• The other person is currently employed or engaged by the GRA or assisting the GRA in the performance of a function.
• The disclosure is for the purposes of tax administration or any other tax law.
• The Commissioner-General has authorised the disclosure.
• The Commissioner-General is to disclose information or documents according to a court or tribunal order for the purpose of a tax law.                                (Any 3 points)
  

• The Minister of Finance.
• A person in the service of the Government in a revenue or statistical department where the disclosure is necessary for the performance of the official duties of the person.
• The Auditor-General or a person authorised by the Auditor-General where the disclosure is necessary for the performance of official duties.
• The competent authority of the government of another country with which Ghana has entered into an international arrangement, to the extent permitted under that arrangement.          (Any 2 points)
  

• The Commissioner-General may engage experts, on the terms and conditions that the Commissioner-General considers necessary, to assist the GRA in the proper performance of the functions of the GRA. The appointment of an expert is ineffective unless the appointment is in writing and is expressly made.
• An expert assisting the GRA to perform a function is to be supervised by the Commissioner-General or an Officer authorised by the Commissioner-General.
• A taxpayer, however may refuse to deal directly with an expert but that person is not to obstruct an expert assisting a tax officer to perform a function.
• A taxpayer may report to the Commissioner-General where that person is of the opinion that the engagement of a particular expert involves a conflict of interest.
• Where the Commissioner-General receives a report that there is a conflict of interest with respect to an expert, the Commissioner-General is required to take a decision and the decision of the Commissioner- General on the matter is final.
  (5 points for 5 marks)

Rate of tax is 5%
Revenue          =10,000,000
Royalty           =5% of 10,000,000 =GH¢500,000.00
Royalty Payable = GH¢500,000

Mining companies want to be able to plan over a long period of time but this can be affected by changes in fiscal system they operate under.

To protect mining companies from fiscal changes, the mining companies enter into stability agreement so ensure that any adverse fiscal system (such as changes in levies, royalties among others) does not affect the mining companies. The stability agreement allows such companies to benefit from any favourable fiscal system.

NGOs are treated as charitable organization subject to approval by the Commissioner-General. The Commissioner-General shall, before approving it as such shall ensure that the entity operates as a charitable institution which is of a public nature or as a religious institution of a public nature or a body of persons formed for the purpose of promoting social activities or sporting activities.
It should not engage in the following activities:

• Party political activity, supporting a political party or using its platform to engage in party politics.
• Conferring a private benefit on the promoters.

Issues

• The NGO buys rice and transports it to the Northern Regions for distributions to widows and orphans.
• It engaged chartered accountants to run training programmes on budget using financial models for fees from which the NGO is run.

Conclusions

• Under section 97(4), the income of a charitable organization, which in this case is Bubandushe is exempt from tax but its business income is taxable under section 97(5).
• The NGO is exempt from tax on its core activities. However, the purchase of rice for distribution if it is above two thousand Ghana cedis (GH¢2,000.00) shall be subject to withholding tax at the rate of 3% on the gross value on payment to the suppliers.
• Additionally, the training programme for which fee is charged shall be subject to tax at the corporate tax rate of 25% on the income from the training after cost associated with the business income is deducted.

The types of taxes are:
*Corporate tax on its business income
*Withholding taxes on payment to third parties                                      (Any 6 points for 6 marks)

The income accruing to or derived by a charitable organization is exempt from tax but when the same organization engages in business activities and makes business income, it shall be subject to tax.

• Under section 56 of Act 896, a Trust is taxed separately from the beneficiaries. When a trust makes a distribution, the following shall be considered before it is considered taxable or otherwise.
• A distribution by a resident trust to its resident beneficiaries is exempt from tax. On the other hand, when the distribution is done by a non-resident trust to its resident beneficiaries, the said distribution shall be subject to tax in Ghana. On the basis of the above, the distribution by Askona is taxable in the hands of Yaaya Mensah and Nana Yaw Mensah.
  

• The extent to which the risk of double taxation actually exists in cross-border situations involving their residents.
• The risk of excessive taxation that may result from high withholding taxes in the source State.
• Features of tax treaties that encourage and foster economic ties between countries.
• Willingness and ability to implement effectively the provisions of tax treaties.            (4 points for 4 marks)
  

The most suitable method for the transaction will be the Transaction Net Margin Method (TNMM).       (2 marks)

Justification:

• The transactional net margin method examines the net profit margin relative to an appropriate base such as sales, costs or assets that a person realizes from a controlled transaction or transactions that it is appropriate to aggregate. This is compared with the result achieved by independent persons on a similar transaction(s). The main difference between the transactional net margin method and the profit split method is that the former is a one-sided method” that is applied only to one of the connected persons, whereas the latter is applied to all the relevant connected persons.
• The transactional net margin method requires the comparison of net margins obtained in its related party dealings against either:
  The net margins of the person’s dealings with independent persons in comparable circumstances; or
  The net margins earned in comparable dealings between two independent persons.
• A search will be performed to identify a set of independent companies that could be used to determine an appropriate arm’s length range of return on marketing support services. The independent companies should be in the same industry/similar industry and in similar markets as the tested party, and services rendered should be similar.
• The search process will involve the examination of the companies in the database, the elimination of non-comparable companies, and the selection of those companies that are believed to be suitable as a benchmark for marketing support services. As a result of the search, a set of independent companies will be identified as comparable, which may be used as benchmark for the return that Pyrotechnics Ghana Limited should earn from the marketing support services.
  (4 points @ 1.5 marks each = 6 marks)

• To ensure that Ghana is able to tax on appropriate taxable basis corresponding to the economic activities deployed by taxable persons in Ghana, included in their transactions and dealings with associated enterprises.
• To provide the Ghanaian authorities the tools to fight tax evasion through over or under-pricing of controlled transactions between associated enterprises.
• To reduce the risk of economic double taxation.
• To provide a level playing field between multinational enterprises and independent enterprises doing business within Ghana; and
• To provide taxable persons with certainty of transfer pricing treatment in Ghana.              (Any 4 points)
  

Arm’s length principle is the principle that the conditions of a controlled transaction should not differ from the conditions that would have applied between independent persons in comparable transactions carried out under comparable circumstances.

• A free zone enterprises are enterprises which operate in non-custom controlled territory and pay tax when they export at the rate of 15% on their income while local sales are taxed at the rate of 25%.
• While a company that deals in tiles in Ghana is subject to tax at the rate of 25%. An investor in a company is part of the ownership structure.                 (2 points for 2 marks)

The following are other tax benefits to a shareholders:

• Dividend paid to shareholders are exempt from tax.
• Shareholders are going to benefit from huge profits when they export to grow their capital.     (2 points for 2 marks)

Conclusion:

• I will advise the investment in Tiika as the investors stand to benefit from the above arrangement. In the case of investors in Taaka, dividend declared shall be subject to a high taxes at 8% final. The growth of equity is much more with Tiika than with Taaka. In future investors in Tiika shall have huge capital gain from the investment in Tiika as against equal investment in Taaka.
• On the strength of the above, the investor should not look any further but to invest in Tiika for maximum benefit in dividend and capital gains when there is a disposal in shares.                   (2 points for 2 marks)
  

The acquisition of 68% of Mbangba ltd will result in change in underlying ownership of Mbangba ltd by more than 50%.
Tax implication:

• The period before the change and the period after the change in underlying ownership in the assets shall be treated as separate years of assessment.
• The tax loss GH¢400,000 incurred in 2018 year of assessment cannot be utilized by Lawomba ltd.
• Financial cost of GH¢100,000 from derivatives brought forward from 2018 cannot be benefited by Lawomba.
• Bad debts of GH¢1,200,000 cannot be taken account of by Lawomba ltd.
• Gain on realization is taxable.                              (4 points @ 1.5 marks each =6 marks)
  

• Income corresponding to the tax has been assessed.
• Submitting a tax credit certificate.
• Official receipt or a functional equivalent of a tax credit certificate from the tax department of the foreign country signifying the nature of income and the quantum of taxes paid by the taxpayer.          (3 points for 3 marks)
  

• It creates fiscal certainty for investors in the affected countries that is countries A and B.
• It provides some income which should be exempt from tax.
• It promotes foreign investment.
• May obtain help in the contracting states in revenue collection.
• It specifies income to be taxed at rates lower.
• It prevents international tax avoidance and evasion.
• Sharing of tax information.                       (5 points for 5 marks)
  

Under section 47 of Act 2015 (Act 896), the gains on realization of an asset accruing to or derived by a company arising out of a merger, amalgamation or re-organisation of a company is exempt from tax where there is a continuity of at least fifty percent of the underlying ownership in the asset.

The intended merger of the two companies may create either a tax benefit or burden depending on the arrangement.

Under this arrangement, Akolo has 40% in the underlying ownership in the asset of the new company, this suggests realization of the assets and consequently, any gains made is subject to tax by adding it to business income and subjecting it to applicable tax rates.

In the case of Abolo that intends to hold 60% in the underlying ownership in the assets of the new company, any gain from this merger is exempt from tax.

If both hold 50% in underlying ownership in the assets of the new company that constitutes realization of asset but the gains on this realization are exempt from tax in both Akolo ltd and Abolo ltd.

Trading in Ghana connotes a non-resident person having business presence in Ghana and competing with our local businesses. It implies in simply terms, having a permanent establishment.
On the other hand, trading with Ghana does not connote having presence in Ghana. This will not create any tax implication for the non-resident person.