- 4 Marks
Question
Jantua Ltd (Jantua) is a company incorporated in the Republic of Israel with subsidiaries across other countries, including Frankaa Company Ltd (Frankaa) in Ghana. All subsidiaries were incorporated in their respective countries by Jantua.
Jantua won a contract with the Ministry of Roads and Highways to construct a road in Ghana. Jantua used its subsidiary, Frankaa, to carry out the project. Jantua billed the Ministry of Roads and Highways for the work done. Likewise, Frankaa billed Jantua for management and technical services on the road project.
Required:
What is the tax treatment of this arrangement?
(4 marks)
Answer
The winning of contract by Jantua Ltd to construct roads, makes Jantua Ltd a
permanent establishment in Ghana for a period of 90 days or more. This means that
once the 90 days’ period is reached, Jantua Ltd will be required to file its tax returns.
Its withholding tax is not final after it attains the status of a permanent establishment
in Ghana.
Additionally, it is required to withhold on the payment to Frankaa Ltd on the
management and technical service fees.
- Topic: International taxation
- Series: AUG 2022
- Uploader: Joseph