Menu
- 4 Marks
Question
Ganigani Ltd is a company based in Ghana and has a business dealing mainly in Nigeria. In the 2020 year of assessment, the following data is relevant to parts of its operation:
- Global income: GH¢25,000,000
- Tax paid in Nigeria: ₦1,000,000
- Exchange rate: GH¢1 = ₦67.59
Ganigani Ltd elects to relinquish a foreign tax credit for the year in line with section 112 of the Income Tax Act, 2015 (Act 896) as amended.
Required:
Compute the tax payable.
Answer
Computation of tax payable for the 2020 year of assessment:
| Description | GH¢ |
|---|---|
| Global income | 25,000,000.00 |
| Less: Tax paid in Nigeria (₦1,000,000 / 67.59) | (14,795.09) |
| Taxable income | 24,985,204.91 |
| Tax payable @ 25% | 6,246,301.23 |
Explanation:
The taxable income is derived from the global income minus the tax paid in Nigeria, converted to Ghana cedis using the exchange rate provided. The tax is then computed at the rate of 25%.
- Tags: Corporate Tax, Foreign income, Tax Credit
- Level: Level 3
- Topic: International taxation
- Series: MAY 2021
- Uploader: Joseph