Question Tag: VAT

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  • 5 Marks

PT – Nov 2023 – L2 – Q2c – Value-Added Tax (VAT), Customs, and Excise Duties

Determine whether a hostel facility and the supply of food and drinks are taxable.

State whether the following are taxable or not and briefly explain your answer.
i) Hostel facility offered to candidates by the Commonwealth Hall of the University of Ghana for profit.
ii) The supply of food and drinks by Papaye to the Vice President of Ghana for the celebration of his birthday.

i) Hostel facility offered to candidates by the Commonwealth Hall of the University of Ghana for profit
The provision of hostel facilities for profit is considered a taxable supply under the VAT Act, 2013 (Act 870). Commonwealth Hall offering hostel accommodation for profit is regarded as a commercial activity and therefore subject to VAT. It becomes exempt from VAT only if the purpose is not for profit, such as in cases of hosting candidates for educational purposes without a profit motive.

ii) Supply of food and drinks by Papaye to the Vice President of Ghana for the celebration of his birthday
The supply of food and drinks to the Vice President of Ghana for his birthday celebration is taxable. The Vice President, unlike the President of Ghana, does not have any specific exemptions or reliefs under VAT law. Therefore, this transaction is subject to VAT as it involves the supply of goods and services for consumption.

  • 5 Marks

PT – Nov 2023 – L2 – Q5b – Value-Added Tax (VAT), Customs, and Excise Duties

Calculate the withholding tax payable for a contract including various levies and VAT.

The cost of iron rods supplied by Akinto Steel Works Ltd to Oputu Construction Ltd is worth GH¢300,000 (inclusive of National Health Insurance Levy, Ghana Education Trust Fund Levy, COVID-19 Health Recovery Levy, and Value Added Tax).

Required:
Determine the Withholding Tax payable in respect of the contract for supplies. (5 marks)

b) Determination of Withholding Tax payable in respect of the contract for supplies
Determine the VAT charged. = (300,000 *15/115) = 39,130.43
Determine the VAT exclusive amount(300,000-39,130.43) = 260,869.57

Note: Candidates who computed withholding VAT instead of 3% withholding for goods were also marked correct.
(5 marks)

  • 5 Marks

PT – Nov 2023 – L2 – Q2a – Value-Added Tax (VAT), Customs, and Excise Duties

Define "Supply of Goods" and "Supply of Services" as per the VAT Act.

There is imposed by the Value Added Tax Act, 2013 (Act 870) a tax to be known as the value added tax, which is to be charged on:
(a) The supply of goods or services made in the country other than exempt goods or services; and
(b) The import of goods or services other than exempt import.

Required:
i) What constitutes “Supply of Goods”?
ii) What constitutes “Supply of Services”?

i) Supply of Goods
Under the VAT Act, the supply of goods is an arrangement in which the owner parts with possession of goods, such as through sale, barter, lease, transfer, exchange, gift, or a similar disposition. Supply of goods does not include the supply of money. Additionally, the disposal of a taxable activity or part of a taxable activity that can be operated as a going concern is considered a supply of goods. Other forms of power, heat, refrigeration, or ventilation are also treated as a supply of goods.

ii) Supply of Services
A supply of services refers to the performance of services for another, making available a facility, tolerating a situation, or refraining from doing something. Services that are incidental to the supply of goods are considered part of the goods supply, and likewise, goods that are incidental to a service supply are treated as part of the service.

  • 12 Marks

PT – Nov 2019 – L2 – Q2b – Value-Added Tax (VAT)

Calculates withholding VAT, output VAT, and VAT payable by Akorfa Vinyo for equipment hire services.

b) Akorfa Vinyo, an equipment hiring company, raises an invoice in the sum of GH¢500,000.00 in respect of hiring of equipment services to a withholding VAT agent (Sir James Enterprise). This supply excludes Value Added Tax (VAT of 12.5%), National Health Insurance Levy (NHIL of 2.5%), and Ghana Education Trust Fund Levy (GETFL of 2.5%).

Assume that this is the only supply of value-added activity done by Akorfa Vinyo in the period and payments are made in the same period.

Required:
i) Calculate the proportion of VAT that should be withheld by the agent in respect of payment of the invoice (the withholding VAT rate is 7%). (3 marks)
ii) Calculate the output VAT to be shown on the face of Akorfa’s monthly VAT Return. (3 marks)
iii) Calculate the VAT payable by Akorfa, if the total input VAT incurred for the period is GH¢25,000. (3 marks)
iv) Show the payment details by the Withholding Agent for the supply. (3 marks)

i) Proportion of VAT that should be withheld by the agent:

Proportion of VAT to be withheld (7% x 525,000) GH¢36,750
(3 marks)

ii) Calculation of output VAT:
Description Amount (GH¢)
12.5% x 525,000 65,625.00
Output VAT GH¢65,625
(3 marks)

  • 3 Marks

PT – Nov 2019 – L2 – Q2a – Value-Added Tax (VAT)

Describes the procedure to follow when a VAT invoice is lost by the recipient.

a) Percy Cool (Percy) supplied goods to Perry Hot (Perry), both are VAT-registered traders. Percy issued a VAT invoice accordingly on 15 February 2019. On 20 February 2019, Percy received a call from Perry indicating that he has lost the VAT invoice issued to him.

Required:
What should Percy do? (3 marks)

Where, within thirty calendar days after the date of a supply, a recipient who is a taxable person claims to have lost the original tax invoice for a taxable supply, the taxable person making the supply is required to, on receipt of a request in writing from the recipient, provide a certified copy clearly marked “copy” to the recipient within fourteen calendar days of receipt after the request.

(3 marks)

  • 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)

  • 3 Marks

TXF – May 2020 – L2 – Q2b – Value-Added Tax (VAT)

This question asks for the computation of VAT withholding taxes for goods invoiced to a VAT Withholding Agent.

Mutumna Ltd is a manufacturer and invoiced goods valued at GH¢20,000,000 to Lamlam Ltd, a resident company located in the Western Region of Ghana. Lamlam Ltd has been appointed as a Value Added Tax Withholding Agent.

Required:
Compute the VAT withholding taxes.
(3 marks)

b)

(3 marks)

  • 6 Marks

PT – March 2023 – L2 – Q2a – Value-Added Tax (VAT), Customs, and Excise Duties

Explain the exceptions to the turnover rules under section 11 of the VAT Act.

Despite the turnover rules stated under section 6 of the Value Added Tax Act, 2013 (Act 870), there are certain exceptions to the turnover rules under section 11 of the same Act.

Required:

Explain the exceptions to the turnover rules under section 11 of the Value Added Tax Act 2013 (Act 870).

(i) A promoter of public entertainment,
(ii) An auctioneer, or
(iii) A national, regional, local, or other authority or body which carries on any taxable activity shall apply for registration.

Registration of these persons or entities occurs under the following conditions:

  • Promoter of Public Entertainment:
    Must apply for VAT registration at least 48 hours before the commencement of the public entertainment if, within any period of 12 or fewer months, the total value of taxable supplies is expected to exceed GHS 10,000.
  • Auctioneer:
    Must apply for VAT registration within 30 days after becoming an auctioneer.
  • National, Regional, or Local Authority or Body:
    Must apply for VAT registration within 30 days after commencing a taxable activity.
  • 7 Marks

PT – July 2023 – L2 – Q2c – Value-Added Tax (VAT), Customs, and Excise Duties

Breakdown of VAT and other taxes included in a phone bill using a given total amount.

Kingsly Atakora is a postpaid customer of MTN Ghana Ltd. He received his July 2022 billing from MTN Ghana Ltd amounting to GH¢3,121 inclusive of all taxes and levies. He is worried about the amount charged for his telephone usage for the month and wants to know the tax composition in the charge.

Required:
Compute the amounts of the following taxes included in the bill for July 2022:
i) VAT
ii) National Health Insurance Levy (NHIL)
iii) Ghana Education Trust Fund Levy (GETL)
iv) Covid-19 Levy
v) Communication Service Tax (CST)

Description Formula Amount (GH¢)
i) VAT GH¢3,121 × 1/9 346.78
ii) NHIL (GH¢3,121 – 346.78) × 2.5/111 62.48
iii) GETFUND Levy (GH¢3,121 – 346.78) × 2.5/111 62.48
iv) Covid-19 Levy (GH¢3,121 – 346.78) × 1/111 25.00
v) Communication Service Tax (CST) (GH¢3,121 – 346.78) × 1/111 124.96

Total VAT, Levies & CST: GH¢621.70

  • 3 Marks

PT – July 2023 – L2 – Q2b – Value-Added Tax (VAT), Customs, and Excise Duties

Explanation of three situations where a taxpayer cannot claim an input tax under VAT rules.

State THREE (3) situations under which a taxpayer cannot claim an input tax. (3 marks)

A taxpayer cannot claim input tax in the following situations:

  1. Exempt Supplies: Input tax cannot be claimed on goods or services that are classified as exempt supplies.
  2. Personal Use: Input tax cannot be claimed on goods or services used for personal, non-business purposes.
  3. Expired Claims: Input tax cannot be claimed if the claim is made after six months from the date of the tax invoice.

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