a) Explain the concept of a ‘permanent establishment’
Major Types and Benefit of Double Tax
b) Stella Akorfa retired from Stonebridge (UK) Limited having served the company for 20 years meritoriously. She relocated to Abuakwa in Kumasi, Ghana where she commenced business as a Security Consultant to honourable politicians. She rented out her house in the UK for a yearly rent of £10,000. She also maintained a healthy balance in her account with Gold Bank in London.
Her income for 2018 accounting year is as summarised below:
Consultancy Income (net of all taxes) GH¢70,000.
Dividend received from Success Company (Ghana) Ltd, a resident company at gross amount GH¢10,000.
Rent paid into her London bank account £9,000. Withholding tax amounting to £1,000 had been deducted.
Her London bank credited her account with net of £4,500 bank interest. UK tax rate on interest is 10%.
Additional information:
The exchange rate is GH¢6 for £1.
Stella Akorfa does not contribute to social security in Ghana.
Required:
Compute her tax liability as an individual for the relevant year of assessment while granting her relief for double
b) Mr. Appiah-Kubi is the Managing Director of Dadiaba Company Limited in Ghana. He was employed in 2011 on a Gross Salary of GH¢187,500. He contributes 5.5% to Social Security. He has investment in Germany. In 2011, the Gross interest income accrued to him was US$18,000 from which a tax of US$4,500 had been deducted at source. The remainder of US$13,500 has been remitted to him in Ghana.
Required:
Determine the tax credit relief to be granted to Mr. Appiah-Kubi and net tax payable assuming Ghana has a Double Taxation Agreement with United Kingdom. Notes: Exchange rate in 2011 was GH¢5.50 = 1 dollar
b) Bosompem, is the Marketing Director of Beauty Bee Cosmetics Ltd in Ghana. His gross salary for the year 2016 was GHS 14,400 from which he contributed 5.5% to Social Security and National Insurance Trust. Bosompem, has investments in France. In 2016, the gross interest that accrued to him was GHS 6,000 from which a tax of GHS 1,500 had been deducted with the remainder of GHS 4,500 remitted to him in Ghana.
i) Determine the Tax Credit Relief to be granted to Bosompem, on the basis that a double taxation agreement exists between Ghana and the France.
ii) What is Bosompem’s net tax liability in Ghana?
The following rates are applicable: GH¢ % Rate
First 1200 5
Next 420 5
Next 1104 10
Next 23196 17.5
Exceeding 25,920 25
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