- 10 Marks
AT – Nov 2017 – L3 – Q4b – International taxation
Calculating the CIF and VAT/NHIL for imported goods.
Question
Obiba JK Enterprise imports component parts from China and assembles them into various forms of office equipment. On 1 January 2016, component parts were imported with the following details:
| Item | Cost ($) |
|---|---|
| Cost of containers | 2,200 |
| Cost of packing for labor and materials | 550 |
| Cost of materials used in production | 15,600 |
| Cost of tools inserted in the components | 3,750 |
| Development and design costs | 630 |
| Royalties and licenses | 330 |
| Cost of labor and others in China | 7,400 |
| Shipping and transport to Tema Harbour | GH¢16,200 |
| Loading, unloading, and handling charges | GH¢5,400 |
| Cost of marine insurance | GH¢2,958.30 |
| Assembling overhead cost | GH¢23,400 |
| Fees for freight services to Tema Harbour | GH¢3,700 |
Additional Information:
- Trade discount of 2% on the cost of goods (not yet accounted for).
- Excise duty of $560 paid in China (included in the labor cost).
- Contingent discounts and rebates of 1% (already accounted for).
- Technical assistance of GH¢3,000 after the goods arrived at the factory.
- Average exchange rate was $1 = GH¢3.11.
- Import duty is 20%.
Required:
i) Compute the Cost, Insurance, and Freight (CIF), clearly showing workings of each component.
(9marks)
ii) Compute the VAT/NHIL. (1 mark)
Find Related Questions by Tags, levels, etc.
- Tags: Cost Insurance and Freight (CIF), Import Duties, Tax computation, VAT/NHIL
- Level: Level 3
- Topic: International taxation
- Series: NOV 2017
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