Following the government’s commitment to build one factory in each district in Ghana and its desire to ensure food sufficiency through the planting for food and job program, an investor from Singapore intends to invest in shoe manufacturing company to be located at Accra in the Greater Accra Region of Ghana. He also considers starting a juice manufacturing company at Nsawam in the Eastern Region of Ghana in response to the investment drive of the government.

As part of the investment, he intends to incur the following cost and start operations in 2018 on either proposal, which is the Shoe manufacturing company or the Juice manufacturing company.
                                                        GH¢
Building                                     7,200,000
Plant and Machinery                 11,700,000
Furniture and Fittings                  180,000
Computers                                   180,000

Additionally, he intends to recruit fresh graduates from the All Nations University College of Ghana.
It is further projected that in the first three years, that is 2018, 2019 and 2020, it will incur GH¢36,000, GH¢32,400 and GH¢18,000 losses respectively.

The investor hopes to start making profit from the year 2021. He intends to borrow at 20% interest from his USA associate amounting to the equivalent of GH¢100,000,000. The equity he intends to start with is GH¢36,000,000.

Required:
As a tax adviser, evaluate the proposed investment by the Singaporean investor and the tax implication on the various activities highlighted in the scenario.         (10 marks)

You are a partner in a Tax Consulting firm. Your firm has recently employed 5 new staff and they have to be trained on a number of issues.

Required:
Prepare a presentation on international taxation with emphasis on FIVE (5) objectives or goals of international taxation treaties. (10 marks)

What are the requirements a foreigner should meet in order to start a trade in Ghana?    (6 marks)

Esther Naah, a Ghanaian by birth, has spent most of her life in the United Kingdom. She has made a lot of savings and would want to invest in Ghana. She has heard of Ghana Free Zone Authority and been told that the rationale behind the free trade zone is the development of disadvantaged regions. You work in a Tax Consulting firm and your Managing Partner has called on you to brief Esther, on the following issues during her next appointment to the Tax Consulting firm.

Required:
Draft a report that will incorporate the following:
a) Tax incentives and benefits for Free Zone Enterprises.      (10 marks)

b) What will be the tax implication if the Free Zone Enterprise sells into the local markets?         (4 marks)

Kankoka is registered with the Registrar General Department of Ghana as a Non-Governmental Organisation (NGO) and had income amounting to GH¢30,000,000 in 2018 year of assessment.

A detailed analysis reveals the following composition of the income:
Support from Benefactor based in Germany                  GH¢10,000,000
Transport business                                                          GH¢10,000,000
Government afforestation project disbursement            GH¢10,000,000

Required:
Determine the tax payable if any by Kankoka and comment on your answer and state any relevant assumption.     (5 marks)

Lydia Waakye aged 16 years old is a sole proprietress with a big super market shop and makes income of an amount of GH¢40,000 per annum over the last 3 years.

Required:
How will the income be subject to tax?       (3 marks)

Compute the royalty payable on the following data of A Ltd, a Mining Company for 2018 year of assessment:

Production of resource (Volumes)                                                                                      1,000,000
Revenue from sale                                                                                                    GH¢10,000,500
Note: the revenue above contains proceeds from sale of scraps amounting to GH¢10,500

Required:
Compute the royalty payable.       (2 marks)

Mmabia University has written to a financial consultancy firm you work for requesting for a clarification in respect of the taxability or otherwise of its profits. The Financial Controller Bubu Moon signed the letter. It indicated that per the University’s understanding, Mmabia is not liable to tax as Government has amended the laws exempting private universities from payment of taxes.

The Financial Controller indicated in his letter that the response from your firm would be shared with other universities to take note also.

The Manager in charge of tax has invited you as his team member to respond to this request for clarification on the matter as expressed by Mmabia University to help clarify the matter better.

Required:
Write a response on the clarification setting straight the tax provision on the matter and also, comment on the decision to share the response with other universities.            (10 marks)

ABC Ltd declared profit (loss) as provided for in the table below:

Required:
Explain how the unrelieved losses will be treated.                    (3 marks)

Mamavi is a retail business woman with a chain of shops in Ghana. She commenced business on 1 March 2011, with the business name of Unity Enterprise. She sells health foods, fruits, vegetables and juices.

The Enterprise’ profit or loss account for the year ended 31 December 2018 as prepared by the Accountant are reproduced below:

Notes
i) Purchases
The purchases figure includes GH¢2,200 in respect of goods taken by Mamavi for her own use with a mark-up of 25%.

ii) Rental Income
In 2018 Mamavi earned GH¢1,500 for the rent of her holiday home in Ho, Volta Region, for the year.

iii) Promotion/Entertainment                              GH¢
Golf lessons                                                              600
Christmas party                                                        900
Advertising on Health foods                                   300
                                                                               1,800

iv) Wages                                                                                GH¢
Drawings by Mamavi                                                             12,740
Staff wages                                                                              10,000
Paying Baby-Sitter to take care of Mamavi’s daughter      6,500
Tax payment on account for Mamavi                                   3,500
                                                                                                32,740

v) Electricity and Water
Mamavi pays electricity and water for her home and office, 20% of the cost relates to her
home.

vi) Bank Payments                                                           GH¢
Business loan repayments                                              5,200
Mortgage loan repayments                                             7,200
                                                                                          12,400
A business loan was taken out to finance the cost of improvements to the store, in particular the juice bars. The interest element included in the loan repayment amounted to GH¢1,750. A mortgage loan was taken out by Mamavi to buy the family a house in Hlefi, Volta Region. The interest element in the loan repayment for the mortgage was GH¢2,670.

vii) Telephone
20% of the telephone costs relate to private use.

viii) Rates
This figure includes GH¢120 in respect of the local property tax for Mamavi’s home. The difference is business rates.

ix) Insurance                                                                      GH¢
Premises Insurance (Business)                                          800
General Business Insurance                                              1,000
Private medical insurance for Mamavi’s children            480
                                                                                             2,280

x) Legal and other fees                                                   GH¢
Accountancy Fee                                                              1,200
Court case following a car accident                                 700
Speeding fines                                                                   400
                                                                                           2,300
This court case was as a result of a car hitting Mamavi when she was walking her dog out at night. The car owner claimed Mamavi stepped out in front of him and therefore it was her fault. Mamavi’s Lawyer told her to respond to the allegation because she needed five sessions of physiotherapy to help heal her leg. Mamavi is suing the car owner for her costs.

xi) Sundry                                                           GH¢
Painting                                                                1,200
Juicers/Food Processors for shop                     5,000
Advertising                                                          600
Lease charges                                                    1,200
Stationery                                                             800
                                                                            8,800

GH¢700 of the painting cost related to the painting of Mamavi’s private house. The balance related to painting her shop. GH¢1,200 lease charges relate to the leasing of a car for the business.

Required:
Compute Mamavi’s chargeable income for the year ended 31 December 2018.               (17 marks)