- 5 Marks
Question
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)
Answer
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)
- Tags: Non-resident, Tax Administration, Taxable Supplies, VAT
- Level: Level 2
- Topic: and Excise Duties, Value-Added Tax (VAT)
- Series: MAY 2020
- Uploader: Cheoli