a) Any resident person other than a partnership may be allowed a foreign tax credit relief on any income that is earned outside Ghana subject to the fulfilment of certain conditions, which are critical in the granting of the relief.
Required:
What are the conditions to satisfy before the foreign tax credit relief is granted? (3 marks)
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- 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)
b) Countries A and B are contemplating a Double Taxation Agreement (DTA). The two countries are of the view that the Double Taxation Agreement will create a lot of tax benefits to citizens and other persons in both countries. Others have criticized this move as counter-productive and not worth the time of either country.
Your inputs are being solicited as an ICAG Finalist and a patriotic citizen of Country A to provide the benefits to be put on the website of Ministry of Finance of Country A to enable people read, appreciate and support the agreement.
Required:
Explain FIVE (5) benefits that the two countries stand to gain from this arrangement. (5 marks)
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- 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)