.

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description GH¢
Turnover 5,640,000.00
Direct Costs 4,840,000.00
Gross Profit 800,000.00
Administration and General Expenses 560,000.00
Profit before Tax 240,000.00
Taxation 60,000.00
Profit after Tax 180,000.00
Net Profit Transferred to Income Surplus 180,000.00

Income Surplus Account

Description GH¢
Balance brought forward 1,575,000.00
Add Profit for the year 180,000.00
Balance carried forward 1,755,000.00

The details of the notes are shown below. Note 1. The company is registered for VAT and has not been submitting its returns regularly. The turnover per the VAT Returns submitted to the Commissioner-General during the period under review was GH¢5,080,000.00

Note 2. Direct Costs

Description GH¢
Imports 3,684,000.00
Freight and Insurance 368,400.00
Import Duties 736,800.00
Transport 50,800.00
Total 4,840,000.00

Note 3. Administration and General Expenses included

Description GH¢
Consultancy Fees 25,000.00
Printing and Stationery 84,000.00
Rent (Commercial Property) 61,280.00
Equipment Rentals 15,000.00
Directors Fees 60,000.00

Note 4. The Company since incorporation has never declared and paid any dividend to its four shareholders even though the company has consistently been declaring profit. The Commissioner-General has therefore decided to invoke Section 59 (8) of the Income Tax Act, 2015 Act 896 by notice in writing to apply 40% of the balance on the Income Surplus Account to Dividend Tax.

Required: You are to determine the tax liability due from the company in respect of direct and Indirect Taxes for 2015 year of assessment, including any relevant penalties that are applicable. Ignore Corporate Tax. Total 20 Marks.

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  • 20 Marks

ATP – Feb 2016 – L2 – Q4 – Transaction Value and Goods Classification

Explain transaction value and distinguish between identical and similar goods for customs purposes under PNDCL 330.

a). Section 30 of the Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended provides, among other things, that the transaction value of an item is to be used for Customs purposes.

i) What is “transaction value”? (3 marks)

ii) Distinguish between “identical goods” and “similar goods” in the ascertainment of transaction value. (8 marks)

b). In what circumstances shall excise duty not be paid on goods as provided for in section 57(2) of Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended. (9 marks)

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  • 20 Marks

AT – Mar 2025 – L3 – Q3 – Tax Planning and Ethical Issues

Explain differences between tax planning and aggressive tax avoidance, manage conflict of interest, and benefits of foreign debt over domestic debt.

a) It has been said that there is a thin line between tax planning and tax avoidance. The line is a little thinner when one compares tax planning to aggressive tax avoidance. Required: Explain the areas of divergence between tax planning and aggressive tax avoidance. Do you however think the two may be similar in any way? (10 marks)

b) A conflict of interest occurs when an individual’s personal interests – family, friendships, financial or social factors such as serving two or more competing clients could compromise his or her judgement, decisions or actions in the performance of his/her duties. You are a tax expert at Pompor & Associates, a firm of Chartered Accountants and Tax Practitioners. Your third assignment is to carry out a tax health check into the affairs of one of the clients of your firm where your interest is likely to conflict. Required: Explain how you are likely to manage the actual or potential conflict of interest situation. (5 marks)

c) The Bank of Ghana’s summary of Economic and Financial data has over the years shown the escalating nature of Ghana’s public debt. Successive governments keep blaming themselves that despite the huge debts contracted over the years there is little development across the country. Published statistics also show that the total foreign debts mostly contracted outstrip the total domestic debt. You are the head of the Policy Unit of the Ministry of Finance who work closely with the Chief Director of the Ministry. Required: Draft a report for the perusal of the Chief Director for onward submission to the Minister to be tabled for cabinet discussion on FOUR benefits of foreign debt over domestic debt. (5 marks)

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  • 20 Marks

ATP – Aug 2019 – L2 – Q4 – Notice of Assessmen

Explain Commissioner-General’s rights to issue Notice of Assessment and its contents.

a). You are a trainee in the office in Brown Green and Associates, a firm of Tax Practitioners. A gentleman, identified later as Mr Kwesi Sikasem walked in to the office fuming with anger saying that he had received a Notice of Assessment from the Ghana Revenue Authority demanding the payment of a total tax liability of 1.2 million Ghana cedis for 2017 and 2018 Years of Assessment. In the course of discussion you realised that he has been in business since October 2016.

Required:

Explain to Mr Kwesi Sikasem the rights of the Commissioner-General to issue a Notice of Assessment and state what is expected in a Notice of Assessment.

b). Mr Thomas Smith a retired employee of the US Border Security has approached you seek your advice on the possibility of forming a company as a Customs House Agent in Tema.

Required:

With reference to the Customs Act, 2015 (Act 891) as amended, advise Mr Thomas Smith on the categories of persons that can engage in the business of customs house agent

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  • 20 Marks

ATP – Feb 2020 – L2 – Q1 – Indirect Taxes

Compute GET Fund, NHIL, and VAT payable for Nyameaye Limited for January 2019.

a) Nyameaye Limited is a company registered under the Companies Act 1963, Act 179 and has been in consultancy business over the years. The company has been registered to operate as a Value Added Tax (VAT) registered company, since it deals in both taxable and non-taxable supplies.

The company’s operations for January, 2019 were as follows:

GH¢
Total value of taxable supplies invoiced (VAT inclusive) 4,353,372
Input Tax on Taxable Supplies 460,317
Value of Exempt Supplies 360,000
Purchase of double cabin Toyota Pick Up (VAT exclusive) 240,000
Value of relief Supplies 108,400

Your review of the invoices showed that VAT and other levies on the Toyota pick-up and hotel bills of GH¢1,880.00 were included in the Input Tax on Taxable supplies.

Required:
Compute the GET Fund Levy, National Health Insurance Levy (NHIL) and VAT payable for the month of January, 2019.

b)i. State and explain the treatments of transactions and filing of returns in respect of the following legislations: Value Added Tax Act, (Act 870); GET Fund levy Act, 2000 (Act 581) and National Health Insurance Levy Act, 2003 (Act 650).

ii. Concisely, outline how taxes are computed and filed under the following Amendment Acts: VAT (Amendment) Acts, 2018 (Act 970), and National Health Insurance Levy (Amendment) Act, 2018 (Act 971); GET Fund (Amendment) Act, 2018 (Act 972).

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  • 20 Marks

ATP – Feb 2017 – L3 – Q2 – VAT Returns

Explain what VAT Returns are for a newly registered company.

The Managing Director of EDVALLEY (Ghana) Limited, a newly registered company, has approached you to assist their company to comply with the Value Added Tax law in Ghana. They have asked you specifically to assist in the area of VAT Return and payment of the related tax.

Required:

a) Explain what VAT Returns are (4 Marks)

b) Advise the Managing Director company with respect to registration, submission of returns and the payment of the tax. (10 Marks)

c) A person with turnover below the registrable level could apply voluntarily to the Commissioner-General to be registered as a taxable person.

Required:

Outline the circumstances under which the Commissioner–General could refuse the request to register a taxable person. (6 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q1 – Tax Avoidance

Explain arrangement and tax avoidance with examples under Income Tax Act 2015.

a). Section 34 (i) of the Income Tax Act, 2015 (Act 896) states that:

“For the purpose of determining liability of tax under this Act, the Commissioner-General may re-characterize or disregard an arrangement or part of an arrangement that is entered into or carried out as part of tax avoidance scheme:

a. Which is fictitious or does not have a substantial economic effect, or

b. Whose form does not reflect its substance’’

Required:

Briefly explain with two examples for each of the following:

i. Arrangement (5 Marks)

ii. Tax avoidance (5 Marks)

b). Under the Customs, Excise and Preventive Service (Management) Law, 1993 PNDCL 330; explain the following:

i) Quarantine (2 Marks)

ii) Drawback (2 Marks)

iii) Excisable goods (2 Marks)

iv) Uncustomed goods (2 Marks)

v) Rummaging (2 Marks)

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  • 20 Marks

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Tosese Limited is a company registered in Ghana under the Companies Act 1963, Act 179 and has been in operation for several years. The company has been noted by the Tax Authorities for being non tax compliant and no returns were submitted and paid for direct taxes in the 2015 year of assessment. However, after much Tax Education with the support of his Tax Practitioner, the Finance Manager presented the financial statement to the GRA.

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description GH¢
Turnover 5,640,000.00
Direct Costs 4,840,000.00
Gross Profit 800,000.00
Administration and General Expenses 560,000.00
Profit before Tax 240,000.00
Taxation 60,000.00
Profit after Tax 180,000.00
Net Profit Transferred to Income Surplus 180,000.00

Income Surplus Account

Description GH¢
Balance brought forward 1,575,000.00
Add Profit for the year 180,000.00
Balance carried forward 1,755,000.00

The details of the notes are shown below. Note 1. The company is registered for VAT and has not been submitting its returns regularly. The turnover per the VAT Returns submitted to the Commissioner-General during the period under review was GH¢5,080,000.00

Note 2. Direct Costs

Description GH¢
Imports 3,684,000.00
Freight and Insurance 368,400.00
Import Duties 736,800.00
Transport 50,800.00
Total 4,840,000.00

Note 3. Administration and General Expenses included

Description GH¢
Consultancy Fees 25,000.00
Printing and Stationery 84,000.00
Rent (Commercial Property) 61,280.00
Equipment Rentals 15,000.00
Directors Fees 60,000.00

Note 4. The Company since incorporation has never declared and paid any dividend to its four shareholders even though the company has consistently been declaring profit. The Commissioner-General has therefore decided to invoke Section 59 (8) of the Income Tax Act, 2015 Act 896 by notice in writing to apply 40% of the balance on the Income Surplus Account to Dividend Tax.

Required: You are to determine the tax liability due from the company in respect of direct and Indirect Taxes for 2015 year of assessment, including any relevant penalties that are applicable. Ignore Corporate Tax. Total 20 Marks.

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  • 20 Marks

ATP – Feb 2016 – L2 – Q4 – Transaction Value and Goods Classification

Explain transaction value and distinguish between identical and similar goods for customs purposes under PNDCL 330.

a). Section 30 of the Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended provides, among other things, that the transaction value of an item is to be used for Customs purposes.

i) What is “transaction value”? (3 marks)

ii) Distinguish between “identical goods” and “similar goods” in the ascertainment of transaction value. (8 marks)

b). In what circumstances shall excise duty not be paid on goods as provided for in section 57(2) of Customs, Excise and Preventive Service (Management) Law, 1993 (P.N.D.C.L. 330), as amended. (9 marks)

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  • 20 Marks

AT – Mar 2025 – L3 – Q3 – Tax Planning and Ethical Issues

Explain differences between tax planning and aggressive tax avoidance, manage conflict of interest, and benefits of foreign debt over domestic debt.

a) It has been said that there is a thin line between tax planning and tax avoidance. The line is a little thinner when one compares tax planning to aggressive tax avoidance. Required: Explain the areas of divergence between tax planning and aggressive tax avoidance. Do you however think the two may be similar in any way? (10 marks)

b) A conflict of interest occurs when an individual’s personal interests – family, friendships, financial or social factors such as serving two or more competing clients could compromise his or her judgement, decisions or actions in the performance of his/her duties. You are a tax expert at Pompor & Associates, a firm of Chartered Accountants and Tax Practitioners. Your third assignment is to carry out a tax health check into the affairs of one of the clients of your firm where your interest is likely to conflict. Required: Explain how you are likely to manage the actual or potential conflict of interest situation. (5 marks)

c) The Bank of Ghana’s summary of Economic and Financial data has over the years shown the escalating nature of Ghana’s public debt. Successive governments keep blaming themselves that despite the huge debts contracted over the years there is little development across the country. Published statistics also show that the total foreign debts mostly contracted outstrip the total domestic debt. You are the head of the Policy Unit of the Ministry of Finance who work closely with the Chief Director of the Ministry. Required: Draft a report for the perusal of the Chief Director for onward submission to the Minister to be tabled for cabinet discussion on FOUR benefits of foreign debt over domestic debt. (5 marks)

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