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- 5 Marks
Question
a) Eddie Enterprise Ltd imported a vehicle for GH¢30,000 and was denied the claim of input tax (VAT) on the imports in 2014 on the vehicle by the Ghana Revenue Authority. In 2017, it intends to sell the vehicle for an amount of GH¢26,000.
Required:
The Company seeks your views as a seasoned Tax Expert to advise on the possible tax implication of the above transaction.
(5 marks)
Answer
a) A taxable person registered for VAT is required to claim input VAT on the acquisition of goods and services which are business-related and also required to pay output VAT on goods and services. In effect, the net is claimable or payable (i.e., input tax minus output tax). If the input tax exceeds the output tax, it is claimable, and if the output tax exceeds the input tax, it is payable.
(2 marks)
If the input tax paid by the registered person is denied, the supply of the goods and services by the taxable person is considered a supply of goods and services other than in the course or furtherance of a taxable activity.
(1 mark)
Conclusion:
Eddie Enterprise Ltd was denied the claim of VAT paid on the importation of a vehicle. The proposed sale of the vehicle shall be deemed as a sale that will not attract output VAT in accordance with section 25 of Act 2013 Act 870 as amended.
(2 marks)
- Tags: Ghana Revenue Authority, Input Tax, Output Tax, Tax implications, VAT, Vehicle sale
- Level: Level 3
- Topic: Business income - Corporate income tax
- Series: MAY 2017
- Uploader: Dotse