The Ghana Revenue Authority’s governance structure is headed by 9-member Board of Directors made up of:

• Chairperson,
• The Commissioner -General of the Authority. Commissioner General who is the CEO. The Commissioner-General is responsible for the day-to-day administration of the affairs of the Authority and is answerable to the Board. The Commissioner- General is assisted by three Commissioners namely:
  * Domestic Tax Revenue Division
  * Customs Division
  * Support Service
• A representative of the Ministry of Finance not below the rank of a Director,
• A representative of the Ministry of Trade and Industry not below the rank of a Director,
• The Governor of the Bank of Ghana or a representative of the Governor not below the rank of a Deputy -Governor, and
• Four other persons from the private sector, two of whom are women.
  

It is the refund or reimbursement of duty paid by an importer when goods which are initially imported are re-exported at later date. The duty is refunded save the payment of small administrative charges. The object of a drawback is to allow commodities which are subject tax be exported and sold in a foreign country on the same terms as goods from countries where they are untaxed.

• To protect the consumption of harmful goods.
• To check lifestyle by imposing taxes on goods consumed by the rich.
• To provide social amenities to the citizenry.
• Redistribution of income by taking more from the rich and subsidizing good consumed by the poor
  

Carried interest entitles the State to a share of the oil produced without making financial contribution towards exploration and development costs. The State should contribute towards production cost being its proportionate representation. The carried interest ranges between 7.5% and 15% in most oil producing countries.

Additional carried interest is a paying interest that allows the State to pay the proportionate share of only the development and production cost. The state does not pay towards exploration and appraisal cost.
The State can acquire up to 5% in any commercial discovery subject to petroleum agreement.

Additional oil entitlement which is also called super normal profit tax. It is levied in case the windfall profit, where the venture’s rate of return exceeds the target rate of return used to evaluate the profitability of the venture during negotiation.
It is computed on the basis of the after-tax inflation adjusted rate of return that the contractor achieves with respect to each field.

Comments on inclusion and or non-inclusion:

• Dividend is subject to a final withholding tax at the rate of 8% where the receiving entity does not have the at least 25% equity in the paying entity and should not be added to income.
• Bad debts recovered should be added to income and taxed but not added to income surplus as income surplus is a recipient of residual income.
• Penalty is not an allowable deduction hence added back to income.
• Capital allowance granted instead of depreciation but depreciation disallowed.
• Taxes are non-deductible allowance.
• The revenue was not added to income because of omission but now added as it is part of assessable income.    (Any 3 points)
  

The following are benefits the Free Zone persons stand to gain and would accrue to Pearl House Ltd if it operates as a free zone company:

• Both foreigners and nationals can own 100% shares without restrictions. Pearl House Ltd shareholders alone can own the shares as they are no restrictions on the shareholding structures.
• Pearl House Limited would be exempt from value added tax and import duties on imports of raw materials and equipment for the use by Pearl House Ltd in its business operations.
• Exempt from payment of corporate tax for the first 10 years of its operation.
• Exports of goods and services shall be taxed @ 15% as opposed to 25% to Domestic market.
• Dividend paid to shareholders of Pearl House Limited shall be exempt from withholding tax.
• Can obtain inputs for its operation from national custom controlled territory which are relief from Value Added Tax
• Can obtain permission to sell up to 30% to the Domestic Market.
• Faulty goods which fall short of meeting international market standards shall form part of the up to 30% for the domestic market.
• Custom Division of Ghana Revenue Authority does not control the Free Zone Enterprise but monitors it to ensure it operates within the rule.
• The Free Zone board facilitates the acquisition of other permits for the operation of the Free Zone Enterprise which may be essential for the operation of the Free Zone Enterprise.                      (Any 5 points)
  

The arm’s length principle states that “If conditions made or imposed between associated enterprises in their commercial or financial relations differ from those which would have been made between independent enterprises, then profits that, but for those conditions, would have accrued to one of the enterprises may be included in the profits of that enterprise and taxed”
That is taxable profit is to be computed on the basis that transactions between related parties take place on the same terms as those between unrelated parties/independent person.

Farming or Agro Processing businesses in Ghana enjoy tax holidays or exemption periods. During the period of exemption the incomes are not taxable until the period is over. The exemption periods vary and depend mainly on the type of businesses. These are granted to serve as incentives for taxpayers.

• “Tree Crops” includes coconut, coffee, oil palm, rubber and sheanut.
• “Cash Crop” includes cassava, maize, pineapple, rice and yam.
• “Processing Business” means business of converting crops, fish or livestock produced in Ghana into edible canned or other packaged products other than their raw state.
• “Farming Business” means the business of producing crops, fish or livestock.
  

This is a case of the interest and foreign exchange loss being subjected to Thin Capitalisation. Ratio of Debt to Equity ie 2:1