Abinjagoro Ltd imports parts for assembling into sewing machines at Makola. On 1st January 2011, 10,000 units of components valued at $45,000 arrived at the Tema Habour. His principal in China incurred an additional cost of $200 in shipping it to the Port. The Shipping Company on arrival in Ghana on 1st January, 2011 with the components, charged $0.15 per unit of component for their services. An amount of GHC1,200 was paid in respect of marine insurance in Ghana. The customs entry was signed and accepted by the Customs official on 18th January, 2011. The exchange rate to the $ provided by the Treasury department of Bank of Ghana were as follows:

Date GHC

1/01/2011 1.575.00

18/01/2011 1.525.00

31/12/2011 1.582.00

The Customs tariffs in respect of sewing machines are as follows:

Rate of Duty 20%

Special Tax 5%

VAT 12.5%

NHIL 2.5%

You are required to:

1. State the appropriate method of tariff to be used in computing the duty payable and why? (3 mark)

2. Calculate the duty payable by the company (10 marks)

Question 3.

(a) A person registered for VAT may take credit for input tax incurred in furtherance of his business. Required: State the circumstances under which a VAT registered person will not be entitled to take credit for input tax incurred for business purposes. (8 marks)

(b) Describe what constitutes taxable supply of goods. (6 marks)

(c) Below is the capital structure of Spera Hayford Ghana Limited for 2014 year of assessment:

GH¢

Equity 20,000,000

Loans 80,000,000

Total 100,000,000

The loans were taken for Spera Hayford Limited from the parent company based in Nigeria.

During the year under review the subsidiary paid GH¢700,000 as interest on the loan and also incurred exchange loss of GH¢500,000 on the repayment of a loan taken earlier from the parent company.

Required: Determine how the above transaction will be treated for tax purposes.