A)Explain briefly the Composition of the Standard Structure and the central design feature of a VAT collection process in Ghana.                                                                                        

The figures below represent extracts from the books of Pampam Enterprise, a VAT registered trader, for the month of June 2015.                                                         

Purchases                                                                                                GH¢

            Imported leather (VAT inclusive)                                           144,000.00

            Paper (VAT inclusive)                                                            144,000.00

            Super glue (VAT exclusive)                                                       9,600.00     

            Cardboard sheet (VAT exclusive)                                          144,000.00

Sales                                                                                                        GH¢

            Handbags leather (VAT exclusive)                                         96,000.00

            Children’s books (VAT exclusive)                                         96,000.00

            Newsprint (VAT inclusive)                                                   432,000.00

            Diaries (VAT exclusive)                                                       240,000.00

            Newsprint for export (VAT exclusive)                                   96,000.00

 

Required: 

Calculate the amount of VAT due to the VAT Service or the amount of VAT due to be refunded to Pampam Enterprise. Assume a VAT rate of 17.5%.                                                          

Notes

i.          Purchases include GH¢800.00 Superglue and GH¢4,000.00 Cardboard sheets purchased from petty traders not registered with the VAT Service.

ii.         Sales include the following supplies to the Presidency:

Diaries             GH¢20,000.00

Handbags        GH¢10,000.00

b) Kwagyebi Ltd imports raw materials worth US&50,000 (Rate of exchange – use GH₵5.5 to the Dollar). He sells the raw materials at GH₵280,000 to the manufacturer. The manufacturer coverts the raw materials, incurring a total conversion cost of GH₵30,000 and sells to a distributor at GH₵450,000. The distributor in turn sold the finished goods to a registered retailer at GH₵600,000. The registered retailer sold to the final consumers grossing a Vat-inclusive Sales of GH₵750,000. Unless otherwise stated all values are VAT- exclusive.

a) You are required to compute the Output Tax, Input tax and Value Added and determine the amount to be paid for VAT at each stage of the Value Added Chain identified.

Assuming the current Vat Rate in Ghana.                                                                    

b) Kofi Enterprise is a VAT registered entity. Kofi Enterprise acquired goods (on wholesale basis) from a manufacturer at VAT inclusive price of GH₵235,000 in July 2014. Kofi Enterprise sold these goods to a retailer, Mr. Adom at a VAT inclusive price of GH₵282,000.

Mr. Adom sold these goods to a customer at a VAT inclusive price of GH₵317,250. The manufacturer, Kofi Enterprise and Mr. Adom are all VAT registered persons/entities. The standard VAT rate is 17.5%.

Required:

 Calculate the net VAT payable to Ghana Revenue Authority by each of the persons/entities within the distribution chain.