Topic: International taxation

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  • 5 Marks

AT – Nov 2019 – L3 – Q2b – International taxation

Explain the benefits that countries A and B stand to gain from a Double Taxation Agreement (DTA).

Countries A and B are contemplating a Double Taxation Agreement (DTA). The two countries are of the view that the Double Taxation Agreement will create a lot of tax benefits to citizens and other persons in both countries. Others have criticized this move as counter-productive and not worth the time of either country.

Your inputs are being solicited as an ICAG Finalist and a patriotic citizen of Country A to provide the benefits to be put on the website of the Ministry of Finance of Country A to enable people to read, appreciate, and support the agreement.

Required:

Explain FIVE (5) benefits that the two countries stand to gain from this arrangement.

The benefits of a Double Taxation Agreement (DTA) between Countries A and B include:

  1. Fiscal Certainty for Investors: It creates fiscal certainty for investors in the affected countries, ensuring they understand the tax obligations in each country.
  2. Tax Exemptions: It provides for certain income to be exempt from tax in one of the contracting states, thereby avoiding double taxation.
  3. Promotion of Foreign Investment: The DTA promotes foreign investment by providing clear rules on how income will be taxed in both countries, making investment decisions easier.
  4. Assistance in Revenue Collection: Countries may obtain help in revenue collection from the contracting state, facilitating the enforcement of tax laws.
  5. Prevention of International Tax Avoidance: The DTA specifies income to be taxed at lower rates and prevents international tax avoidance and evasion by providing clear rules for taxation.
  • 3 Marks

AT – Nov 2019 – L3 – Q2a – International taxation

Outline the conditions required to satisfy before foreign tax credit relief is granted.

Any resident person other than a partnership may be allowed a foreign tax credit relief on any income that is earned outside Ghana subject to the fulfillment of certain conditions, which are critical in the granting of the relief.

Required:

What are the conditions to satisfy before the foreign tax credit relief is granted?

The foreign tax credit relief is granted subject to the following conditions:

  1. Income Assessment: The income corresponding to the tax must have been assessed.
  2. Tax Credit Certificate: Submission of a tax credit certificate from the tax department of the foreign country signifying the nature of income and the quantum of taxes paid by the taxpayer.
  3. Official Receipt: Providing an official receipt or a functional equivalent of a tax credit certificate from the tax department of the foreign country.
  • 3 Marks

AT – Nov 2019 – L3 – Q1c – International taxation | Tax administration in Ghana

Explain the tax implications of "Trading in Ghana" versus "Trading with Ghana."

What is the tax implication of the concepts “Trading in Ghana” and “Trading with Ghana” in tax administration arrangement?

Trading in Ghana connotes a non-resident person having business presence in Ghana and competing with local businesses. It implies, in simple terms, having a permanent establishment. This creates tax obligations for the non-resident person within Ghana.

Trading with Ghana, on the other hand, does not imply having a business presence in Ghana. It means conducting business with entities in Ghana from outside the country without establishing a permanent establishment within Ghana. This does not create any tax obligations for the non-resident person within Ghana.

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