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

AT – May 2016 – L3 – Q1 – Tax administration in Ghana, Business income – Corporate income tax

Compute the tax liabilities and take-home pay for an employee provided various benefits and allowances for the 2014 Year of Assessment.

Question

Mr. Frank Danso was employed by Ghana Trust Ltd on 1st September 2010 on a salary scale of GH¢4,500 x 500-7,500 as the financial controller of the company. He is provided with the following as part of his conditions of service for the 2014 Year of Assessment:

i) Well-furnished rented flat by his employers in respect of which he pays GH¢100 per month as rent by way of deductions at source.
ii) Watchman allowance of GH¢200 per annum, paid directly to Mr. Frank Danso.
iii) Risk allowance of GH¢905 per annum.
iv) Leave allowance of GH¢500 per annum.
v) Garden boy allowance of GH¢100 per quarter paid directly to Mr. Frank Danso.
vi) Medical allowance of GH¢680 per annum.
vii) Meals allowance of GH¢50 per month.
viii) Two maidservants each on wages of GH¢200 per annum. The amount is paid to the maid servants directly by the company.
ix) Bonus of 40% on annual basic salary.
x) Entertainment allowance of GH¢400 a year (accountable).
xi) Duty post allowance of GH¢100 per month.
xii) He has Life Assurance Policies with EIC Ltd. Below are the details:

Policy	Sum Assured (GH¢)	Annual Premium (GH¢)
A	4,000	420
B	2,800	240
C	16,000	1,650
D	5,000	525

xiii) He is entitled to a company car and fuel for both official and private use.
xiv) He has two wives and ten children; four of whom are in SHS in Accra, and the rest are gainfully employed; he caters for 3 of his aged relatives.
xv) He contributes 7% of his salary towards the company’s Provident Fund which has been approved by the National Pension Authority, and he also contributes 5.5% of his salary to the SSNIT.

Required:
a) Compute his tax liabilities for the 2014 Year of Assessment using 2014 rates.
(15 marks)

b) Determine his take-home pay for the 2014 Year of Assessment.
(5 marks)

Total: 20 marks

Answer

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Tags: Allowances, Provident fund, Reliefs, Take-home pay, Tax computation, Tax liabilities
Level: Level 3

Topic: Business income - Corporate income tax, Tax administration in Ghana
Series: MAY 2016

AT – Nov 2016 – L3 – Q5c – Tax administration in Ghana

Discuss the social significance of imposing taxes by the government.

Question

c) Discuss the social significance of the imposition of taxes by the government. (4 marks)

Answer

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Tags: Economic Inequality, Public Policy, Social Impact, Taxation
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2016

AT – Nov 2016 – L3 – Q4a – Tax administration in Ghana

Discuss the tax benefits that Pearl House Ltd stands to gain by operating in a Free Zone.

Question

a) Pearl House Ltd is a company incorporated in Ghana and contemplates applying for a license to operate within the Free Zone environment from the Free Zone Board as opposed to an earlier decision to run a Micro Finance Business. Management has been at a crossroads on the decision to make.

Required:
As a Tax Consultant, the Management of Pearl House Ltd has approached you to join them at a breakfast meeting and convince them on the tax benefits, if any, that Pearl House Ltd stands to gain from operating in the Free Zone environment. (10 marks)

Answer

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Tags: Business operations, Corporate Taxation, Free Zone, Tax Benefits
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2016

AT – Nov 2016 – L3 – Q2b – Tax administration in Ghana

Examine the rules for using landed property as security for unpaid taxes and recovering taxes from persons owing money to the tax debtor.

Question

b) Tax, when it becomes due and payable, is a debt due to GRA and is payable to the Commissioner-General.

Required:
i) Examine the rules where the Commissioner-General can use security on landed property for unpaid tax. (5 marks)
ii) Detail out the rules where the Commissioner-General can recover tax from persons owing money to the GRA as a tax debtor. (5 marks)

Answer

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Tags: Commissioner-General, Debt Collection, Landed Property, Tax Recovery
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2016

AT – Nov 2016 – L3 – Q2a – Tax administration in Ghana

Evaluate the effects of government borrowing on Ghana's economy and discuss how taxation serves as a fiscal tool in fiscal policy.

Question

a) The current level of government borrowing has become a topical issue for discussion, causing observers to wonder whether borrowing is good or bad. In the light of this, you are required to:

i) Evaluate the effect of government borrowing on the economy of Ghana. (4 marks)
ii) Discuss how taxation can be used as a fiscal tool in fiscal policy. (6 marks)

Answer

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Tags: Economic Impact, Fiscal Policy, Government Borrowing, Public Debt, Taxation
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2016

AT – Nov 2016 – L3 – Q1c – Tax administration in Ghana

Advise a client on VAT/NHIL issues related to credit sales, instalment payments, sale-or-return, and tax relief.

Question

c) You have been appointed as a Tax consultant in a firm in Tabora, Accra. A client approached you one month after your appointment, and asked for your advice with their business records and Value Added Tax and National Health Insurance Levy (VAT/NHIL) returns.

i) One of their customers to whom they sold goods on credit worth GH¢12,500 inclusive of VAT has gone officially bankrupt. The company had paid the VAT on the transaction three months ago.
ii) In March 2015, the client in order to boost sales started selling to customers on 12 months equal instalments payment with some small interest. He is confused as to how to determine the amount of the VAT/NHIL and when he should pay the VAT/NHIL.
iii) The company sold goods worth GH¢17,000 in March 2015, on a sale-or-return basis, but the company is not clear as to when to account for the VAT/NHIL on the sale and what happens to the VAT/NHIL paid if the customer returns the goods.
iv) The company sold stationery and office equipment worth GH¢30,000 to a Jude Power Manufacturing Company in Accra. The accountant of Jude Power informed them that their company is relieved from paying VAT/NHIL, so they will not pay.

Required:
Advise your client on issues raised in “i-iv” concerning VAT/NHIL returns. (10 marks)

Answer

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Tags: Advise a client on VAT/NHIL issues related to credit sales, and tax relief., instalment payments, sale-or-return
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2016

AT – Nov 2023 – L3 – Q1a – Tax administration in Ghana

Discuss three ways a foreigner may participate in business activities in Ghana under the GIPC Act.

Question

Ghana has a lot of opportunities for both local and foreign investors. The Ghana Investment Promotion Centre has demonstrated in many ways the policy consideration behind the promotion of investment to both Ghanaians and foreigners.

Foreigners must meet certain basic conditions before they are permitted to undertake business activities in Ghana.

Required:
Discuss THREE (3) ways a foreigner may participate in business activities in Ghana.

Answer

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Tags: Business Activities, Foreign Investment, Ghana Investment Promotion Centre, GIPC Act
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2023

AT – Nov 2019 – L3 – Q5b – Tax administration in Ghana

Rules governing the assistance of experts in the duties of the Commissioner-General of the Ghana Revenue Authority

Question

During the tax audit of Kalybos Ltd, the Commissioner-General sought the assistance of some Lawyers and Architects who were not employees of Ghana Revenue Authority. The Management of Kalybos Ltd is protesting the use of these experts whose advice influenced the final decisions of the Commissioner-General.

Required:
What are the rules governing the assistance of experts in the duties of the Commissioner-General of the Ghana Revenue Authority?

Answer

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Tags: Commissioner-General duties, Expert assistance, Tax Administration
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2019

AT – Nov 2019 – L3 – Q5a – Tax administration in Ghana

Explain circumstances for disclosing taxpayer information and authorized recipients of such information.

Question

During the tax audit of Kalybos Company Ltd, a lot of information came to the attention of the Ghana Revenue Authority staff who conducted the audit. The staff reminded themselves that a person employed, or engaged by Ghana Revenue Authority must be confidential.

Required: i) Under what circumstances would a person or the Commissioner-General disclose information or documents to another person? (3 marks)

ii) Which categories of persons or institutions may the Commissioner-General disclose a taxpayer’s information to?

Answer

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Tags: Information disclosure, Tax Administration, Tax confidentiality
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2019

AT – Nov 2019 – L3 – Q4a – Tax administration in Ghana

Determine the tax obligations of an NGO involved in both charitable activities and business operations.

Question

Scenario:

Bubandushe is a Non-Governmental Organisation (NGO) located in Accra with operational areas in the Northern Regions of Ghana. The NGO buys rice from a supermarket in Accra and transports it to the Northern Regions for distribution to widows and orphans. Its main source of funding is from a benefactor based in the Netherlands, who has been supporting the project since its inception.

In support of its operations, it engaged Chartered Accountants from the Institute of Chartered Accountants (Ghana) as employees. Their role is basically to organize training programmes for Government Institutions on budget preparation using advanced financial models for a fee. This additional source of income equally supports the operations of this NGO.

Ghana Revenue Authority (GRA) has written to this NGO to regularize its operations with it for tax purposes. The Management of the NGO has argued that it is exempt from tax on its income. The management has written to you to offer professional help on the matter.

Required:

i) Determine whether the NGO is required under the tax laws to pay tax and if yes, what type of taxes. (6 marks)

ii) On what basis are NGOs liable to tax or exempt? (2 marks)

Answer

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Tags: Charitable Organizations, Corporate Tax, NGO Taxation, Withholding Tax
Level: Level 3