Nov 2015 Q5 c&d
c) Should a Contractor in the Upstream Petroleum Sector be subject to tax by the Ghana Revenue Authority in a situation where its products are exported to its Parent Company without evidence of sale (technically called export without sale)? (4 marks)
View Solution
Petroleum operations are described as exploration, development and or production of the product, the sale of the product and export without sale of the product.
The contractor is deemed to have sold its products when exports are done to their affiliates in this case its Parent Company and the revenue will be realized using the rate ruling internationally on the day the export is made. (2 marks)
Conclusion:
Whether the Contractor will be liable or not depends on whether it has a chargeable income after all allowable deduction as prescribed by the tax provisions. Tax is payable if the allowable deduction is less than the assessable income. If the assessable income is less than the chargeable income, no tax will be payable. (2 marks)
d) Carried Interest is part of income stream by the Host Government. What is the basis for the ownership of carried interest under petroleum upstream operations and the mining and mineral operation? (4 marks)
View Solution
Carried Interest is in the case of the petroleum activities, allows the Host government to benefit from production of oil and only pay towards production cost. Government does not contribute towards the exploration and development costs. (2 marks)
In the case of mining operations, government takes 10% carried interest free without any financial contribution from the government. (2 marks)