Free Zone Enterprise – NBC Institute

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

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Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

Question

ABG Ltd is a Free Zone Enterprise established in the year 2011. The company is part of Akafina Group of Companies with subsidiaries located in Accra, Kumasi, Ayanfuri, Tema, and Bodie. The following information is relevant to the operations of Akafina Group of Companies:

Taxable Profit for the Year Ended 31 December 2022	Location	Activity	GH¢ million
ABG Ltd	Accra	Manufacturing	28
Adooso Ltd	Tema	Manufacturing	13
Brefa Ltd	Kumasi	Manufacturing	14
Crame Ltd	Bodie	Manufacturing	22
Didie Ltd	Ayanfuri	Manufacturing	33
Frankaa Ltd	Accra	Manufacturing	14
Greda Ltd (established since 2010)		Agriculture	20

Required:
Compute the tax payable by each company and explain the type of tax incentives they may enjoy.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Free Zone Enterprise, Group companies, Tax Incentives
Level: Level 3

Topic: Tax planning
Series: JULY 2023

AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

Question

The following is the extract of financial statements – Financial position as at 31 December 2018 of the following companies:

Item	Tiika (GH¢)	Taaka (GH¢)
Stated Capital	1,000,000	1,000,000
Retained Earnings	600,000	600,000
Share Deals	30,000	30,000
Total Equity	1,630,000	1,630,000

Tiika is a Free Zone company, resident in Ghana. Taaka is also a company resident in Ghana, and both companies are engaged in the sale of tiles.

A Ghanaian who was living in the United States for a very long time has relocated to Ghana and has sought your opinion as a student of taxation to advise on the company to buy shares in. Your background checks indicate that the two companies have huge prospects.

Required:

Which of the companies will you advise this Ghanaian to invest in and why?

Answer

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Tags: Free Zone Enterprise, Investment Decision, Tax Benefits
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2019

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

Question

Taxable Profit for the Year Ended 31 December 2022	Location	Activity	GH¢ million
ABG Ltd	Accra	Manufacturing	28
Adooso Ltd	Tema	Manufacturing	13
Brefa Ltd	Kumasi	Manufacturing	14
Crame Ltd	Bodie	Manufacturing	22
Didie Ltd	Ayanfuri	Manufacturing	33
Frankaa Ltd	Accra	Manufacturing	14
Greda Ltd (established since 2010)		Agriculture	20

Required:
Compute the tax payable by each company and explain the type of tax incentives they may enjoy.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Free Zone Enterprise, Group companies, Tax Incentives
Level: Level 3

Topic: Tax planning
Series: JULY 2023

AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

Question

The following is the extract of financial statements – Financial position as at 31 December 2018 of the following companies:

Item	Tiika (GH¢)	Taaka (GH¢)
Stated Capital	1,000,000	1,000,000
Retained Earnings	600,000	600,000
Share Deals	30,000	30,000
Total Equity	1,630,000	1,630,000

Tiika is a Free Zone company, resident in Ghana. Taaka is also a company resident in Ghana, and both companies are engaged in the sale of tiles.

Required:

Which of the companies will you advise this Ghanaian to invest in and why?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Free Zone Enterprise, Investment Decision, Tax Benefits
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2019

Question Tag: Free Zone Enterprise

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AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

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AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

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AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

You're reporting an error for "AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax"

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

AT – July 2023 – L3 – Q5a – Tax planning

Computing the tax payable for group companies and identifying applicable tax incentives.

You're reporting an error for "AT – July 2023 – L3 – Q5a – Tax planning"

AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax

Advise on which company, Tiika or Taaka, a Ghanaian investor should invest in, considering tax benefits and future growth potential.

You're reporting an error for "AT – Nov 2019 – L3 – Q2d – Business income – Corporate income tax"

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