Question Tag: Taxable Supplies

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  • 5 Marks

PT – May 2020 – L2 – Q2a – Value-Added Tax (VAT),

Examines the VAT implications for a non-resident company's purchase and servicing of vehicles in Ghana.

Pamela Noi Ltd is a non-resident person. The Company’s Procurement Officer came down to Ghana to buy Ten (10) Toyota Vehicles manufactured by Safo Kantanka to be delivered in Mali. The vehicles are going to be used in Mali. The management of Pamela Noi Ltd requested that the vehicles be serviced in Ghana by High Class Mechanic, a popular mechanic in Accra-Ghana.

Required:

i) What is the Value Added Tax (VAT) implication on the vehicle to be acquired by Pamela Noi Ltd?
(2.5 marks)

ii) What is the VAT implication of the servicing of the vehicle in Ghana?
(2.5 marks)

i) VAT Implication on Vehicle Purchase:
VAT is charged on goods, services, and imports under the destination principle. Since the 10 vehicles purchased by Pamela Noi Ltd are to be used in Mali (outside Ghana), the purchase does not attract VAT in Ghana.

ii) VAT Implication on Vehicle Servicing:
VAT is charged when services are consumed in Ghana. Since the vehicles will be serviced in Ghana by a Ghanaian mechanic, this service is a taxable activity and will attract VAT under the destination principle.

(5 marks evenly spread using ticks)

  • 10 Marks

PT – Mar 2024 – L2 – Q2a -Value-Added Tax (VAT), Customs, and Excise Duties

Compute VAT and Levies payable by Pioneer Products Ltd for the year 2023.

Pioneer Products Ltd (PPL) is a manufacturer of plastic products which are supplied into both domestic and foreign markets.

The following transactions took place in the year 2023:

Transaction Amount (GH¢)
Turnover for the year 2,350,000
Export sales 570,000
Supplies to the presidency of Ghana for maintenance 205,200
Import duties paid 12,900
Import VAT Paid 43,100
Cost of local purchases (Excluding VAT) 17,100
Cost of electricity bills paid (Including VAT) 63,200
VAT paid to Ghana Revenue Authority during the year 15,900
Levies paid to Ghana Revenue Authority during the year 3,200

Required:
Compute VAT and Levies payable at the end of the year 2023. (10 marks)

Computation of VAT and Levies Payable for the year ended 2023

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