- 6 Marks
AT – Nov 2023 – L3 – Q1c – Tax planning
Advise on tax strategies to reduce advertising and marketing costs while creating value for shareholders.
Question
Zantem Ltd has equity of GH¢10,000,000 while Bonty Ltd has equity of GH¢12,000,000. The two companies are in competition for the same market space. This has increased their advertising and marketing costs. The Ghana Revenue Authority (GRA) has threatened to disallow a portion of their advertising and marketing costs, which appear astronomically high.
The Management of the two companies have invited you, a tax expert, to be part of a discussion to look at the possible ways the two companies can eliminate or reduce any tax exposure to their shareholders with the potential threat from the GRA.
Required:
Advise the Management on the tax strategy(ies) to adopt to reduce their cost while creating value for their shareholders. (6 marks)
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