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Communication service tax
Home Previous Syllabus Level 3 - Taxation & Fiscal Policy Archive by Category "Communication service tax"

Category: Communication service tax

Communication service taxLevel 3 - Taxation & Fiscal PolicyNHILPrevious SyllabusVAT

May 2018 Q4 d.

XYZ ltd is into mobile telecommunication and manufactures scratch cards among other products for sale. In October 2017, it sold scratch cards amounting to GH¢3,000,000 to the public. XYZ ltd intends to appoint you as acting assistant accountant pending confirmation after successfully completing your ICAG examinations. As part of the engagement, you are to assist the Company file its returns with the Ghana Revenue Authority.
Required:
Compute the following taxes from the above data to aid the filing.
i) Communication Service Tax (CST)                                                                                       (2 marks)

ii) Value Added Tax (VAT)                                                                                                        (2 marks)

iii) National Health Insurance.                                                                                                   (1 mark)

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Vat Rate = 15%

ii) VAT = (Rate/117.5)* Amount
.       = (15/117.5)*3,000,000  = GH¢ 382,978.72

iii) NHIL Rate = 2.5%

NHIL = (Rate/117.55)* Amount
.          =  (2.5/117.5)*3,000,000 = GH¢ 63,829.79 
VAT/NHIL = 382,978.72 + 63,829.79 = GH¢ 446,808.51

i) Amount inclusive CST = (3,000,000 – 446808.51)
.                                           = 2,553,191.49
Rate of CST = 6%
CST = (Rate/106) *Amount
.       = (6/106) *2,553,191.49  = GH¢144,520.27
Comments:
VAT/NHIL are the last tax to be imposed and working in reverse, shall be the first to be deducted

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Communication service taxLevel 3 - Taxation & Fiscal PolicyPrevious Syllabus

Nov 2017 Q4 a(i)

SwissCom Ltd, a Swiss based Information and Communication Technology Company is hopeful of investing in Ghana. The CEO of the company participated in a tax conference in Paris, in France and met Obodai of GoodLuck & Associates, a firm of Chartered Accountants in Ghana. He took the opportunity to discuss with Mr. Obodai, SwissCom’s intention to invest in Ghana and contracted GoodLuck & Associates to brief him on the Communications Service Tax (CST) regime in Ghana. The CEO already understands what CST is and enterprises that charge CST.
You are a Tax Expert in the employment of GoodLuck & Associates and Mr. Obodai has requested you to draft a report to the CEO of SwissCom Ltd. on the Communication Tax regime in Ghana.
Required:
Draft the report in which you:
Indicate the procedures for submission of returns and payment of tax. Also provide any penalties or sanctions if these are not done. (your answer should exclude the content of a return, recovery of tax and distraint of liability).                        (6 marks)

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NOVEMBER 8, 2017
REPORT BY MASTER XXX TO CEO SWISSCOM LTD ON PROCEDURE FOR SUBMISSION OF RETURNS AND PAYMENT OF TAX (INCLUDING PENALTY) AND DISPUTE RESOLUTION PROCEDURES.
Procedure for submission of returns and payment of tax including penalties:

  • The tax return shall be submitted to the Commissioner-General not later than the last working day of the month immediately following the month to which the return relates, whether or not tax is payable for the tax period.
  • The payment of the tax due for a tax period shall be made to the Commissioner-General not later than the date the return prescribed is required to be submitted.
  • The Commissioner-General may require a person, to submit to the Commissioner-General, whether on that person’s own behalf or as agent or trustee of another person, a further or other returns in the prescribed form as and when required by the Commissioner-General.
  • Late filing of returns attracts a pecuniary penalty of two thousand Ghana cedis (GH¢2,000) and a further penalty of five hundred Ghana cedis (GH¢500.00) each day the return is not submitted.
  • A service provider who fails to pay the tax due by the due date shall pay monthly interest on the tax due at 125% of Bank of Ghana statutory rate compounded, monthly.                      (1 mark for each point = 6 marks)

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