Topic: Tax administration in Ghana

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AT – Nov 2024 – L3 – Q5a – Transfer Pricing Documentation and Compliance

Explain the required transfer pricing documentation and exemptions under Ghana’s Transfer Pricing Regulations, 2020 (L.I. 2412).

Question

You are a Senior Transfer Pricing Associate of Fameye and Associates. You have received the following email from a former client, Asew LTD, who has received a Transfer Pricing audit assessment from the Ghana Revenue Authority (GRA) for the 2021, 2022, and 2023 years of assessment.

Subject: Transfer Pricing Compliance Assistance

Hello Team,

I came to the office today and received a letter from the GRA regarding a tax assessment on transfer pricing issues. According to the letter, our company owes the GRA some penalties for non-compliance with the transfer pricing regulations. I am confused as to what our compliance obligations are. I would need your assistance on how we can comply with the transfer pricing laws of Ghana.

I hope to hear from you soon.

Kind regards,

Nii Armaah
Managing Director, Asew LTD

Required:

In line with the provisions of the Transfer Pricing Regulations, 2020 (L.I. 2412), draft a response for the review of your Tax Partner, covering the following:

(i) The required transfer pricing documentation that must be maintained by companies in Ghana under the three-tier transfer pricing documentation requirements, including the time by which these must be filed with the GRA, where applicable. (ii) TWO conditions or circumstances under which a company may be exempted from compliance with any of the above documentation requirements.

Answer

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Tags: Documentation, Ghana Revenue Authority, Multinational Entities, Tax Compliance, Tax Regulations, Transfer Pricing
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

AT – Nov 2024 – L3 – Q4b – Crowding Out Effect in Fiscal Policy

Explain the concept of ‘Crowding Out’ in fiscal policy, using relevant examples.

Question

Expansionary Fiscal Policy has been criticised on the grounds that it can lead to ‘Crowding Out’.

Required:

Explain with appropriate examples what is meant by ‘Crowding Out’ as used under Fiscal Policy.

Answer

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Tags: Crowding Out, Economic growth, Fiscal Policy, Government Spending, Private Sector, Public Finance
Level: Level 3

Topic: Fiscal Policy, Tax administration in Ghana
Series: Nov 2024

AT – Nov 2024 – L3 – Q4a – Value Added Tax Deductibility

Determine the deductible input VAT for a VAT-registered company operating multiple business divisions under different VAT treatments.

Question

The two scenarios below relate to ClearTel LTD, a VAT-registered company in Ghana. Each scenario is an independent scenario and should be considered separately.

Scenario 1

ClearTel LTD operates three divisions (XYZ). Division X deals in the sale of computers and mobile phones. Division Y deals in the sale of locally-manufactured sanitary towels. Division Z is into the supply of fertilizers to farmers in Ghana.

Revenue from each division for 2024 is shown below:

Division	Description	Revenue (GH¢)
X	Computers and mobile phones	1,005,700
Y	Sale of locally-manufactured sanitary towels	2,500,000
Z	Supply of fertilizers to farmers	78,800,000

ClearTel LTD has incurred total input VAT of GH¢50,500,000, and the Finance Manager of the company is unable to determine specifically which division of the business this input VAT amount relates to.

Required:

Determine the amount of input VAT ClearTel LTD can deduct, in line with the provisions of the Value Added Tax Act, 2013 (Act 870 as amended). Justify your answer

Answer

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Tags: Deductibility, Exempt supplies, Input Tax, Mixed Taxation, VAT, Zero-rated supplies
Level: Level 3

Topic: Tax administration in Ghana, Value-Added Tax (VAT)
Series: Nov 2024

AT – Nov 2024 – L3 – Q3b – Prohibitions on Representation and Tax Advice

Explain the prohibitions on representation and tax advice in relation to tax consultants under the Revenue Administration Act, 2016 (Act 915).

Question

With reference to the Revenue Administration Act, 2016 (Act 915), what constitutes prohibitions on representation and tax advice in relation to tax consultants?

Answer

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Tags: ICAG Regulations, Legal Framework, Revenue Administration Act, Tax advice, Tax Compliance, Tax Consultants, Tax Representation
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

AT – Nov 2024 – L3 – Q3a – Tax Planning and Objection to Tax Assessment

Advise Poyooyo LTD on provisions in tax laws to challenge a disputed tax liability.

Question

The Directors of Poyooyo LTD have heard of the Maxims of Tax Planning, which outline strategies for minimizing tax liabilities legally.

In a recent visit by the Domestic Tax Revenue Division of the Ghana Revenue Authority (GRA), the Large Taxpayers Office (LTO) in Accra conducted a tax audit on the company, resulting in tax assessments raised against Poyooyo LTD for settlement.

Management of the company, in their last meeting with the directors, presented the outcome of the tax audit and strongly argued that the assessment was erroneous. They claimed that the liabilities raised were based on legitimate tax planning strategies the company employed.

They believe that the company is in full compliance with the tax laws and should not be required to settle the tax liabilities assessed. However, payment of the liability would significantly impact the company’s cash flow and disrupt its operations.

Poyooyo LTD has approached your tax consulting firm for assistance and guidance.

Required:

Advise Poyooyo LTD on the provisions of the tax laws that could be taken advantage of to avert the payment of the liability.

Answer

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Tags: Appeals, Objection, Revenue Administration Act, Tax Audit, Tax Liability, Tax Planning
Level: Level 3

Topic: Tax administration in Ghana, Tax planning
Series: Nov 2024

AT – Nov 2024 – L3 – Q2c – Extension of Time and Early Filing of Tax Returns

Explain the conditions for tax return extension and early filing requirements.

Question

Akosua Sokode has set up a small business to sell cosmetics in Accra. She just called you, an associate member of the Institute of Chartered Accountants Ghana, to seek your advice on tax returns and payment of taxes. Akosua Sokode told you that she cannot meet her tax payment deadlines and cannot file tax returns by the due dates. She also confided in you that maintenance of documents is a big problem for her.

Required:

Address the concerns of Akosua Sokode by briefing her on the following:

i) THREE factors regarding the extension of time for filing tax returns.

ii) TWO circumstances under which the Commissioner-General may request for filing of tax returns before the due date.

Answer

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Tags: Commissioner-General, Compliance, Filing Deadlines, Revenue Administration Act, Tax Policy, Tax Returns
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

AT – Nov 2024 – L3 – Q1b – Challenges in Tax Reforms in Ghana

Analyze two key challenges in tax reforms in Ghana.

Question

Countries, including Ghana, have embarked on various tax reforms geared towards improving tax revenue to help provide infrastructure and guarantee sustainable growth. Tax administration in Ghana has therefore seen a number of reforms over the years, including restoring the tax base, improving tax administration, and the integration of the Revenue Agencies into an Authority to act as a one-stop shop as per the Ghana Revenue Authority Act, 2009 (Act 791).

Required:
In reference to the statement above, analyze TWO challenges (key issues) on tax reforms in Ghana.

Answer

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Tags: Compliance, Fiscal Policy, policy implementation, Revenue Administration, Tax Base Expansion, Tax Law Challenges, Tax reforms
Level: Level 3

Topic: Tax administration in Ghana
Series: Nov 2024

PT – May 2020 – L2 – Q5c – Withholding Tax Administration

This question requires the computation of the penalty for late filing of withholding tax returns by Adamu Ltd.

Question

The following unstructured invoice has been forwarded to Adamu Ltd from Asigra Ltd, a standard rated supplier:
Goods invoiced (VAT inclusive) GH¢3,000,000 The above transactions relate to payment for goods in January 2019.
Required:
i) Compute the withholding tax payable by Adamu Ltd.
(2 marks)
Assuming Adamu Ltd filed the withholding tax return 12 days after the due date,
ii) compute the penalty payable.
(3 marks)

Answer

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Tags: Ghana Revenue Authority, Late Filing Penalty, Withholding Tax
Level: Level 2

Topic: Penalties, Tax administration in Ghana
Series: MAY 2020

AT – Nov 2018 – L3 – Q5c – Tax administration, Minerals and mining

Explanation of how revenue from a shared processing facility is accounted for tax purposes in mining operations.

Question

A mining company with two contracts operating in the Western and Ashanti Regions of Ghana has one processing facility for its mining operations from both contracts. This has engaged the attention of the Ghana Revenue Authority for some time now regarding how to handle its activities for tax purposes.

Required:
As a final-level tax candidate, how will revenue received from a shared processing facility by a mining company be accounted for tax purposes?

Answer

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Tags: Mineral Operations, Mining Taxation, Revenue Allocation, Shared Processing
Level: Level 3

Topic: Minerals and mining, Tax administration in Ghana
Series: NOV 2018

AT – Nov 2018 – L3 – Q4c – Tax administration

Explanation of the objectives and effects of tax amnesty on government revenue.

Question

As part of tax administration, the government rolls out tax amnesty from time to time.

Required:
i) What does tax amnesty seek to serve? (2 marks)
ii) What are the effects of tax amnesty on revenue? (2 marks)

Answer

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Tags: Penalties, Revenue Collection, Tax Amnesty, Tax Compliance
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2018

TX – May 2019 – L3 – Q1a – Tax planning-+

Analyze the tax implications for a company increasing its stated capital by transferring funds from income surplus.

Question

Management of Kwame Enterprise Ltd considers increasing its stated capital by transferring GH¢600,000 from Income Surplus in 2019 year of assessment in its bid to expand its business horizon in future. The management of the company intends to consult widely on the taxability, if any, on this line of action.

Required:

Assess the tax implication of this funding arrangement by Management of Kwame Enterprise Ltd.
(3 marks)

Answer

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Tags: Dividend Withholding Tax, Income Surplus, Stamp Duty, Stated Capital
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q1c – Tax Planning

Explain the purpose of taxpayer segmentation by the Ghana Revenue Authority.

Question

As part of efficient tax administration, taxpayers have been segmented into Large Taxpayers, Medium Taxpayers, and Small Taxpayers by the Ghana Revenue Authority. In the view of tax reformers, taxpayer segmentation is the way to go in order to grow revenue.

Required:

What purpose does this segmentation seek to achieve?
(4 marks)

Answer

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Tags: GRA, Revenue Growth, Tax Administration, Taxpayer Segmentation
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q2C – Capital Allowance

Discuss the concepts of domestic and excluded expenditure according to the Income Tax Act 2015 (Act 896) and their implications on tax deductions.

Question

i) What constitutes domestic expenditure? (2 marks)
ii) What constitutes excluded expenditure? (2 marks)

Answer

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Tags: Deductibility, Domestic expenditure, Excluded Expenditure, Income Tax Act 2015 (Act 896), Tax deduction
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q4A – Tax administration in Ghana

Discuss the circumstances under which the Commissioner-General can require early filing of tax returns and the powers available when taxpayers fail to file on time.

Question

i) Under what circumstances would the Commissioner-General of Ghana Revenue Authority, by notice, require a person to file a tax return before the due date for filing of tax returns? (4 marks)

ii) What are the powers of the Commissioner-General if a taxpayer fails to file tax return on time? (3 marks)

Answer

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Tags: Commissioner-General, Filing Deadlines, Ghana Revenue Authority, Tax Compliance, Tax Returns
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

Question

b) The Commissioner-General may, in the exercise of his powers, audit the tax affairs of a person.

Required:
Identify THREE (3) factors considered for selecting a person for audit. (3 marks)

Answer

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Tags: Audit Selection, Commissioner-General, Compliance, Ghana Revenue Authority, Tax Audit
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q4D – Anti-Avoidance Measures

Explain the general rule on registration for VAT.

Question

d) State the general rule on registration for VAT. (2 marks)

Answer

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Tags: Ghana Revenue Authority, Registration, Tax Compliance, Taxable Activity, VAT
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TX – May 2019 – L3 – Q4C – Business income – Corporate income tax

Explain VAT terms including taxable activity, exempt supply, relief supply, and zero-rated supply, with examples.

Question

c) Explain the following terms used under Value Added Tax (VAT) administration and provide TWO (2) examples under each term.
i) Taxable activity (2 marks)
ii) Exempt supply (2 marks)
iii) Relief supply (2 marks)
iv) Zero-rated supply (2 marks)

Answer

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Tags: Exempt Supply, Ghana Revenue Authority, Relief Supply, Taxable Activity, VAT, Zero-Rated Supply
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

TF – May 2018 – L3 – Q4c – Business income – Corporate income tax

VAT computation for Akonfem Fabricating Ltd. based on taxable transactions.

Question

In the month of September 2016, Akonfem Fabricating Ltd, a registered trader for VAT, made the following transactions:

Sales: GH¢

Local Supplies: 425,000
Relief Supplies: 215,000
Exports: 550,000
Purchases/Expenses (Input Invoices):
Stationery: 2,030
Hotel Bill for the MD: 3,450
Raw Material (Imported): 545,000
MTN Phone Bills for MD: 1,020
Electricity (Factory): 5,000

Note: Sales and purchases are all Value Added Tax/National Health Insurance Levy exclusive.

Required:
i) Compute the output and input taxes.
ii) Determine the tax payable, if any.

Answer

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Tags: Exports, Input and Output Taxes, Relief Supplies, Tax Payab, VAT
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2018

TF – May 2018 – L3 – Q1a – Tax administration in Ghana

Identify five functions to be performed by the GRA in achieving its objectives.

Question

The Ghana Revenue Authority Act, 2009 (Act 791) provides certain objectives to be achieved by the Ghana Revenue Authority (GRA) in the performance of its functions.

Required:
Identify FIVE functions that are to be performed by GRA to achieve its objectives.
(5 marks)

Answer

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Tags: Ghana Revenue Authority, GRA Act, Tax Administration
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2018

AT – Aug 2022 – L3 – Q2b – Tax administration in Ghana

Explain unrelieved losses under the Income Tax Act and its implications for Dekey Company.

Question

Dekey Company Ltd was incorporated under the Companies Act, 2019 (Act 992) on 1 January 2021 to prospect for diamonds in the Densu River in the Eastern Region of Ghana.

A review of its Comprehensive Income Statement for the year ended 31 December 2021 showed a loss of GH¢29,304,000 for the 2021 year of assessment.

An extract of the Comprehensive Income Statement is as follows:

Description	GH¢
Income from Operations	864,000
Operational Cost	17,920,000
Administration and General Expenses	11,160,000
Finance Charges	1,088,000
Net Loss	(29,304,000)

The CEO of Dekey Company Ltd remembered a discussion on “Unrelieved Losses” during a training workshop. The CEO has approached you, a final year tax candidate, to explain and advise him on the implications of the loss on future tax liabilities of the company.

Required:
Write a report explaining to the CEO what “Unrelieved Losses” are and the rights available to the company for the loss declared at the end of its first year of operations under the Income Tax Act, 2015 (Act 896).

Answer

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Tags: Income Tax Act, Loss carryforward, Mineral Operations, Unrelieved losses
Level: Level 3