Question 1a.

The tax audit manual requires analytical procedure to be performed as part of

the initial risk assessment stage of the audit. These procedures, also known as
preliminary analytical review, are usually performed as part of the planning of the
audit.

Required:
(i) Explain, using examples, the reasons for performing analytical
procedures as part of risk assessment; (5marks).

(ii) Discuss the limitations of performing analytical procedures at the

planning stage of the audit. (5 marks).

Question 1b.
You have been assigned to conduct a tax audit of Patapaa Limited, a large
company, which operates a chain of supermarkets.

The following information was provided during an entrance meeting held with the
management of Patapaa Limited. All the matters outlined in the notes below are
potential information for your coming audit.

Notes from meeting held 29 November 2013:

The company operates in three regions of Ghana namely Greater Accra, Ashanti
and Western.

The Greater Accra region comprises stores branded as Super Mall. This region
makes up half of the companys, sales. These stores sell a wide variety of items,
including food and drink, clothing, household goods, and electrical appliances.
The Ashanti region operation (branded as made in Ghana goods) comprises
traditional goods focusing on food and drink, especially ready meals and other
convenience items.

The company also established property investment and financial services

division at western region which offers loans and low cost real estate services to
customers.

During the meeting it came out that, on 31 August 2013, Patapaa Limited
received notice from the Food and Drugs Authority that it was under
investigation, along with three other companies operating supermarket chains,
for alleged collusion and price fixing activities. As at the close of the financial
year, the authority had not concluded its investigation but it has emerged that, if it
is found guilty, significant financial penalties will be imposed on Patapaa Limited.
The company is vigorously defending its case.

To help cash flows, the company raised finance by issuing debentures and other
debt instruments with maturity dates in 2015.

The property market slumped in 2013, and significant losses were made on the
sale of some plots of land which were originally acquired for development
potential. The decision to sell the land was made as it is becoming increasingly
difficult for the company to receive planning permission to build supermarkets on
the land. Land is recognized at cost in the statement of financial position.

Required:
Using the specific information provided in respect of Patapaa Limited;
explain the information that you would require in order to perform
analytical procedures during the planning of the audit. (10 marks)
Question 2a.

In the case of a taxable person who supplies both taxable and exempt goods,
input taxes may be incurred on both taxable and exempt supplies.
(i) State and briefly explain the three categories of input tax incurred in
partially-exempt cases. (3 marks)
(ii) State what steps you will take to determine the amount of deductible
input tax when performing CV activities in a business which makes
both taxable and exempt supplies. (3 marks)

Question 2b.
AG Goldrich Flour Mills Limited (TIN: 552M000665) manufactures hard spring
and pastry flour for countrywide distribution and for export. During the month of
May, 2013, you were assigned as a Control and Verification officer to audit, in
accordance with the Value Added Tax Act, 1998 (as amended), the company for
the six-month period ended 31st March, 2013. The following data were made
available to you:

Sales in Ghana (Exclusive of VAT & NHIL) GH

Hard-milled wheat flour 7,580,000
Pastry flour 23,200,000
Semolina 4,020,000

Supplies to Etablissments Patisserie Kokou Messahn, Cotonou, Benin

Currency CFA
Hard-milled wheat flour 3,568,800.00
Pastry flour 1,252,000.00
Semolina 1,692,000.00

(The average rate of exchange was CFA120 to GH1)

Imports/Purchases (Exclusive of VAT & NHIL) made during the period were
as follows:
Deliveries from Tema Port (C.I.F. value) GH
Wheat 4,865,000
Milling machinery spare parts 240,000

The rate of import duty on all items procured from other countries was 20%.

Other costs incurred during the period (all exclusive of VAT & NHIL) were as
follows:
GH
Maize produced in Ghana 5,500,000
Lubricants for machinery 600,000
2 Cars for official use by the directors 84,000
4 Twin-cabin vehicles for office use 128,000
Computer hardware and software 18,000
Electricity bill (factory) 640,000
Electricity bill (office) 10,800
Office stationery 8,000
Telephone bills 56,500
Clearing agents charges 6,000

Required:
(i) Compute in Ghana cedis (GH) the following for AG Goldrich Flour Mills
Limited in respect of the six-month period ended 31st March, 2012:
a) The total value of standard rate output (2marks)
b) The total value of zero rate output (2 marks)
c) Total output tax (2 marks)
d) The value of exempt input (1 mark)
e) The total value of taxable input (2 marks)
 f) Total input tax (2marks)
g) Deductible input tax (1 marks)
h) Non- deductible input tax (1 marks)
i) Net amount payable to the Commissioner-General.
(1 mark)

(Total 14 marks)

Question 3.
You are the tax audit supervisor of MTO of GRA. You have been assigned to tax
audit Nankoli Company limited, a large company, operating in the wholesale and
retail industry. As this is your first assignment in the audit of the company, you
need to gain an understanding of the audit risks facing the company.

You have therefore undertaken the review of the tax file and the financial
statement of the company for the past two years and have obtained the following
extract from the statement of comprehensive income, which are shown below:

2012 2011
GH GH
Total Sales:
Retail Outlets 10,802,455 11,304,452
Wholesale 3,854,521 3,548,450
14,656,976 14,852,902

Cost of Sales 11,548,654 11,106.325

Operating Profit 3,108,322 3,746,577

Administrative and selling expenses 1,325,478 1,048,754
Finance Cost 900,254 845,048
Profit before tax 882,590 1,852,775
Corporate tax 198,543 457,845

Profit after tax 684,007 1,394,930

Additional Notes:
No. of retail stores 30 28

Extract from the meeting with the finance director.

Nankoli Company limited, sells clothing, with a strategy of selling high
fashion items under a brand name Ahoafe Wura. New ranges of clothes
are introduced to stores every quarter. The company relies on a team of
highly skilled designers to develop new fashion ranges. The designers
must be able to anticipate and quickly respond to changes in consumer
preferences. There is a high staff turnover in the design team.

Most sales are made in-store, but there is also a very popular mobile sales
which mobile staff on trucks moves from one business centre to another
The company has accounting software to track sales made by the mobile
teams.

Again the company has a phone in facility where customers can place
orders. The system for phone ordering has recently been outsourced. The
contract for outsourcing went out to tender and Nankoli Company limited,
awarded the contract to the company offering the least cost.

A significant advertising campaign promoting Nankoli Company limiteds

business has recently taken place.
 The company purchased Efi Joromy brand name five years ago and is
recognized at cost as an intangible asset, which is not amortized. The
brand represents 12% of the total assets recognized on the statement of
financial position.

The company owns about thirty distribution centers some of which operate
deep into the night. Security have to be provided and this had been
outsourced to Gyata Security system

Required:
(a) Prepare briefing notes to be used at a planning meeting with head of
audit, in which you evaluate the audit risks (both business and financial)
facing Nankoli Company limited. (12marks)

(b) Using the risk identified in (a) above, indicate the key areas that the
audit team must focus during the field work. (8 marks)

Question 4a.
You are conducting the audit of Love of God Company limited and have found
out that the Managing Director of the Company committed a Teeming and
Lading Fraud. The amount involved has however been refunded by the year
end. From the point of view of tax audit, how would you deal with the
situation. (8 marks)

Question 4b.
Cut off procedure is one of the most popular audit techniques used in tax audits.
Explain Cut-off Procedures and how they are used in the tax audit of a
limited liability company. (6 marks)
Question 4c.
Walk through tests is very important in the understanding of a taxpayers
accounting system. Define and explain how it is applied and its relevance in
an audit of a taxpayer. (6 marks)

Question 5.
You are the audit supervisor in charge of objections and appeal in one of the
Small Taxpayers Offices of the Ghana Revenue Authority. Your staff had
concluded the field audit with a report issued to the taxpayer. The taxpayer had
objected to the assessment and had provided the following responses:

Objection 1
We noticed that, the managing directors basic salary was revised which
we disagreed. Please be informed that as a company policy, expatriate
staff (including the Managing Director) is paid by the number of days they
worked in a month. In effect, no work no pay. This issue indeed came up
in your previous audit and we provided the necessary clarification which
had been accepted. We are at a loss why now.

Required:
Provide a response to the taxpayers objection to the issue raised in your
capacity as audit supervisor. (8 marks.)

Objection 2
Expatriate Staff:
This is in response to the issue concerning the tax audit assessment of
our expatriate staff. We refer to section E (E1-E4) of their respective
employment contracts which defined how the assignees were
remunerated. Their net amounts are grossed up and taxes due duly paid.
We therefore disagree with your assessment.
 Extract from some sections of the contract agreement is shown below.

Section 4a: Notional Income

Your gross Notional salary would be fixed at US$36,047 on annual basis.

Section 4b: Income abroad.

On the basis of the gross notional income, your income abroad as at the
beginning of January 2013 is determined by the home net method as
follows:
a. An income in local currency of GH13,875.00 on an annual basis
b. An Income in hard currency of US$27,897.00 on an annual basis.
This hard currency includes a special allowance of US$10,436.00
on an annual basis.

Section 4c: Payment of income abroad.

The income abroad referred to in Section 4b. will be made available to you
in the form of
The local spendable amount amounting to GH13,875 an annual basis.
This income will be paid to you as net income by your host company.
A net payment of US$27,897.00 on an annual basis to be paid to you via
remittance to a bank of your choice.
All taxes and social security payments payable on this income will be
borne by your host company.

Required:
As an auditor appointed to review the salary of the expatriates, outline the
audit steps to be followed to arrive at the correct tax liability to be paid.

Note, details of workings are not required. Professional marks will be

awarded for the presentation and clarity of your answer. (12 marks)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013

FINAL LEVEL 1
PAPER 7 TAX AUDIT & INVESTIGATIONS

TIME ALLOWED: THREE (3) HOURS

INSTRUCTIONS: ATTEMPT ALL QUESTIONS

Question 1

a) Designing a risk based tax audit strategy is the backbone of the modern tax
system. Discuss. (12 marks)

b) You have been assigned to conduct a tax audit of a private limited company for
the first time. Apart from adopting the conventional audit procedures such as
posting, casting and vouching, what other auditing techniques would you employ
in conducting the audit? (8 marks)
Total (20 Marks)

Question 2
a) You are the leader of the tax audit team conducting the tax audit of ABM
Company Limited for the year ended 31 December, 2012. What evidence would
you look for in verifying the following amounts appearing in the balance sheet of
the company?

i. Leasehold buildings stated at GH1,055,000.00 (2 marks)

ii. Treasury bills GH3,000,000.00 (2 marks)
iii. Salesmens commission GH190,500.00 (2 marks)
iv. Interest receivables GH40,150.00 (2 marks)

b) You are the audit supervisor in a firm engaged in the audit of Se Ebewie
Limited, a medium-sized manufacturing company. Owing to simultaneous
engagements in other assignments, you are unable to spend adequate time with
the staff engaged in the audit of the company.
Required:

(i) What specific control procedures would you adopt to ensure that staff
engaged in the audit perform to the required standards? (5 marks)

(ii) Outline the points to which your attention will be focused during your
review of the audit file. (7 marks)

Total (20 Marks)

1
Question 3

a) Customs duty is payable as a percentage of Value often called Assessable

Value or Customs Value. The Value may be either Value as defined in section
29 of Customs Act or Commissioners Value as defined in section 34.

Discuss briefly with reference to Customs, Preventive and Excise Service

Management Law, 1993, (PNDCL 330) as amended, how the assessable value
of imported item is determined (3 marks)
b) With reference to the Customs, Excise and Preventive Service (Management)
Law, 1993 (PNDCL 330) as amended, discuss how you will deal with the
following:
(1) Goods are sold at special price to buyer by a relative and the buyer is
asked not to disclose the special price to any other party in Ghana.
(2) There has been a price rise between the date of contract and the date of
importation. The contract was over 6 months before the date of shipment.
(3) The sale involves special discounts limited to exclusive agents.
(4) The goods are purchased on High seas. (5 marks)

c) You are auditing Aden Nti Limited, an importer from Egakope in the Volta region
of Ghana.
The importer has imported a machine from Japan at FOB cost of 900,000 Yen.
Other details are as follows:
Freight from Japan to Indian port was 18,000 Yen.
Transit insurance charges were 1% of FOB value.
Design and development charges of 90,000 Yen were paid to a consultancy
firm in Japan for the design of the machinery.
Packing charges of 22,000 Yen were charged extra.
Royalty on manufacture and commission paid to foreign collaborator 5%
GH20,000 was spent as design cost of the machine in Accra, Ghana.
The company incurred a cost of GH15,300 to transport the machine from
Tema port to Accra.
An amount of 98,500 Yen was payable to the Japanese manufacturer for the
installation and commissioning of the machine in Accra.
Rate of exchange as announced by BOG for the relevant period was:
1Yen=GH0.309
Find the customs duty payable if duties are paid in accordance with HS Code as follows:

a. Import VAT 12.50%

b. NHIL 2.50%
c. Import Special tax 0%
d. Import Duty 10.00%
e. Ecowas Levy 5.00%

If similar goods were produced in Ghana, excise duty payable as per tariff is 30%.
(12 marks)
Total (20 Marks)

2
Question 4

Eden Limited, a company engaged in manufacturing of chemicals is consistently

recording higher sales turnover, but declining net profits for the past 5 years. As a tax
auditor appointed to find out the reasons for the same, mention any matters you would
verify in your audit planning stage before the field work? (20 marks)

Question 5

(a) Mention the difference between report and certificate. (4 marks)

(b) What are the contents of tax audit reports and Tax certificates for special
purposes? (8 marks)

(c) You have been asked by a company to compile financial statements for the
purpose of obtaining a loan from a Bank. Draft a report to be given to the
Management for the same. (5 marks)

(d) You are the Manager-Tax Affairs of Titibidi Construction Company Limited. Your
Director of Finance has directed that from July 1, 2013 and subsequent months
you are to furnish him with a FLASH REPORT of all tax assessments and actions
taken on them.

Explain your understanding of what constitute a flash report as required by the

Director of Finance. (3 marks)
Total (20 Marks)

END OF PAPER
Solution 1a

a) Definition of risk based audit:

Risk based audit strategy uses risk assessment to select taxpayers for audits. It
is directed at gathering an intelligent, relevant and reliable evidence to execute
an audit more efficiently at a minimum cost. (2 marks)

Risk Based audit strategy involves the following steps or approaches:

Audit selection
This involves audit strategies focusing on taxpayer noncompliance risks. It
identifies those taxpayers who are the most likely to be noncompliant, that is,
those who have the highest likelihood of yielding large amounts of audit
adjustments and penalties. It focuses on compliance review tasks. After
selection, it moves to planning stage. (2 marks)

Planning
An audit should start with a written plan containing:
a) Taxpayer Profiling

b) Risk review
A list of the prioritized risks;
Issues identified at the risk profiling stage;
Risk Report

c) Audit approach
The sequence of activities to be followed/undertaken during the audit;
The type of audit and the methodology and techniques to be employed;

d) Personnel
The audit team to carry out the audit and time management plan;
The expected duration/audit turnaround time;

e) Management
Directing and supervision
Timing and briefing
Review Procedure

f) Resources
Special resources required such as computer facilities (hardware and
software), special type stationery and other items not readily available; and
Appropriate authority to audit, such as endorsement or approval by
supervisor.
(1 mark each for any 6 correct answers)

Controlling the audit

 Review & Reporting
File review
Exit conference
Draft report
Final Report

(1 mark each for any 2 correct answers)

Solution 1b

b)(1) Obtain knowledge of the business

A tax auditor conducting audit of a taxpayers company for the first time would
do well to obtain knowledge of the business of the company to understand and
assess the kind of audit procedures to be employed by him. Knowledge of the
business is a frame of reference within which the auditor exercises professional
judgement. Understanding the business and using this information appropriately
assists the auditor in:

(i) Assessing risks and identifying problems.

(ii) Planning and performing the audit effectively and efficiently.
(iii) Evaluating audit evidence.

Such knowledge would enable the auditor to identify and understand the events,
transactions and practices that, in the auditor's judgment, may have a significant
effect on the financial statements or on the examination of the records or audit
report.

(2) Review of Internal Controls

An application of compliance procedure to evaluate the internal control systems
in operations would enable the auditor to determine nature, extent and timing of
substantive procedures.

(3) Test-check approach

Test-check approach is an accepted auditing procedure, which aims to test
transactions on the basis of selection of samples from the entire population.
Audit sampling means the application of audit procedures to less than 100% of
the items within an account balance or class of transactions to enable the auditor
to obtain and evaluate audit evidence about some characteristic of the items
selected in order to form or assist in forming a conclusion concerning the
population.

(4) Verification
After performing vouching, it is necessary for an auditor to perform verification
of balances contained in the financial statements. Verification and valuation of
assets and liabilities contained in the balance sheet would involve obtaining
evidence through methods like physical observations, confirmation, computation,
inspection of documents and analytical reviews.

(5) Direct confirmation:

 Direct confirmation procedure provides an independent audit evidence to analyse
the financial information contained in the accounting records. For example,
confirmation may be done for debtors, creditors, investments lying with third
parties, bank balances, etc.

(6) Analytical review

Apart from conducting audit procedures like vouching and verification, it is quite
useful to employ analytical review procedures; In fact, analytical review
procedures would provide substantive audit evidence to support various
assertions in the financial statements. Over a period of time, the analytical
review as a method of obtaining evidence has emerged as a significant auditing
procedures analytical procedures means the analysis of significant ratios and
trends including the resulting investigation of fluctuations and relationships that
are inconsistent with other relevant information or which deviate from predicted
amounts. Analytical procedures in planning the audit use both financial and
nonfinancial information, for example, the relationship between sales and square
footage of selling space or volume of goods sold

(7) Physical observation and direct confirmation

Physical observation and direct confirmation are also useful audit techniques in
the verification of items contained in the financial statements.

(2 marks each for any 4 correct answers)

Solution (2a):

i) Leasehold Buildings-GH1,055,000.00
a) The lease agreement covering the transactions should be verified.
b) The periodic payments
c) Original value and depreciation rate.
d) Whether the lease agreement is finance lease or operating lease.
(1 mark each for any 2 correct answers)

ii) Treasury bills-GH3,000,000.00

a.) The bill certificate from the central bank or the institution which issued the
bill
b.) The applicable interest rate
c.) The period of the bill whether 90days, 180 etc
d.) The maturity date of the bill
e.) The total proceeds on maturity.
(1 mark each for any 2 correct answers)

iii) Salesmens commission-GH190,500.00

a) Evidence of the rates by reference to contracts of employment,
Calculation should be checked.
b) Evidence of the sales by reference to a sample of sales invoices.
c) Evidence of the sales by reference to a sample from the payroll and/or
cashbook and signed receipts.
 e) Any amounts due but not paid should be included in creditors and can be
checked against invoices and the payroll.
(1 mark each for any 2 correct answers)

iv) Interest receivable-GH40,150.00

a) The amount of the loan or deposit on which the interest is earned should
be established at various periods
b) The loan certificates giving the interest rate
c) The date of the last payment can be verified from the cash book
d) If the loan is due from the bank or other reputable institution,
confirmation letter.
(1 mark each for any 2 correct answers)

Solution (2b)

(i) As a supervisor in charge of the audit engagement and who is unable to spend
considerable time with the staff engaged in the audit, the following are the
effective control measures necessary to ensure that staff carry out the audit to
the required high standard:

(a) Work performed by each staff should be adequately documented.

(b) All working papers should be initialed by staff responsible for their
production.
(c) There should be a checklist to ensure the completion of all aspects of the
work.
(d) Audit queries should be separated into two: those in respect of which the
client is expected to provide additional information and those requiring
superior opinion.
(e) Review points raised by the supervisor should be properly disposed of and
documented. (1 mark each)

(ii) The supervisors review will deal with the following points:
Whether working papers comply with the firms audit standards,
Whether working papers are suitably indexed and cross referenced,
Whether all schedules agreed with the relevant figures in the financial
statements,
Whether all necessary letters of confirmation have been received,
Whether the letter of representation covers all applicable points,
Whether the issues raised comply with existing tax laws and standards,
Whether the accounting policies adopted by the company are appropriate and
consistent,
Whether the audit programmes have been duly completed and all audit
queries raised during the work have been acknowledged and appropriate
responses received,
Whether there are any points that put the auditor on enquiry, and hence to
be further dealt with by the appropriate level of authority,
Whether there are any key points which could lead to an amendment of tax
position of the taxpayer. (1 mark each for any 7 correct answers)
Solution 3a

a) For Customs purposes the value of imported goods shall be the transaction
value, that is the price actually paid or payable for the goods when sold in the
country of origin for export into Ghana and adjusted in accordance with the
provisions of section 35.

The following six methods of valuation are employed according to Customs

Excise and Preventive Service (Management) Law, 1993 (PNDCL 330)
Transaction Value of Imported goods [Section 29(1).
Transaction Value of Identical Goods [[Section 29(3) b.
Transaction Value of Similar Goods [Section 29(3) c
Deductive Value which is based on identical or similar imported goods sold in
Ghana.
Computed value which is based on cost of manufacture of goods plus profits
[Rule 8]
Residual method based on reasonable means and data available [Rule 9]

(1 mark each for any 3 correct answers)

Solution (3b)

1) Where sales are made to buyers at special prices,in determining whether the
transaction value is acceptable for the purpose of tax, the fact that the buyer
and the seller are related within the meaning of this section shall not in itself be
grounds for regarding the transaction value as acceptable; in such case the
circumstances surrounding the sale shall be examined and the transaction value
shall be accepted provided that the relationship did not influence the price; and if
in the light of information provided by the importer or otherwise obtained, the
Commissioner has grounds for considering that the relationship influenced the
price, he shall communicate his grounds in writing to the importer who shall be
given a maximum of thirty days to respond.
In the case of the above, the prices so offered cannot be said to be the ordinary
prices and the said price will not be acceptable. (2 marks)

2) Where there is a price rise at the time when the goods are imported in
comparison to the price when the contract was made then, the price at the time
of importation will be taken to be the value of the goods. the value is to be
determined at the time of importation of the goods.

3) Where the sale involves special discounts limited to exclusive agents, such
discounted price shall not be accepted as the assessable value.

4) Where the buyer and the seller are not related and the price is the sole
consideration for sale, the discounted price in some cases can be taken as the
assessable value. However this decision has been nullified by the Customs
Valuation Price of Imported Goods Rules.
5) Where high sea sales are made, the price charged by the importer from the
assessee will be taken to be the value of the goods.

(1 mark each for any 3 correct answers)

Solution (3c)
Design charges of GH20,000 are not allowable in determining Assessable Value, but
design charges paid abroad are allowable.
Erection and commissioning charges are not allowable. Relevant rate of exchange is 1
Yen = GH0.308.
Hence duty payable is calculated as follows

Amount Total Duty

FOB in Yen 900,000.00)
Ocean freight 18,000.00)
Insurance charges 9,000.00) 5 marks
Design and consultancy charges 90,000.00)
Packing charges 22,000.00)
CIF in Yen 1,039,000.00
Exchange Rate 0.309
Total CIF Value in (1 mark) 321,051.009

ADD- LandingCharges @ 1% 3,210.51

(A) Assessable Value 324,261.51

(B) Import Duty @ 10% (32,426.15

(C) Sub Total Value for VAT Purpose (356,687.66

(D) Import VAT @ 12.5% (6 marks) (44,585.95
(E) Ecowas Levy - 5% (17,834.38
(F) NHIL @2.5% (_8,917.19
(L) Total Duty (103,763.67

Answer 4

Decline in Net Profits Despite Increasing Sales: As per the facts that there has
been
consistently high turnover but declining net profits is an anomalous situation. It may be
attributed to one or more following reasons requiring further investigation:

(i) Unfavourable Sales mix: Where the company sells different chemical products
with different product margins, the product with the maximum PV ratio/margin
should have a higher share in the total sales. If due to revision of sales mix,
more quantities of unprofitable products are sold; profits will be reduced in spite
of an increase in sales.
(ii) Negative Impact of Financial Leverage: Where the company does not have
sufficient own funds (equity) but has a higher debt-equity ratio, the interest
commitments will be higher. As the volume of its operation increases, higher
debt and interest charges would result in lower profits.

(iii) Other Items Included in Sales: The figure of sales as per Profit and Loss
Account may include incidental revenues, e.g., freight, excise duty, sales-tax,
etc. where the amount of excise duty goes up considerably the total sales may
show an increase which is not represented by a real increase in sales
quantity/value.

(iv) High Administrative and Selling Expenses: Administrative and selling costs
are generally period costs which are fixed in nature. Their increase is generally
not proportional to sale increase. However, a reduction in profit could also be
due to increase in administrative overheads and sales overheads at a rate higher
than the rate of increase in sales.

(v) Cost-Price Relationship: If the increases in cost of raw materials and labour
has not been compensated by a corresponding increase in the sales price this
would also result in higher sales and declining profits. In spite of same sales
quantity, for the increasing cost of raw materials and other services, per unit
values of the product has been increased which is however unmatched by the
increase in cost.

(vi) Competitive Price: Where sales have been made at cut-throat prices in order
to
eliminate competition from the market, the profits would be in the declining
trend in the short-run.

(vii) Additions to Fixed Assets: Where there are heavy additions to fixed assets
and
consequent depreciation charges in the initial years of additions, there may be
reduction in profits in spite of increased sales. (4 marks each for any 5
correct answers)

Solution 5

a) A certificate is a written confirmation of the accuracy of the facts stated therein

and does not involve any estimate or opinion. The term certificate is, therefore,
used where the auditor verifies the accuracy of facts. A tax auditor may thus,
certify the accuracy of tax payments or tax position of a taxpayer. An auditors
certificate represents that he has verified certain figures and is in a position to
vouch safe their accuracy as per his examination of documents and books of
account. (2 marks)

A report, on the other hand, is a formal statement usually made after an

enquiry, examination or review of specified matters and includes the reporting
auditors opinion thereon. Thus, when a reporting auditor issues a certificate, he
 is responsible for the factual accuracy of what is stated therein. On the other
hand, when a reporting auditor gives a report, he is responsible for ensuring that
the report is based on factual data, that his opinion is in due accordance with
facts, and that it is arrived at by the application of due care and skill. The report
involves expression of opinion which may differ from one professional to another.
(2 marks)

b) Content of Tax audit report

1) Title: It is appropriate to use the term Tax Auditors Report in the title

2) Addressee: Ordinarily, the auditors report is addressed to the authority of

the company or organization.

3) Introductory Paragraph: The auditors report should identify the financial

statements of the enterprise that has been audited including the date of and
period covered by the financial statements. This introductory paragraph must
state that the preparation of financial statements is the responsibility of the
management and that the auditors responsibility is to express an opinion
based on audit.
4) Purpose of the audit

5) Scope Paragraph: The auditors report should describe the scope of the
audit stating that the tax audit was conducted in accordance with tax laws. It
must also lay down briefly the work performed by the auditor and the
constraints involved in discharge of his attest function.

6) Observations and Findings:: This paragraph is mainly devoted for all the
observations and findings noted which would lead to tax adjustments

7) Conclusion

8) Date of Report: The date of an auditors report on the financial statements

is the date on which the auditor signs the report.

9) Auditors Signature: The report should be signed by the auditor in his

name.

(1 mark each for any 8 correct answers)

c) Draft of a Report of an Engagement to Compile Financial Statements -

SRS 4410

To On the basis of the accounting records and other information and

explanations provided to us by the Management, we have compiled the
unaudited Balance Sheet of_______ (Name) as at______ (date) and the related
Profit & Loss Account for the period then ended.

(2 marks)
 The management of the__________ (Name) is responsible for:

(a) Completeness and accuracy of the underlying data and complete

disclosure of all material and relevant information to the accountant;
(b) Maintaining adequate accounting and other records and internal controls
and selecting appropriate accounting policies;

(c) Preparation and presentation of financial statements in accordance with

applicable laws. (1 mark each for any 2 correct answers)

The compilation engagement was carried out in accordance with requirement of

ICAG.

The Balance sheet and the Profit & Loss Account are in agreement with the
books of accounts.

We have not audited or reviewed these financial statements and accordingly

express no opinion thereon.

For_______________
Chartered Accountants
(1 mark)

d) Flash Reports are reports that indicate significant highlights for immediate
attention of top management. Generally suspected defalcations are reported
briefly to the appropriate authority on 'flash' basis, often ending up in referral for
criminal investigation and legal action. It is a common practice in a number of
companies to issue a report quite frequently summarising the various individual
reports issued and describing the range of their contents in a very brief and
comprehensive manner where only important points are highlighted. Such
reports are primarily issued for Board of Directors and for other top level
managers who do not have sufficient time to go through the elaborate reports
and matters which are required to be brought to their notice for immediate
action.
(3 marks)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013

FINAL LEVEL 1
PAPER 7 TAX AUDIT & INVESTIGATIONS

TIME ALLOWED: THREE (3) HOURS

INSTRUCTIONS: ATTEMPT ALL QUESTIONS

Question 1

a) Designing a risk based tax audit strategy is the backbone of the modern tax
system. Discuss. (12 marks)

b) You have been assigned to conduct a tax audit of a private limited company for
the first time. Apart from adopting the conventional audit procedures such as
posting, casting and vouching, what other auditing techniques would you employ
in conducting the audit? (8 marks)
Total (20 Marks)

Question 2
a) You are the leader of the tax audit team conducting the tax audit of ABM
Company Limited for the year ended 31 December, 2012. What evidence would
you look for in verifying the following amounts appearing in the balance sheet of
the company?

i. Leasehold buildings stated at GH1,055,000.00 (2 marks)

ii. Treasury bills GH3,000,000.00 (2 marks)
iii. Salesmens commission GH190,500.00 (2 marks)
iv. Interest receivables GH40,150.00 (2 marks)

b) You are the audit supervisor in a firm engaged in the audit of Se Ebewie
Limited, a medium-sized manufacturing company. Owing to simultaneous
engagements in other assignments, you are unable to spend adequate time with
the staff engaged in the audit of the company.
Required:

(i) What specific control procedures would you adopt to ensure that staff
engaged in the audit perform to the required standards? (5 marks)

(ii) Outline the points to which your attention will be focused during your
review of the audit file. (7 marks)

Total (20 Marks)

1
Question 3

a) Customs duty is payable as a percentage of Value often called Assessable

Value or Customs Value. The Value may be either Value as defined in section
29 of Customs Act or Commissioners Value as defined in section 34.

Discuss briefly with reference to Customs, Preventive and Excise Service

Management Law, 1993, (PNDCL 330) as amended, how the assessable value
of imported item is determined (3 marks)
b) With reference to the Customs, Excise and Preventive Service (Management)
Law, 1993 (PNDCL 330) as amended, discuss how you will deal with the
following:
(1) Goods are sold at special price to buyer by a relative and the buyer is
asked not to disclose the special price to any other party in Ghana.
(2) There has been a price rise between the date of contract and the date of
importation. The contract was over 6 months before the date of shipment.
(3) The sale involves special discounts limited to exclusive agents.
(4) The goods are purchased on High seas. (5 marks)

c) You are auditing Aden Nti Limited, an importer from Egakope in the Volta region
of Ghana.
The importer has imported a machine from Japan at FOB cost of 900,000 Yen.
Other details are as follows:
Freight from Japan to Indian port was 18,000 Yen.
Transit insurance charges were 1% of FOB value.
Design and development charges of 90,000 Yen were paid to a consultancy
firm in Japan for the design of the machinery.
Packing charges of 22,000 Yen were charged extra.
Royalty on manufacture and commission paid to foreign collaborator 5%
GH20,000 was spent as design cost of the machine in Accra, Ghana.
The company incurred a cost of GH15,300 to transport the machine from
Tema port to Accra.
An amount of 98,500 Yen was payable to the Japanese manufacturer for the
installation and commissioning of the machine in Accra.
Rate of exchange as announced by BOG for the relevant period was:
1Yen=GH0.309
Find the customs duty payable if duties are paid in accordance with HS Code as follows:

a. Import VAT 12.50%

b. NHIL 2.50%
c. Import Special tax 0%
d. Import Duty 10.00%
e. Ecowas Levy 5.00%

If similar goods were produced in Ghana, excise duty payable as per tariff is 30%.
(12 marks)
Total (20 Marks)

2
Question 4

Eden Limited, a company engaged in manufacturing of chemicals is consistently

recording higher sales turnover, but declining net profits for the past 5 years. As a tax
auditor appointed to find out the reasons for the same, mention any matters you would
verify in your audit planning stage before the field work? (20 marks)

Question 5

(a) Mention the difference between report and certificate. (4 marks)

(b) What are the contents of tax audit reports and Tax certificates for special
purposes? (8 marks)

(c) You have been asked by a company to compile financial statements for the
purpose of obtaining a loan from a Bank. Draft a report to be given to the
Management for the same. (5 marks)

(d) You are the Manager-Tax Affairs of Titibidi Construction Company Limited. Your
Director of Finance has directed that from July 1, 2013 and subsequent months
you are to furnish him with a FLASH REPORT of all tax assessments and actions
taken on them.

Explain your understanding of what constitute a flash report as required by the

Director of Finance. (3 marks)
Total (20 Marks)

END OF PAPER
Solution 1a

a) Definition of risk based audit:

Risk based audit strategy uses risk assessment to select taxpayers for audits. It
is directed at gathering an intelligent, relevant and reliable evidence to execute
an audit more efficiently at a minimum cost. (2 marks)

Risk Based audit strategy involves the following steps or approaches:

Audit selection
This involves audit strategies focusing on taxpayer noncompliance risks. It
identifies those taxpayers who are the most likely to be noncompliant, that is,
those who have the highest likelihood of yielding large amounts of audit
adjustments and penalties. It focuses on compliance review tasks. After
selection, it moves to planning stage. (2 marks)

Planning
An audit should start with a written plan containing:
a) Taxpayer Profiling

b) Risk review
A list of the prioritized risks;
Issues identified at the risk profiling stage;
Risk Report

c) Audit approach
The sequence of activities to be followed/undertaken during the audit;
The type of audit and the methodology and techniques to be employed;

d) Personnel
The audit team to carry out the audit and time management plan;
The expected duration/audit turnaround time;

e) Management
Directing and supervision
Timing and briefing
Review Procedure

f) Resources
Special resources required such as computer facilities (hardware and
software), special type stationery and other items not readily available; and
Appropriate authority to audit, such as endorsement or approval by
supervisor.
(1 mark each for any 6 correct answers)

Controlling the audit

 Review & Reporting
File review
Exit conference
Draft report
Final Report

(1 mark each for any 2 correct answers)

Solution 1b

b)(1) Obtain knowledge of the business

A tax auditor conducting audit of a taxpayers company for the first time would
do well to obtain knowledge of the business of the company to understand and
assess the kind of audit procedures to be employed by him. Knowledge of the
business is a frame of reference within which the auditor exercises professional
judgement. Understanding the business and using this information appropriately
assists the auditor in:

(i) Assessing risks and identifying problems.

(ii) Planning and performing the audit effectively and efficiently.
(iii) Evaluating audit evidence.

Such knowledge would enable the auditor to identify and understand the events,
transactions and practices that, in the auditor's judgment, may have a significant
effect on the financial statements or on the examination of the records or audit
report.

(2) Review of Internal Controls

An application of compliance procedure to evaluate the internal control systems
in operations would enable the auditor to determine nature, extent and timing of
substantive procedures.

(3) Test-check approach

Test-check approach is an accepted auditing procedure, which aims to test
transactions on the basis of selection of samples from the entire population.
Audit sampling means the application of audit procedures to less than 100% of
the items within an account balance or class of transactions to enable the auditor
to obtain and evaluate audit evidence about some characteristic of the items
selected in order to form or assist in forming a conclusion concerning the
population.

(4) Verification
After performing vouching, it is necessary for an auditor to perform verification
of balances contained in the financial statements. Verification and valuation of
assets and liabilities contained in the balance sheet would involve obtaining
evidence through methods like physical observations, confirmation, computation,
inspection of documents and analytical reviews.

(5) Direct confirmation:

 Direct confirmation procedure provides an independent audit evidence to analyse
the financial information contained in the accounting records. For example,
confirmation may be done for debtors, creditors, investments lying with third
parties, bank balances, etc.

(6) Analytical review

Apart from conducting audit procedures like vouching and verification, it is quite
useful to employ analytical review procedures; In fact, analytical review
procedures would provide substantive audit evidence to support various
assertions in the financial statements. Over a period of time, the analytical
review as a method of obtaining evidence has emerged as a significant auditing
procedures analytical procedures means the analysis of significant ratios and
trends including the resulting investigation of fluctuations and relationships that
are inconsistent with other relevant information or which deviate from predicted
amounts. Analytical procedures in planning the audit use both financial and
nonfinancial information, for example, the relationship between sales and square
footage of selling space or volume of goods sold

(7) Physical observation and direct confirmation

Physical observation and direct confirmation are also useful audit techniques in
the verification of items contained in the financial statements.

(2 marks each for any 4 correct answers)

Solution (2a):

i) Leasehold Buildings-GH1,055,000.00
a) The lease agreement covering the transactions should be verified.
b) The periodic payments
c) Original value and depreciation rate.
d) Whether the lease agreement is finance lease or operating lease.
(1 mark each for any 2 correct answers)

ii) Treasury bills-GH3,000,000.00

a.) The bill certificate from the central bank or the institution which issued the
bill
b.) The applicable interest rate
c.) The period of the bill whether 90days, 180 etc
d.) The maturity date of the bill
e.) The total proceeds on maturity.
(1 mark each for any 2 correct answers)

iii) Salesmens commission-GH190,500.00

a) Evidence of the rates by reference to contracts of employment,
Calculation should be checked.
b) Evidence of the sales by reference to a sample of sales invoices.
c) Evidence of the sales by reference to a sample from the payroll and/or
cashbook and signed receipts.
 e) Any amounts due but not paid should be included in creditors and can be
checked against invoices and the payroll.
(1 mark each for any 2 correct answers)

iv) Interest receivable-GH40,150.00

a) The amount of the loan or deposit on which the interest is earned should
be established at various periods
b) The loan certificates giving the interest rate
c) The date of the last payment can be verified from the cash book
d) If the loan is due from the bank or other reputable institution,
confirmation letter.
(1 mark each for any 2 correct answers)

Solution (2b)

(i) As a supervisor in charge of the audit engagement and who is unable to spend
considerable time with the staff engaged in the audit, the following are the
effective control measures necessary to ensure that staff carry out the audit to
the required high standard:

(a) Work performed by each staff should be adequately documented.

(b) All working papers should be initialed by staff responsible for their
production.
(c) There should be a checklist to ensure the completion of all aspects of the
work.
(d) Audit queries should be separated into two: those in respect of which the
client is expected to provide additional information and those requiring
superior opinion.
(e) Review points raised by the supervisor should be properly disposed of and
documented. (1 mark each)

(ii) The supervisors review will deal with the following points:
Whether working papers comply with the firms audit standards,
Whether working papers are suitably indexed and cross referenced,
Whether all schedules agreed with the relevant figures in the financial
statements,
Whether all necessary letters of confirmation have been received,
Whether the letter of representation covers all applicable points,
Whether the issues raised comply with existing tax laws and standards,
Whether the accounting policies adopted by the company are appropriate and
consistent,
Whether the audit programmes have been duly completed and all audit
queries raised during the work have been acknowledged and appropriate
responses received,
Whether there are any points that put the auditor on enquiry, and hence to
be further dealt with by the appropriate level of authority,
Whether there are any key points which could lead to an amendment of tax
position of the taxpayer. (1 mark each for any 7 correct answers)
Solution 3a

a) For Customs purposes the value of imported goods shall be the transaction
value, that is the price actually paid or payable for the goods when sold in the
country of origin for export into Ghana and adjusted in accordance with the
provisions of section 35.

The following six methods of valuation are employed according to Customs

Excise and Preventive Service (Management) Law, 1993 (PNDCL 330)
Transaction Value of Imported goods [Section 29(1).
Transaction Value of Identical Goods [[Section 29(3) b.
Transaction Value of Similar Goods [Section 29(3) c
Deductive Value which is based on identical or similar imported goods sold in
Ghana.
Computed value which is based on cost of manufacture of goods plus profits
[Rule 8]
Residual method based on reasonable means and data available [Rule 9]

(1 mark each for any 3 correct answers)

Solution (3b)

1) Where sales are made to buyers at special prices,in determining whether the
transaction value is acceptable for the purpose of tax, the fact that the buyer
and the seller are related within the meaning of this section shall not in itself be
grounds for regarding the transaction value as acceptable; in such case the
circumstances surrounding the sale shall be examined and the transaction value
shall be accepted provided that the relationship did not influence the price; and if
in the light of information provided by the importer or otherwise obtained, the
Commissioner has grounds for considering that the relationship influenced the
price, he shall communicate his grounds in writing to the importer who shall be
given a maximum of thirty days to respond.
In the case of the above, the prices so offered cannot be said to be the ordinary
prices and the said price will not be acceptable. (2 marks)

2) Where there is a price rise at the time when the goods are imported in
comparison to the price when the contract was made then, the price at the time
of importation will be taken to be the value of the goods. the value is to be
determined at the time of importation of the goods.

3) Where the sale involves special discounts limited to exclusive agents, such
discounted price shall not be accepted as the assessable value.

4) Where the buyer and the seller are not related and the price is the sole
consideration for sale, the discounted price in some cases can be taken as the
assessable value. However this decision has been nullified by the Customs
Valuation Price of Imported Goods Rules.
5) Where high sea sales are made, the price charged by the importer from the
assessee will be taken to be the value of the goods.

(1 mark each for any 3 correct answers)

Solution (3c)
Design charges of GH20,000 are not allowable in determining Assessable Value, but
design charges paid abroad are allowable.
Erection and commissioning charges are not allowable. Relevant rate of exchange is 1
Yen = GH0.308.
Hence duty payable is calculated as follows

Amount Total Duty

FOB in Yen 900,000.00)
Ocean freight 18,000.00)
Insurance charges 9,000.00) 5 marks
Design and consultancy charges 90,000.00)
Packing charges 22,000.00)
CIF in Yen 1,039,000.00
Exchange Rate 0.309
Total CIF Value in (1 mark) 321,051.009

ADD- LandingCharges @ 1% 3,210.51

(A) Assessable Value 324,261.51

(B) Import Duty @ 10% (32,426.15

(C) Sub Total Value for VAT Purpose (356,687.66

(D) Import VAT @ 12.5% (6 marks) (44,585.95
(E) Ecowas Levy - 5% (17,834.38
(F) NHIL @2.5% (_8,917.19
(L) Total Duty (103,763.67

Answer 4

Decline in Net Profits Despite Increasing Sales: As per the facts that there has
been
consistently high turnover but declining net profits is an anomalous situation. It may be
attributed to one or more following reasons requiring further investigation:

(i) Unfavourable Sales mix: Where the company sells different chemical products
with different product margins, the product with the maximum PV ratio/margin
should have a higher share in the total sales. If due to revision of sales mix,
more quantities of unprofitable products are sold; profits will be reduced in spite
of an increase in sales.
(ii) Negative Impact of Financial Leverage: Where the company does not have
sufficient own funds (equity) but has a higher debt-equity ratio, the interest
commitments will be higher. As the volume of its operation increases, higher
debt and interest charges would result in lower profits.

(iii) Other Items Included in Sales: The figure of sales as per Profit and Loss
Account may include incidental revenues, e.g., freight, excise duty, sales-tax,
etc. where the amount of excise duty goes up considerably the total sales may
show an increase which is not represented by a real increase in sales
quantity/value.

(iv) High Administrative and Selling Expenses: Administrative and selling costs
are generally period costs which are fixed in nature. Their increase is generally
not proportional to sale increase. However, a reduction in profit could also be
due to increase in administrative overheads and sales overheads at a rate higher
than the rate of increase in sales.

(v) Cost-Price Relationship: If the increases in cost of raw materials and labour
has not been compensated by a corresponding increase in the sales price this
would also result in higher sales and declining profits. In spite of same sales
quantity, for the increasing cost of raw materials and other services, per unit
values of the product has been increased which is however unmatched by the
increase in cost.

(vi) Competitive Price: Where sales have been made at cut-throat prices in order
to
eliminate competition from the market, the profits would be in the declining
trend in the short-run.

(vii) Additions to Fixed Assets: Where there are heavy additions to fixed assets
and
consequent depreciation charges in the initial years of additions, there may be
reduction in profits in spite of increased sales. (4 marks each for any 5
correct answers)

Solution 5

a) A certificate is a written confirmation of the accuracy of the facts stated therein

and does not involve any estimate or opinion. The term certificate is, therefore,
used where the auditor verifies the accuracy of facts. A tax auditor may thus,
certify the accuracy of tax payments or tax position of a taxpayer. An auditors
certificate represents that he has verified certain figures and is in a position to
vouch safe their accuracy as per his examination of documents and books of
account. (2 marks)

A report, on the other hand, is a formal statement usually made after an

enquiry, examination or review of specified matters and includes the reporting
auditors opinion thereon. Thus, when a reporting auditor issues a certificate, he
 is responsible for the factual accuracy of what is stated therein. On the other
hand, when a reporting auditor gives a report, he is responsible for ensuring that
the report is based on factual data, that his opinion is in due accordance with
facts, and that it is arrived at by the application of due care and skill. The report
involves expression of opinion which may differ from one professional to another.
(2 marks)

b) Content of Tax audit report

1) Title: It is appropriate to use the term Tax Auditors Report in the title

2) Addressee: Ordinarily, the auditors report is addressed to the authority of

the company or organization.

3) Introductory Paragraph: The auditors report should identify the financial

statements of the enterprise that has been audited including the date of and
period covered by the financial statements. This introductory paragraph must
state that the preparation of financial statements is the responsibility of the
management and that the auditors responsibility is to express an opinion
based on audit.
4) Purpose of the audit

5) Scope Paragraph: The auditors report should describe the scope of the
audit stating that the tax audit was conducted in accordance with tax laws. It
must also lay down briefly the work performed by the auditor and the
constraints involved in discharge of his attest function.

6) Observations and Findings:: This paragraph is mainly devoted for all the
observations and findings noted which would lead to tax adjustments

7) Conclusion

8) Date of Report: The date of an auditors report on the financial statements

is the date on which the auditor signs the report.

9) Auditors Signature: The report should be signed by the auditor in his

name.

(1 mark each for any 8 correct answers)

c) Draft of a Report of an Engagement to Compile Financial Statements -

SRS 4410

To On the basis of the accounting records and other information and

explanations provided to us by the Management, we have compiled the
unaudited Balance Sheet of_______ (Name) as at______ (date) and the related
Profit & Loss Account for the period then ended.

(2 marks)
 The management of the__________ (Name) is responsible for:

(a) Completeness and accuracy of the underlying data and complete

disclosure of all material and relevant information to the accountant;
(b) Maintaining adequate accounting and other records and internal controls
and selecting appropriate accounting policies;

(c) Preparation and presentation of financial statements in accordance with

applicable laws. (1 mark each for any 2 correct answers)

The compilation engagement was carried out in accordance with requirement of

ICAG.

The Balance sheet and the Profit & Loss Account are in agreement with the
books of accounts.

We have not audited or reviewed these financial statements and accordingly

express no opinion thereon.

For_______________
Chartered Accountants
(1 mark)

d) Flash Reports are reports that indicate significant highlights for immediate
attention of top management. Generally suspected defalcations are reported
briefly to the appropriate authority on 'flash' basis, often ending up in referral for
criminal investigation and legal action. It is a common practice in a number of
companies to issue a report quite frequently summarising the various individual
reports issued and describing the range of their contents in a very brief and
comprehensive manner where only important points are highlighted. Such
reports are primarily issued for Board of Directors and for other top level
managers who do not have sufficient time to go through the elaborate reports
and matters which are required to be brought to their notice for immediate
action.
(3 marks)
 CHARTERD INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013
FINAL LEVEL 1
PAPER 8 OIL AND GAS AND OTHER MINERALS TAXATION

TIME ALLOWED THREE (3) HOURS

INSTRUCTIONS: ANSWER ALL QUESTIONS

Question 1

Explain, briefly the following sources of revenue accruing to the Government of Ghana from the
upstream petroleum operations in Ghana:

a) Royalty;
b) Carried Interest;
c) Additional Interest;
d) Additional Oil Entitlement; and
e) Surface Rentals.
(4 marks each)
(Total: 20 marks)

Question 2

a) Section 2 of the Petroleum Income Tax Law, 1987 (PNDCL 188) (PITL) provides the
basis of ascertainment of chargeable income. It stipulates that the chargeable income of a
person from petroleum operation is calculated by deducting from gross income for the
year, amounts allowed as deductions under section 3 of the PITL.

Required:

With reference to section 2 of PITL and Article 11.7 of the Model Petroleum Agreement,
(MPA), you are required to explain to a group of potential investors, what is meant by
gross income for purposes of determining chargeable income of a person in petroleum
operations in Ghana. Identify also, what gross income does not include.
(10 marks)

b) Outline the composition and strategic importance of Joint Management Committee (JMC) as
contained in the MPA. (10 marks)

1
Question 3

a) Explain to the management of Zizo Limited, the significance of unrelieved tax losses and
capital allowances for a mining company. Briefly advice on tax efficient ways of relieving
tax losses. (4 mark).

b) Zizo Limited, is a medium-sized mining company which has been in operation for several
years. The Company recorded tax losses from 2005 to 2007 years of assessment as follows:

Year 2005 2006 2007

Amount (GH) 200,000 150,000 100,000

However, from 2008 onwards Zizo Limited made the following assessable incomes after the
required adjustments to its accounting profit in accordance with the Internal Revenue Act,
2000 (Act 592) as amended:

Year 2010 2011 2012

Amount (GH) 150,000 160,000 200,000

Capital allowances for the company from the 2010 to 2012 years of assessment were as
follows:

Year 2010 2011 2012

Amount (GH) 60,000 55,000 60,000

You are required to:

Determine the chargeable income of Zizo Limited and tax liability, if any,from 2010 to 2012
years of assessment and comment on the outcome of the utilization of the losses and capital
allowance for each year of assessment.
(21 marks)

Total: (25 marks)

Question 4

a) Mr. Warmer is a specialist in oil and gas testing. He comes from Serbian and is ordinarily
resident in Serbia for tax purposes. His services are in high demand across the globe and
therefore, he shares his time with several companies in many jurisdictions.

2
 The Ghanaian upstream petroleum industry has been using the services of Mr. Warmer, who
visited Ghana on a number of occasions in 2012. Whilst in Ghana, he earned money from the
services he rendered to the players.

Information available from the Immigration Service as well as his passport disclosed the
following with respect to his travels:

Date From To
2January 2012 Serbia Ghana
13 January 2012 Ghana Sierra Leone
30 July 2012 Sierra Leone Ivory Coast
1 September 2012 Ivory Coast Ghana
13 September2012 Ghana United Arab Emirates
1 December 2012 United Arab Emirates Serbia

Required:

You are required to determine whether or not Mr. Warmer is taxable in Ghana. Support your
answer with relevant provisions of PITL and MPA. (10 marks)

b) The Public Interest and Accountability Committee (PIAC) was established under Section 51
of the Petroleum Revenue Management Act (Act 815) with the following objectives as spelt
out in Section 52:

To monitor and evaluate compliance with Act 815 by government and other relevant
institutions in the management and use of petroleum revenues and investments;
To provide space and platform for the public to debate whether spending prospects and
management and use of petroleum revenues conform to development priorities; and
To provide an independent assessment on the management and use of revenues to assist
Parliament and the executive in the oversight and performance of related functions.

The Committee is mandated by the law to publish a semi-annual and an annual report by the 15th
September and 15th March each year. Since its establishment, PIAC has issued two (2) reports in
compliance with Act 815.

You are required to identify at least five (5) non-compliance issues or violations of the
provisions of Act 815 disclosed by the PIAC report. (10 marks)

(Total 20 marks)

Question 5

Does the functions of the Petroleum Commission conflict with that of the Ghana National
Petroleum Corporation? - Discuss. (15 marks)

END OF QUESTIONS

3
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2012

FINAL LEVEL 1

PAPER 9 INTERNATIONAL TAXATION

TIME ALLOWED - 3 HOURS

ANSWER ALL QUESTIONS

Candidates will lose marks for giving irrelevant answers.

Question 1

Edsey PLC is a company resident in the United Kingdom. The company has recently
modified its production process as a response to market demands. To maintain
worldwide standards in production process Edsey PLC is planning to send its Chief
Technical Officer, Mr. Elvis Grant, to work in its subsidiary, Accra Mills Limited, in
Ghana for three years, starting January 2013. Mr. Grant plans to come to Ghana with
his wife and three children aged 7, 9, and 12. He will send them to the United Kingdom
every year for the summer holidays. Under a negotiated agreement, Mr. Elvis Grant will
be paid an annual salary of 96,000 (equivalent of GH300,000) He will have an option
to buy shares of Edsey PLC and benefit from Edsey OPLCs contributory registered
pension scheme established in the United Kingdom that will provide benefits to him
upon retirement. He will be entitled to an exclusive chauffer-driven car in Ghana. Other
entitlements whilst in Ghana include a rent free fully furnished accommodations with
security personnel, and a full-time housekeeper.

Required

Prepare a letter to Mr. Elvis Grant advising him on his

a. proposed residence status in Ghana, and (12 marks)

b. potential Income Tax Liability in Ghana. (8 marks)

Question 2

a. Generally state and explain, in accordance with the OECD Model Tax
Convention on Income and Capital, what

i. constitute permanent establishment and

ii. are deemed not to constitute permanent establishment (8 marks)

b. Accra Web Limited was registered in Ghana on 3rd January, 2011 and
commenced business activities on 14th January, 2011. The company sells its
merchandise via the internet. It maintains a website, which domain name is
registered in the United States of America and rents a server operated by an
independent internet service provider in Nigeria. Accra Web Limited has an office
in Accra which is manned by the General Manager and four supporting staff.
Customers all over the world place orders via the internet to the server in Nigeria.
The server processes the orders, directs customers how to make payment and
issues an instructions to the staff in Accra to supply the products from a
warehouse in Accra. The server also monitors the companys stock levels and
place orders to suppliers in Taiwan, South Africa, Japan and China, if necessary.
The server then instructs the staff in the Accra office to take delivery of the
products when they arrive at Ghana ports. They clear the products from the ports
and warehouse them. The server instructs bankers to effect payment to the
suppliers. All customers concerns are handled by the staff in the Accra office.
The suppliers meet the General Manager in Accra to negotiate and finalize
business deals. The General Manager makes financing arrangements with banks
in Accra for the companys operations. Marketing and financial strategies are
formulated by the General Manager in Accra. He inputs the trading and payment
parameters that the server follows via the internet.

The General Manager of Accra Web Limited approached you, an expert in

international taxation, to advise him on the tax implications of the activities of
Accra Web Limited and staff remunerations in all the countries in which the
company has business dealings.

Required

Prepare a briefing note to the General Manager of Accra Web Limited in which
you advise the General Manager on the tax implications of

i. the operations of Accra Web Limited in all the countries it undertakes business
operations, and
(12 marks)
ii. payment of remuneration to the staff of Accra Web Limited (2 marks)

Question 3

Article 9 of the OECD Model Convention on Income and Capital set out the arms length
principle. This principle had been adopted by Ghana a stipulated in Section 70 of Act
592 of the Internal Revenue Act 2000.
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL I
PAPER 8 OIL, GAS AND OTHER MINERALS TAXATION
AUGUST 2012 EXAMINATIONS

Time Allowed 3 Hours

Answer All Questions
Candidates will lose marks for giving irrelevant answers

Question 1
Indonesia was the first country to sign a revolutionary fiscal petroleum contractual
agreement in 1966 to bring the worldwide fiscal petroleum contractual frameworks to two
main classified regimes. Identify these two fiscal petroleum regimes and explain the main
features of each of them.
(20 marks)
Question 2
What tax concessions do a holder of a mineral right and the holders employees may be
granted in accordance with the Minerals and Mining Act 2006 Act 703? (9 marks)

Question 3
Winston Petroleum Resources Limited, Jefferson Investment Limited and Lenora Oil
Limited are in joint venture agreement in a ratio of 4.3:3.8:1.9 respectively to undertake
petroleum operations within an oil block upstream off the coast of the Greater Accra
Region of Ghana known as Odom Oil block. The consortium, led by Winston Petroleum
Resources Limited, has a petroleum agreement with the Government of Ghana. The
Government of Ghana and the Ghana National Petroleum Corporation (known as the
Ghana Group) has a carried interest of 10% and a Participating Interest of 3.75%. The
agreement is same as the Petroleum Model Agreement. A total of 11 742,928 barrels of
crude oil was produced and lifted for the three month period ended on 31st March, 2012.
The market price per barrel in respect of the barrels of crude oil lifted by the Ghana
Group was US$110.10 with a marketing cost of US$.10 per barrel.

Required

(a) Prepare the Distribution of crude oil lifting by the Odom Partners for the first
ended 31st March, 2012.

(b) Prepare Petroleum Receipts and Distribution Report for the first quarter 2012 in
accordance with the Petroleum Revenue Management Act 2011 (Act 815)
(20 marks)

Question 4
Write short notes on the following within the context of revenue and cost stream of Oil
and Gas Taxation.

a. Cost oil
b. Profit oil
c. Signature Bonus
d. Additional Oil Entitlement
e. Production Bonus
f. Surface Rental
g. Royalty (14 marks)
Question 5
(a) What is the rationale for empowering the Minister of Lands and Mineral
Resources to enter into a stability agreement with a holder of a mining lease?

(b) What are the possible tax concessions a holder of a mining lease who has a
stability agreement with the Government of Ghana enjoyed? (9 marks)

(c) What is the operational time limit for a stability agreement to elapse? (1 marks)

Question 6
Qantas Mineral Resources Limited was incorporated and commenced business in
Ghana on 1st July 2011 and acquired mineral rights which included a mining lease for
gold production from Danka Gold Limited at a price of GH2,120,000.00 on 1st August,
2011. Before the acquisition Danka had only one mining project which is located at
Anyang in the Western Region. The purchase and sale agreement was approved by the
Minister of Lands and Mineral Resources. During the year Qantas Mineral Resources
Limited incurred the following capital expenditures.

Plant and Machinery GH18,320,000

Mine Development GH15,750,000
Computers GH 30,000
Bullion vans GH 240,000

The Mine Development expenditure includes buildings, structures and works of a

permanent nature for mining operations.

Required
Compute the capital allowance (if any) claimable by Qantas Mineral Resources Limited
for its 1st year of assessment. State clearly any assumption you made. (16 marks)

END OF QUESTIONS
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL I
PAPER 8 OIL, GAS AND OTHER MINERALS TAXATION
AUGUST 2012 EXAMINATIONS

Examiners Report
Question 1
This question was the best answered question on the paper with a significant number of
candidates scoring the maximum mark. The question required candidates to identify the
two main fiscal petroleum contractual regimes and explain the main features of each of
them. Candidates identify the Concessionary system (the tax and royalty system) and
Production Sharing Agreement (PSA) system. However, some candidates were not
aware that the Risk Contract system is a form of the Petroleum Agreement (PSA)
system.
Candidates enumerated some of the main features to include the issues of duration of
the exploration and periods which are in phases; successive relinquishments of portions
of the contract area; right and obligations of the contractor; how petroleum is to be
valued, how the contractor may recover costs out of their share of the production, how
the remainder of production is to shared, tax obligations of the contractor, and when and
for which payment streams fiscal stability might be granted and other provisions such as
dispute resolution, confidentially and transparency.

Question 2
This question requires candidates to state the tax concessions a holder of a mineral right
and the holders employees may be granted in accordance with the Minerals and mining
Act 2006, Act 703. The question was poorly answered. Many candidates failed to state
the three tax concessions are:

1. Exemption from payment of customs import duty in respect of plant, machinery,

equipment and accessories imported specifically and exclusively for the mineral
operations.

2. Exemption of staff from the payment of income tax on furnished accommodation

at the mine site.
3. Personal remittance quota for expatriate personnel free from tax imposed by a
regulation for the transfer of money out of the country.

Question 3
This question was concerned with t the operation of an oil and gas consortium. The first
part of the question required candidates to prepare a Distribution of crude oil report.
Candidates failed to recognize that the GNPCs carried interest and participation interest
are part of equity of the Odom Partners. This fundamental error affected the performance
of candidates. Most candidates lost vital marks as a result.
The second part of the question required candidates to prepare Petroleum Receipts and
Distribution Report. In accordance with the Petroleum Management Act 2011, Act 815.
This second part was poorly answered by most candidates because of the fundamental
error committed by candidates in the first part of the question. The calculations required
to prepare the report were not accurate as a result.
Question 4
This question was well answered by most candidates. Candidates scored high mark and
overall performance was above average. The question required candidates to write short
notes on terms relating to revenue and cost streams of Oil and Gas Taxation. These
terms are cost oil, profit oil, Signature bonus. Additional oil entitlement, Production
bonus, Surface rental and Royalty.

In brief, Cost oil refers to the oil retained by the contractor to recover the costs of
exploration, development, and production. Profit oil is the share of production remaining
after the royalty is paid and cost oil has been retained by the contractor. Signature
bonuses are paid when the contract becomes effective, and can be considerable in
highly prospective areas. Additional Oil Entitlement is a resource rent tax designed for
the purposes of capturing a progressively larger share of the profit from projects with a
high rate of return. Production bonuses are paid at the start of commercial production
and when production reaches specified levels. Surface rental fees are often given in
monetary units per square kilometer, so that the overall flow to the government declines
with each relinquishment. Royalties are based on the volume or value of petroleum
extracted. Royalties may be paid in cash or in kind; if the later, specified amounts of oil,
gas, or both are delivered to the government.

Most candidates scored the maximum mark for this question.

Question 5

This question, which is in three parts, examined candidates knowledge of stability

agreement in respect of mining.

(a) In the part candidates were required to state the rationale for empowering the
Minister of Lands and mineral Resources to enter into a stability agreement with a
holder of mining lease. Candidates performance was far below expectation.
Candidates failed to recognize that the rationale was explicitly stated in the
Mineral and Mining Act 2006, Act 703. The rationale is to ensure that the holder of
the mining lease will not be adversely affected by a new enactment, order
instrument or other action made under a new enactment or changes to an
enactment, order, instrument that existed at the time of the stability agreement, or
other action taken under these that have the effect or purport to have the effect of
imposing obligations upon the holder or applicant of the mining lease.

(b) The second part of the question required candidates to state the tax
consequences a holder of a mining lease enjoyed. According to law a taxpayer
who has a stability agreement may not be adversely affected by subsequent
changes to t
- the level of and payment of customs or other duties relating to the entry
materials, goods, equipment and any other inputs necessary to the mining
operations or project,
- the level of and payment of royalties and other taxes specifically mentioned in
the stability agreement
The performance of the second part of the question was on the average.

(c) The last was well answered by majority of candidates. Most candidates state the
correct answer being a period not exceeding fifteen years from the date of the
stability agreement.
Question 6

This question requires candidates to compete the capital allowance claimable by mining
company. Candidates performance was below average. Most candidates failed to
classify the fixed assets into the appropriate classes. They also failed to use to use the
correct rates to calculate the capital allowances. They lack the knowledge of calculating
residue carried forward. Candidates who use the rule of ring fences to compute the
capital allowances were not penalized even though the law was less than the month old
as at the time of the examination.
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL I
PAPER 8 OIL, GAS AND OTHER MINERALS TAXATION
AUGUST 2012 EXAMINATIONS

Time Allowed 3 Hours

Answer All Questions
Candidates will lose marks for giving irrelevant answers

Question 1
Indonesia was the first country to sign a revolutionary fiscal petroleum contractual
agreement in 1966 to bring the worldwide fiscal petroleum contractual frameworks to two
main classified regimes. Identify these two fiscal petroleum regimes and explain the main
features of each of them.
(20 marks)
Question 2
What tax concessions do a holder of a mineral right and the holders employees may be
granted in accordance with the Minerals and Mining Act 2006 Act 703? (9 marks)

Question 3
Winston Petroleum Resources Limited, Jefferson Investment Limited and Lenora Oil
Limited are in joint venture agreement in a ratio of 4.3:3.8:1.9 respectively to undertake
petroleum operations within an oil block upstream off the coast of the Greater Accra
Region of Ghana known as Odom Oil block. The consortium, led by Winston Petroleum
Resources Limited, has a petroleum agreement with the Government of Ghana. The
Government of Ghana and the Ghana National Petroleum Corporation (known as the
Ghana Group) has a carried interest of 10% and a Participating Interest of 3.75%. The
agreement is same as the Petroleum Model Agreement. A total of 11 742,928 barrels of
crude oil was produced and lifted for the three month period ended on 31st March, 2012.
The market price per barrel in respect of the barrels of crude oil lifted by the Ghana
Group was US$110.10 with a marketing cost of US$.10 per barrel.

Required

(a) Prepare the Distribution of crude oil lifting by the Odom Partners for the first
ended 31st March, 2012.

(b) Prepare Petroleum Receipts and Distribution Report for the first quarter 2012 in
accordance with the Petroleum Revenue Management Act 2011 (Act 815)
(20 marks)

Question 4
Write short notes on the following within the context of revenue and cost stream of Oil
and Gas Taxation.

a. Cost oil
b. Profit oil
c. Signature Bonus
d. Additional Oil Entitlement
e. Production Bonus
f. Surface Rental
g. Royalty (14 marks)
Question 5
(a) What is the rationale for empowering the Minister of Lands and Mineral
Resources to enter into a stability agreement with a holder of a mining lease?

(b) What are the possible tax concessions a holder of a mining lease who has a
stability agreement with the Government of Ghana enjoyed? (9 marks)

(c) What is the operational time limit for a stability agreement to elapse? (1 marks)

Question 6
Qantas Mineral Resources Limited was incorporated and commenced business in
Ghana on 1st July 2011 and acquired mineral rights which included a mining lease for
gold production from Danka Gold Limited at a price of GH2,120,000.00 on 1st August,
2011. Before the acquisition Danka had only one mining project which is located at
Anyang in the Western Region. The purchase and sale agreement was approved by the
Minister of Lands and Mineral Resources. During the year Qantas Mineral Resources
Limited incurred the following capital expenditures.

Plant and Machinery GH18,320,000

Mine Development GH15,750,000
Computers GH 30,000
Bullion vans GH 240,000

The Mine Development expenditure includes buildings, structures and works of a

permanent nature for mining operations.

Required
Compute the capital allowance (if any) claimable by Qantas Mineral Resources Limited
for its 1st year of assessment. State clearly any assumption you made. (16 marks)

END OF QUESTIONS
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL I
PAPER 8 OIL, GAS AND OTHER MINERALS TAXATION
AUGUST 2012 EXAMINATIONS

Examiners Report
Question 1
This question was the best answered question on the paper with a significant number of
candidates scoring the maximum mark. The question required candidates to identify the
two main fiscal petroleum contractual regimes and explain the main features of each of
them. Candidates identify the Concessionary system (the tax and royalty system) and
Production Sharing Agreement (PSA) system. However, some candidates were not
aware that the Risk Contract system is a form of the Petroleum Agreement (PSA)
system.
Candidates enumerated some of the main features to include the issues of duration of
the exploration and periods which are in phases; successive relinquishments of portions
of the contract area; right and obligations of the contractor; how petroleum is to be
valued, how the contractor may recover costs out of their share of the production, how
the remainder of production is to shared, tax obligations of the contractor, and when and
for which payment streams fiscal stability might be granted and other provisions such as
dispute resolution, confidentially and transparency.

Question 2
This question requires candidates to state the tax concessions a holder of a mineral right
and the holders employees may be granted in accordance with the Minerals and mining
Act 2006, Act 703. The question was poorly answered. Many candidates failed to state
the three tax concessions are:

1. Exemption from payment of customs import duty in respect of plant, machinery,

equipment and accessories imported specifically and exclusively for the mineral
operations.

2. Exemption of staff from the payment of income tax on furnished accommodation

at the mine site.
3. Personal remittance quota for expatriate personnel free from tax imposed by a
regulation for the transfer of money out of the country.

Question 3
This question was concerned with t the operation of an oil and gas consortium. The first
part of the question required candidates to prepare a Distribution of crude oil report.
Candidates failed to recognize that the GNPCs carried interest and participation interest
are part of equity of the Odom Partners. This fundamental error affected the performance
of candidates. Most candidates lost vital marks as a result.
The second part of the question required candidates to prepare Petroleum Receipts and
Distribution Report. In accordance with the Petroleum Management Act 2011, Act 815.
This second part was poorly answered by most candidates because of the fundamental
error committed by candidates in the first part of the question. The calculations required
to prepare the report were not accurate as a result.
Question 4
This question was well answered by most candidates. Candidates scored high mark and
overall performance was above average. The question required candidates to write short
notes on terms relating to revenue and cost streams of Oil and Gas Taxation. These
terms are cost oil, profit oil, Signature bonus. Additional oil entitlement, Production
bonus, Surface rental and Royalty.

In brief, Cost oil refers to the oil retained by the contractor to recover the costs of
exploration, development, and production. Profit oil is the share of production remaining
after the royalty is paid and cost oil has been retained by the contractor. Signature
bonuses are paid when the contract becomes effective, and can be considerable in
highly prospective areas. Additional Oil Entitlement is a resource rent tax designed for
the purposes of capturing a progressively larger share of the profit from projects with a
high rate of return. Production bonuses are paid at the start of commercial production
and when production reaches specified levels. Surface rental fees are often given in
monetary units per square kilometer, so that the overall flow to the government declines
with each relinquishment. Royalties are based on the volume or value of petroleum
extracted. Royalties may be paid in cash or in kind; if the later, specified amounts of oil,
gas, or both are delivered to the government.

Most candidates scored the maximum mark for this question.

Question 5

This question, which is in three parts, examined candidates knowledge of stability

agreement in respect of mining.

(a) In the part candidates were required to state the rationale for empowering the
Minister of Lands and mineral Resources to enter into a stability agreement with a
holder of mining lease. Candidates performance was far below expectation.
Candidates failed to recognize that the rationale was explicitly stated in the
Mineral and Mining Act 2006, Act 703. The rationale is to ensure that the holder of
the mining lease will not be adversely affected by a new enactment, order
instrument or other action made under a new enactment or changes to an
enactment, order, instrument that existed at the time of the stability agreement, or
other action taken under these that have the effect or purport to have the effect of
imposing obligations upon the holder or applicant of the mining lease.

(b) The second part of the question required candidates to state the tax
consequences a holder of a mining lease enjoyed. According to law a taxpayer
who has a stability agreement may not be adversely affected by subsequent
changes to t
- the level of and payment of customs or other duties relating to the entry
materials, goods, equipment and any other inputs necessary to the mining
operations or project,
- the level of and payment of royalties and other taxes specifically mentioned in
the stability agreement
The performance of the second part of the question was on the average.

(c) The last was well answered by majority of candidates. Most candidates state the
correct answer being a period not exceeding fifteen years from the date of the
stability agreement.
Question 6

This question requires candidates to compete the capital allowance claimable by mining
company. Candidates performance was below average. Most candidates failed to
classify the fixed assets into the appropriate classes. They also failed to use to use the
correct rates to calculate the capital allowances. They lack the knowledge of calculating
residue carried forward. Candidates who use the rule of ring fences to compute the
capital allowances were not penalized even though the law was less than the month old
as at the time of the examination.
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
PAPER 7 - TAX AUDIT AND INVESTIGATIONS

AUGUST 2012

FINAL LEVEL 1

TIME ALLOWED - 3 HOURS

ATTEMPT ALL QUESTIONS

QUESTION 1:

Tax auditors are requested to carry out procedures designed to obtain

sufficient and appropriate audit evidence to determine with reasonable
confidence whether the financial statement are free of material misstatement.

Amongst the various methods of obtaining audit evidence in tax audits is

analytical review.

(i) You are required to explain clearly what analytical review technique is in
a briefing paper to a group of newly recruited audit juniors.(5 Marks)

(ii) The analytical review technique is usually applied throughout an audit.

Explain any three occasions where it is most important with examples.
(2 Marks)

(iii) Explain any three factors that may influence your use of analytical review
in a tax audit assignment. (3 Marks)

(iv)Live Together Ltd. (LTL) is a dealer in iron rods. DDT Consult is a firm of tax
consultants and investment advisors. DDT has won a contract to carry
out a tax audit of LTL for the year ended 2011. You have been
selected to lead the audit team in your capacity as audit senior.

The following information was obtained from the Medium Taxpayer

Office (MTO) of GRA where the companys tax file is located.

1
 LIVE TOGETHER LIMITED
TRADING PROFIT AND LOSS ACCOUNT
FOR YEAR ENDED DECEMEBER 31 (EXTRACT

(All figures in GH000) 2010 2011 Budget 2011

Sales 10,000 10,330 10,660
Cost of Sales 6600 7,650 7083
Gross Profit 3300 2,980 3,583
Wages 1300 1,180 1,166
Overheads 1160 1,250 1,230
Net Profit 870 550 1,180
Stock 970 883 1,030
Creditors 1186 1,316 1,230

In addition to above you have also obtained the following economic indicators
from the Research Unit of Ghana Revenue Authority;

- rate of inflation - 15%

- economic sector rate of growth in real terms - 15%
- gross profit ratio - 35%
- stock turnover ratio - 45 days
- ratio of creditors to sales - 13%
- ratio of wages to sales - 11%

You are required to apply analytical review techniques to above data and
draw conclusions there-from for the attention of the Director-Assurance in a
suitable form. (10 Marks)
(Total 20 Marks)
QUESTION 2:
(i) Tik Tok Enterprises is a dealer in computers and accessories with 25
employees. Tik Tok has just hired your firm to undertake a tax audit of its
accounts for the past five years to 31st December 2011 prior to conversion
to a limited liability status.

Your Director Tax Solutions has directed you in your capacity as audit
senior to prepare a paper suitable for briefing newly recruited audit clerks
on the steps required to be taken before commencement of actual audit
work. (4 Marks)
(ii) The tax audit has just commenced and your team leader has requested
you to set up the permanent notes file for Tik Tok. You are required to
state clearly the contents of this file and any other matters you consider
necessary for inclusion. (5 Marks)
2
( iii) It is generally accepted that businesses face risks both internal and
external and an understanding of these risks gives the tax auditor a
thorough knowledge and understanding of the clients/taxpayers
business and may also suggest where misstatements may occur in the
financial statement. The proprietor of Tik Tok has requested your firm to
advise him on possible risks faced by him.

You are required to identify and explain four (4) internal and four (4)
external risks faced by Tik Tok Enterprises. You are to communicate these
in a suitable form to your Director Tax solutions. (11 Marks)

(Total 20 Marks)

QUESTION 3

(a)(i) A key feature of many tax audit tests is the concept of directional testing.

Explain clearly what you understand by this concept. (11/ 2 Mark)

(ii) Directional testing is based on two simple premises.

You are required to explain your understanding of these premises.

(2 Marks)

(b) You have been assigned to lead a team of tax auditors to carry out the
audit of Tuff Gong Limited. Part of your duty is to carry out a briefing
session for the team before commencement of actual audit work.

You have directed them in the course of the briefing to carry out
directional testing for;
(i) Overstatement, and (2 Marks)
(ii) Understatement. (3 Marks)

Explain clearly what you hope to achieve by this instruction to the team.

(c) Give two reasons each why managers may want to;
(i) Overstate profit (2 Marks)
(ii) Understate profit (1 Mark)

(d) State advantages of directional testing. (3 Marks)

(e) State any disadvantage of directional testing. (1 Mark)

3
(f) The following is the extract of the financial statement of LTE Ltd. A general
merchant based in Accra.

LTE LIMITED

Balance sheet as at December 31

2010 2011
GH000 GH000

Fix Assets 11,500 12,500

Depreciation 2,825 3,100
8,675 9,400

Current Asset

Stocks 6,000 7,347

Debtors 2,100 2,075
Bank 2,275 4,628
10,375 14,050

Current Liabilities

Taxation 1,450 1,600

Creditors 1,600 1,700
Dividends proposed 250 300
3,300 3,600
Net Current Assets 7,075 10,450
Total Assets 15,750 19,850

2010 2011
GH000 GH000
Financed By:

Stated Capital 9,000 11,500

Income Surplus 3,750 4,600
Long-term Loan 3,000 3,750
15,750 19,850

Ignore trading profit and loss account.

You are required to carry out a desk audit of above balance sheet and
write a report suitable for submission to the managing director of LTE
Limited.
(4 Marks) (Total 20 Marks)

4
QUESTION 4:

(a) Compare and contrast the following;

(i) Private audit and statutory audit (4 Marks)

(ii) External audit and Internal audit (4 Marks)

(b) Explain briefly your understanding of the following types of audits;

(i) Complete audit (1 Mark)
(ii) Interim Audit (1 Mark)
(iii) Continuous Audit (1 Mark)

(c) An Accra-based client of your firm, BT Express Limited is contemplating

setting up an Audit Committee in view of the fast expanding nature and
complexity of their operations.

You are required to advise the company on the functions and

responsibilities of an Audit Committee in your capacity as an audit senior
of TJ Consulting Services. (9 Marks)
(Total 20 Marks)

QUESTION 5

(a) Tax auditors who do not comply with tax auditing standards when
performing tax audits face the risk of regulatory action by the chartered
Institute of Taxation.

Suggest how the independence of the tax auditor might be

strengthened. (10 Marks)

(b) When tax auditors accept appointment, they enter into a legal contract
which imposes certain obligations both express and implied, on them.

You are required to state and explain any implied terms that may be
imputed in a tax audit contract.

You are to communicate this in appropriate form to the C.E.O. of ToT ToT
Mining Limited, a company listed on the Ghana Stock Exchange.
(10 Marks)

(Total 20 Marks)

END OF PAPER
 PAPER 7 - TAX AUDIT AND INVESTIGATIONS

ANSWER 1

BRIEFING PAPER (1/ 2 Mark)

ANALYTICAL REVIEW TECHNIQUE IN TAX AUDITS

(i) Analytical review studies the relationship between elements of financial

information expected to conform to a predictable pattern based on:

(a) the organisations experience

(b) financial and non-financial information
(c) comparison of comparable information with that of prior period or
periods
(d) comparison of information with anticipated results and
(e) comparison with information relating to similar organizations.
(1 mark each for any four correct answers)

PREPARED BY: .. }
} Marks
DATE: 28TH JUNE, 2012 }

(ii)
(a) At the planning stage The auditor applies the technique to identify
areas of potential risk or new developments so that he can plan his
other audit procedures in these areas.

(b) Obtaining evidence It is used alone or in conjunction with internal

control reliance and substantive testing to ensure efficiency and
economy.

(c) At the final review stage of the audit analytical review techniques
can provide support for the conclusions arrived at as a result of
other work. It can also be used to assess the overall reasonableness
of the financial statements as a whole.
(1 mark each for any two correct answers)

(III) The following factors may influence my use of analytical review

technique.

(a) The nature of the entity and its operations. A long and well-
established company with branches across the country which has
changed little over the years will lend itself to the use of analytical
review.

(b) Knowledge gained in previous tax audits of the enterprise if any.

The auditor will have experience of those areas where errors and
difficulties arose and of those areas of greatest audit risk.
 (c) Managements own use of analytical review procedures. Where
management has a reliable system of budgetary control then the
auditor will have already obtained explanations for variances.

(d) Availability of non-financial information to back up financial

information. Many companies record non-financial statistics.

(e) The reliability relevance and comparability of the information

available.

(f) The cost effectiveness of the use of analytical review in relation to

other forms of evidence.

(g) The availability of high quality staff with much intelligence,

experience and training.
(1 mark each for any three correct answers)

DDT CONSULT
MEMORANDUM

TO: DIRECTOR-ASSURANCE

FROM: TEAM LEADER Mark

DATE: 28/06/12

SUBJECT: LIVE TOGETHER LIMITED ANALYTICAL REVIEW OF THE FINANCIAL

STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011

(1) Computation of estimated sales:

- GH10,000.00 x 1.15 x 1.15 -13,225.00. The difference is significant and
must be investigated.

(2) Estimated Gross Profit GH10,830.00 x 35% = GH3,790.50

Actual rate is 2,980.00/10,830.00 x 100% = 27.5%

This is a clear departure from the industrial average and must be

investigated.

(3) Stock should be about 45 days worth GH7,650.00 x 45/365 = 943.00.

Actual is lower but not significant.

(4) Creditors should be GH10,330.00 x 13% - GH1,343.00

This appears to confirm the actual stock figure.

(5) Estimated wages GH10,330.00 x 11% = GH1,136.30

 This appears to agree with the actual and budget. This can be confirmed
by the number of staff on roll in 2011.

(6) Other expenses may have also risen by 15% but this could be examined
on individual basis. (2 Marks each for any three correct answers)

Conclusion

(1) Stock and creditors appear to agree with expectations and may not
require indepth investigation.

(2) Overheads appear to be inline but disaggregation is required to enable

treatment of individual items.

(3) Sales are lower than expected. This may require indepth investigation of
cause.

(4) Gross Profit is much lower than expected. Stock and creditors figures
agree with expectations therefore the lower gross profit may not be
attributed to cut-off errors. It seems theft of stock or cash has occurred.
Thorough investigation is required. (1 mark each for any three correct
answers)

Thank you.
Mark
Signed.

ANSWER 2

(i) The audit of Tik Tok is a first audit and will therefore require the setting up of
permanent notes file and for the team to familiarize themselves with the
company and its operations. This audit may also require more
experienced staff than future tax audits of the company. (1 Mark)

The following may have to be considered before commencement of

actual audit work.

(a) Before acceptance of the engagement, the partners must first

consider whether or not they can take on the work from an ethical,
legal and practical point of view. These appear to have been
considered by the partners prior to acceptance.

(b) Professional etiquette - It appears from the question that the firm is
not the statutory auditors of the company. It may therefore be
necessary to contact the statutory auditor with a view to discussing
risk areas, any special difficulties associated with the company and
simply as a courtesy.
 (c) Confirmation of appointment Tik Tok is a sole proprietor and may
therefore not have a directors minute book as with limited liability
companies. Appointment may therefore be evidenced by a letter
from Tik Tok to the firm.

(d) Letter of engagement The partners will draft a letter of

engagement detailing the work to be done for the signature of Tik
Tok. (1Mark each for any three correct answers)

(ii) This file usually contain documents and matters of continuing importance
for any future tax audits.

(a) Statutory matters concerning the conduct,accounts and tax audit

of the enterprise (eg. Tax audit of a bank will consider the Banking
Act).

(b) The rules and regulations of the enterprise. This is a sole proprietor
and there is none.

(c) Copies of documents of continuing importance and relevance to

the tax auditor.

(1) Letter of engagement

(2) Trade licence, and royalty agreements etc.
(3) Debenture deeds, loan agreements etc.
(4) Leases
(5) Addresses of the registered office and all other premises.
(6) An organizational chart showing ;
(a) The principal departments and sub-divisions thereof.
(b) Name of responsible officials and their designations and line
of responsibility
(7) List of books and other records, names, positions, specimens of
signatures and initials of persons responsible for the books and
documents, account codes and classification.
(8) History of the enterprise
(9) List of accounting matters of importance such as rates of
depreciation, valuation of stock and work in progress and research
and development.
(10) Note on matters discussed with the proprietor.
(11) Tik Toks internal audit report if any and accounting instructions if
any.
(12) List of properties and investments with notes on verification.
(1/ 2 mark each for any 10 correct answers)
 MEMORANDUM

TO: Director Tax solutions

FROM: Tax Auditor

DATE: 11/06/12

SUBJECT: TIK TOK ENTERPRISES-ANALYSIS OF BUSINESS RISK

INTRODUCTION

Business risk faced by Tik Tok comes in two forms, external risk arising from outside
the enterprise and internal risk arising from inside the enterprise.
(a) EXTERNAL RISK
These include but not limited to;
(1) Changing interest rate
(2) Changing exchange rate
(3) Price wars with competitors
(4) Untried technologies and ideas
(5) Natural hazards (eg. Fire or flood)
(6) Bad debts
(7) Litigation
(8) Changing legislation
(9) Public Opinion, attitudes
(10) Environmental matters (eg. electricity fluctuation)
(11) Import competition
(1 mark each for any five correct answers)
(b) INTERNAL RISK

This also includes but not limited to;

(1) Failure to modernize products, labour relation, marketing

(2) Employees
(3) The process of dealing with suppliers or customers.
(4) Being a sole proprietor, everything revolves around him.
(5) Cash flow including overtrading.
(6) Inappropriate acquisitions
(7) Excessive reliance on one of a few products, customers, suppliers.
(8) Internal controls.
(9) Fraud
(1 mark each for any five correct answers)
Thank you.
Mark
Signed.
ANSWER 3

(a) (i) The concept of directional testing recognizes that it is the purpose of the
audit test which will determine the direction of the test (ie. do we start by
testing raw data or final accounts balances?). (1 Mark)

(ii) Directional testing is based on two simple premises.

(1) Errors found in financial statements may be due to either over-or
understatements resulting from either omissions or misstatement of
the items. (1 Mark)

(2) The double entry system provides a set of links between assets,
liabilities, revenues and expenses included in the accounts.
To overstate an asset means an income account or liability may
have also been overstated (or another asset account or expense
account understated). (1 Mark)

(b)(i) Directional testing for over statement;

(1) Carrying out a primary test of an asset account balance (eg.

debtors) for overstatement leads to the testing of a reciprocal
population (eg. sales) (1 Mark)

(2) Overstatement tests start with the monetary population of the

account balance (ie accuracy tests to test that what is included
should be included). (1 Mark)

(ii) Directional testing for understatement;

(1) Testing sales income for understatement, the tax auditor obtains
evidence that other credit balances are not overstated and that
debit balances are not understated (eg. debtors). (1 Mark)

(2) Understatement tests are tests to detect omissions. The starting

point is the non-monetary population. (eg. when testing sales for
understatement the population for selection is normally
waybill/dispatch notes). (1 Mark)

Generally, by carrying out primary testing of all debit balances

(assets and expenses) for overstatement and all credit balances
(income and liabilities) for understatement the auditor, has
effectively tested all items in both directions. (1 Mark)

(c)(i) Motive for overstatement of profits may be due: to:

(1) Meet expectations and requirements of lenders and shareholders,
or to fulfill previously made forecasts
 (2) To fight off take-over bids
(3) To boost management remuneration when this is based on profit.
(1 mark each for any two correct answers)

(ii) Motive for understatement of profit may be to:

(1) Design to reduce tax liabilities

(2) Lower value of company assets for the purchases of capital gain
tax. (1 mark for one correct answer)

(d) The advantages of directional testing approach are;

(1) It gives focus to audit
(2) It reduces the time and effort on an audit.
(3) It helps ensure that overstatement or understatement (as
appropriate) has not occurred and therefore minimizes the risk of
material misstatement in the financial statement.
(4) It facilitates audit conclusions based on statistical sampling
techniques. (1 mark each for any three correct answers)

(e) Disadvantages are;

(1) There is a possible tendency not to obtain sufficient primary

evidence in the right direction (ie. Understatement when
overstatement is expected).
(2) There is a need to realize that all assets and liabilities and revenues
and expenses should be verified for all assertions in the financial
statements. (1 mark for one correct answer)

3(b) LTE Limited

The Managing Director

LTE Limited (1 Mark)
Accra

Dear Sir,
YEAR OF ASSESSMENT 2011 FINANCIAL STATEMENT
FOR THE YEAR ENDED DECEMBER 2011 FILE NO. XXXX
We are happy to receive your companys accounts for the year ended
December 31st, 2011. We have completed examination of the accounts
and wish to bring our observation to your notice.

1. Additions to Fixed Assets

Our examination indicates that additions amounted to
GH1,000,000. Kindly submit supporting documents attesting to
ownership and value. Take note that you are required by the
Internal Revenue Act (Act 592) to inform the Commissioner General
upon acquisition in order to attract capital allowance.
 2. Stocks
Kindly submit stock schedules to indicate stock in trade and
consumable stocks.

3. Debtors
Kindly submit schedules of debtors indicating trade debtors and
other debtors.
4. Bank Balance
You are required to produce bank statements supporting all your
bank accounts.

5. Creditors
Please furnish us with schedule of creditors indicating trade creditors
and other creditors.

6. Dividends
Kindly furnish us with evidence of taxes paid.

7. Addition to Stated Capital

Please indicate sources of funding of this addition.

8. Long Term Loan

Please furnish us with particulars of the additions.

Counting on your co-operation.

Thank you. (1/2 Mark each for any six correct answers)

Yours faithfully

Signed (1/2 Mark)

ANSWER 4

(a)(i) Private Audit Statutory

1. Undertaken at the instance of an Statutory obligation arising out

interested party or parties (such as sole of the Companies Code. This
trader or partnerships). requires that a professionally
qualified accountant audits
and certify the accounts of a
limited liability company.
2
Scope of audit determined by the Scope determined by
interested party or parties (in case of legislation in operation at the
partnerships time of audit.

3. Governed by contract Governed by contract

4. Report issued to interested party. Report to shareholders

(1/ 2 Mark each)

(a)(ii) External Audit Internal Audit

1. Independent of the organization Responsible to management,

managing director, Board of
Directors or Audit Committee

2. Responsibilities are fixed by statute Responsibilities are specified by

management

3. Report to shareholders Report to the Director or Audit

committee

4. Perform work to enable them express Work may range over many
an opinion on the truth and fairness of operational and financial areas
the accounts and activities as determined by
Management.

( Mark each)

(b)(i) Complete Audit

Complete audit usually apply to small companies where the volume of

transactions and complexity of records do not require more than one
attendance by the auditor. Auditors work begins as soon as the
companys financial year ends. (1 Mark)

(ii) Interim Audit

This usually applies to larger organizations. Due to the volume of testing to

be undertaken, in order to reach an opinion on the reliability of the
records, auditors find it necessary to proceed with the audit on interim
basis. Interim audits are arranged with the co-operation of the client and
may be bi-annual, quarterly or even monthly depending on the volume of
audit work considered necessary. (1 Mark)
(iii) Continuous Audit

Where the system of internal control operated by a large company

displays a fundamental and material weaknesses, the auditor may carry
out audit test on a higher proportion of transactions. Due to such
weaknesses, the auditor may carry out audit checks throughout the
period under consideration. (1 Mark)

(c) TJ CONSULTING SERVICES

The Managing Director

BT Express Limited (1/ 2 Mark)
Accra

25 June, 2012

Dear Sir,

FUNCTIONS AND RESPONSIBILITIES OF AN AUDIT COMMITTEE

Forward to the enquiry you made in connection with the setting up of the
Audit Committee in your company we wish to bring to your notice the
functions and responsibilities of an Audit Committee as follows;

(1) To review the financial results shown by both management

accounts and those presented to shareholders.

(2) To make recommendations for the improvement of management

control.

(3) To ensure that there are adequate procedures in place for the
review of interim statements, forecasts and other financial
information before distribution to shareholders.

(4) To assist external auditor in obtaining all information they need and
in resolving difficulties experienced by them in pursuing their
independent examination.

(5) To deal with any material reservation of the auditors regarding the
companys management, its records and its final accounts;
including the manner in which significant items are presented.

(6) To facilitate a satisfactory working relationship between the

management, and auditors, and between the internal and external
audit functions.
 (7) To be responsible for the appointment of auditors as well as fixing
their remuneration.

(8) To be available for consultation with the auditors at all times, if

necessary, without the presence of management to discuss
regularly and review the procedures employed by the auditors.

(10) To be concerned with all matters relating to the disclosure by the

accounts of a true and fair view for the benefit of all users.

We hope this explains the role expected of the audit committee.

(1 mark each for any eight correct answers)

Thank you.
Mark
Signed

ANSWER 5(a)

The following measures may be introduced to strengthen the independence of

the tax auditor in the tax audit of a public company;

(i) The payment of audit fees and appointment of auditors by a central

body.

(ii) The mandatory requirement of establishing audit committee for all listed
companies composed of non-executive directors and dealing directly
with auditors and accounting and tax issues.

(iii) Tax auditors could be required to make some formal declaration that they
are not involved with a client company in any way which might be seen
to impair their objectivity.

(iv) Tax auditors could be rotated by the chan ging of firms if tax audit
assignments become frequent.

(v) A system of peer reviews could be introduced where the reviewers brief
may include the assessment of the tax auditors independence from the
client. (2 marks each)

ANSWER 5(b)

The Chief Executive Officer

Tot Tot Mining Limited (1 mark)
Ghana
26th June, 2012

Dear Sir,

IMPLIED TERMS OF A TAX AUDIT CONTRACT- EXPLANATION

Obligations are imposed on a tax auditor when he accepts to undertake a tax

audit assignment. The obligations arise from the terms of the contract. There are
both express and implied terms of a contract which impact upon the auditor.
(2 Marks)

The following implied terms which contract law will impute into a tax audit
contract are as follows:

(i) The auditors have a duty to exercise reasonable care. (2 Marks)

(ii) The auditors have a duty to carry out the work required with reasonable
expediency. (2 marks)

(iii) The auditor has a right to reasonable remuneration. (2 Marks)

I hope this is clear enough. We are ready to provide any additional explanation
you may require.

Thank you.

(1 Mark)
Signed
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
PAPER 7 - TAX AUDIT AND INVESTIGATIONS

AUGUST 2012

FINAL LEVEL 1

TIME ALLOWED - 3 HOURS

ATTEMPT ALL QUESTIONS

QUESTION 1:

Tax auditors are requested to carry out procedures designed to obtain

sufficient and appropriate audit evidence to determine with reasonable
confidence whether the financial statement are free of material misstatement.

Amongst the various methods of obtaining audit evidence in tax audits is

analytical review.

(i) You are required to explain clearly what analytical review technique is
in a briefing paper to a group of newly recruited audit juniors.(5 Marks)

(ii) The analytical review technique is usually applied throughout an audit.

Explain any three occasions where it is most important with examples.
(2 Marks)

(iii) Explain any three factors that may influence your use of analytical
review in a tax audit assignment. (3 Marks)

(iv) Live Together Ltd. (LTL) is a dealer in iron rods. DDT Consult is a firm of
tax consultants and investment advisors. DDT has won a contract to
carry out a tax audit of LTL for the year ended 2011. You have been
selected to lead the audit team in your capacity as audit senior.

The following information was obtained from the Medium Taxpayer

Office (MTO) of GRA where the companys tax file is located.

1
 LIVE TOGETHER LIMITED
TRADING PROFIT AND LOSS ACCOUNT
FOR YEAR ENDED DECEMEBER 31 (EXTRACT

(All figures in GH000) 2010 2011 Budget 2011

Sales 10,000 10,330 10,660
Cost of Sales 6600 7,650 7083
Gross Profit 3300 2,980 3,583
Wages 1300 1,180 1,166
Overheads 1160 1,250 1,230
Net Profit 870 550 1,180
Stock 970 883 1,030
Creditors 1186 1,316 1,230

In addition to above you have also obtained the following economic indicators
from the Research Unit of Ghana Revenue Authority;

- rate of inflation - 15%

- economic sector rate of growth in real terms - 15%
- gross profit ratio - 35%
- stock turnover ratio - 45 days
- ratio of creditors to sales - 13%
- ratio of wages to sales - 11%

You are required to apply analytical review techniques to above data and
draw conclusions there-from for the attention of the Director-Assurance in a
suitable form. (10 Marks)
(Total 20 Marks)
QUESTION 2:
(i) Tik Tok Enterprises is a dealer in computers and accessories with 25
employees. Tik Tok has just hired your firm to undertake a tax audit of its
accounts for the past five years to 31st December 2011 prior to conversion
to a limited liability status.

Your Director Tax Solutions has directed you in your capacity as audit
senior to prepare a paper suitable for briefing newly recruited audit clerks
on the steps required to be taken before commencement of actual audit
work. (4 Marks)
(ii) The tax audit has just commenced and your team leader has requested
you to set up the permanent notes file for Tik Tok. You are required to
state clearly the contents of this file and any other matters you consider
necessary for inclusion. (5 Marks)
2
( iii) It is generally accepted that businesses face risks both internal and
external and an understanding of these risks gives the tax auditor a
thorough knowledge and understanding of the clients/taxpayers
business and may also suggest where misstatements may occur in the
financial statement. The proprietor of Tik Tok has requested your firm to
advise him on possible risks faced by him.

You are required to identify and explain four (4) internal and four (4)
external risks faced by Tik Tok Enterprises. You are to communicate these
in a suitable form to your Director Tax solutions. (11 Marks)

(Total 20 Marks)

QUESTION 3

(a)(i) A key feature of many tax audit tests is the concept of directional testing.

Explain clearly what you understand by this concept. (11/ 2 Mark)

(ii) Directional testing is based on two simple premises.

You are required to explain your understanding of these premises.

(2 Marks)

(b) You have been assigned to lead a team of tax auditors to carry out the
audit of Tuff Gong Limited. Part of your duty is to carry out a briefing
session for the team before commencement of actual audit work.

You have directed them in the course of the briefing to carry out
directional testing for;
(i) Overstatement, and (2 Marks)
(ii) Understatement. (3 Marks)

Explain clearly what you hope to achieve by this instruction to the team.

(c) Give two reasons each why managers may want to;
(i) Overstate profit (2 Marks)
(ii) Understate profit (1 Mark)

(d) State advantages of directional testing. (3 Marks)

(e) State any disadvantage of directional testing. (1 Mark)

3
(f) The following is the extract of the financial statement of LTE Ltd. A general
merchant based in Accra.

LTE LIMITED

Balance sheet as at December 31

2010 2011
GH000 GH000

Fix Assets 11,500 12,500

Depreciation 2,825 3,100
8,675 9,400

Current Asset

Stocks 6,000 7,347

Debtors 2,100 2,075
Bank 2,275 4,628
10,375 14,050

Current Liabilities

Taxation 1,450 1,600

Creditors 1,600 1,700
Dividends proposed 250 300
3,300 3,600
Net Current Assets 7,075 10,450
Total Assets 15,750 19,850

2010 2011
GH000 GH000
Financed By:

Stated Capital 9,000 11,500

Income Surplus 3,750 4,600
Long-term Loan 3,000 3,750
15,750 19,850

Ignore trading profit and loss account.

You are required to carry out a desk audit of above balance sheet and
write a report suitable for submission to the managing director of LTE
Limited.
(4 Marks) (Total 20 Marks)

4
QUESTION 4:

(a) Compare and contrast the following;

(i) Private audit and statutory audit (4 Marks)

(ii) External audit and Internal audit (4 Marks)

(b) Explain briefly your understanding of the following types of audits;

(i) Complete audit (1 Mark)
(ii) Interim Audit (1 Mark)
(iii) Continuous Audit (1 Mark)

(c) An Accra-based client of your firm, BT Express Limited is contemplating

setting up an Audit Committee in view of the fast expanding nature and
complexity of their operations.

You are required to advise the company on the functions and

responsibilities of an Audit Committee in your capacity as an audit senior
of TJ Consulting Services. (9 Marks)
(Total 20 Marks)

QUESTION 5

(a) Tax auditors who do not comply with tax auditing standards when
performing tax audits face the risk of regulatory action by the chartered
Institute of Taxation.

Suggest how the independence of the tax auditor might be

strengthened. (10 Marks)

(b) When tax auditors accept appointment, they enter into a legal contract
which imposes certain obligations both express and implied, on them.

You are required to state and explain any implied terms that may be
imputed in a tax audit contract.

You are to communicate this in appropriate form to the C.E.O. of ToT ToT
Mining Limited, a company listed on the Ghana Stock Exchange.
(10 Marks)

(Total 20 Marks)

END OF PAPER
 (a) the organisations experience
(b) financial and non-financial information
(c) comparison of comparable information with that of prior period or
periods
(d) comparison of information with anticipated results and
(e) comparison with information relating to similar organizations.
PAPER 7 - TAX AUDIT AND INVESTIGATIONS

ANSWER 1

BRIEFING PAPER (1/ 2 Mark)

ANALYTICAL REVIEW TECHNIQUE IN TAX AUDITS

(i) Analytical review studies the relationship between elements of financial

information expected to conform to a predictable pattern based on:

(1 mark each for any four correct answers)

PREPARED BY: .. }
} Marks
DATE: 28TH JUNE, 2012 }

(ii)
(a) At the planning stage The auditor applies the technique to identify
areas of potential risk or new developments so that he can plan his
other audit procedures in these areas.

(b) Obtaining evidence It is used alone or in conjunction with internal

control reliance and substantive testing to ensure efficiency and
economy.

(c) At the final review stage of the audit analytical review techniques
can provide support for the conclusions arrived at as a result of
other work. It can also be used to assess the overall reasonableness
of the financial statements as a whole.
(1 mark each for any two correct answers)

(III) The following factors may influence my use of analytical review

technique.

(a) The nature of the entity and its operations. A long and well-
established company with branches across the country which has
changed little over the years will lend itself to the use of analytical
review.

(b) Knowledge gained in previous tax audits of the enterprise if any.

The auditor will have experience of those areas where errors and
difficulties arose and of those areas of greatest audit risk.
 (c) Managements own use of analytical review procedures. Where
management has a reliable system of budgetary control then the
auditor will have already obtained explanations for variances.

(d) Availability of non-financial information to back up financial

information. Many companies record non-financial statistics.

(e) The reliability relevance and comparability of the information

available.

(f) The cost effectiveness of the use of analytical review in relation to

other forms of evidence.

(g) The availability of high quality staff with much intelligence,

experience and training.
(1 mark each for any three correct answers)

DDT CONSULT
MEMORANDUM

TO: DIRECTOR-ASSURANCE

FROM: TEAM LEADER Mark

DATE: 28/06/12

SUBJECT: LIVE TOGETHER LIMITED ANALYTICAL REVIEW OF THE FINANCIAL

STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011

(1) Computation of estimated sales:

- GH10,000.00 x 1.15 x 1.15 -13,225.00. The difference is significant and
must be investigated.

(2) Estimated Gross Profit GH10,830.00 x 35% = GH3,790.50

Actual rate is 2,980.00/10,830.00 x 100% = 27.5%

This is a clear departure from the industrial average and must be

investigated.

(3) Stock should be about 45 days worth GH7,650.00 x 45/365 = 943.00.

Actual is lower but not significant.

(4) Creditors should be GH10,330.00 x 13% - GH1,343.00

This appears to confirm the actual stock figure.

(5) Estimated wages GH10,330.00 x 11% = GH1,136.30

 This appears to agree with the actual and budget. This can be confirmed
by the number of staff on roll in 2011.

(6) Other expenses may have also risen by 15% but this could be examined
on individual basis. (2 Marks each for any three correct answers)

Conclusion

(1) Stock and creditors appear to agree with expectations and may not
require indepth investigation.

(2) Overheads appear to be inline but disaggregation is required to enable

treatment of individual items.

(3) Sales are lower than expected. This may require indepth investigation of
cause.

(4) Gross Profit is much lower than expected. Stock and creditors figures
agree with expectations therefore the lower gross profit may not be
attributed to cut-off errors. It seems theft of stock or cash has occurred.
Thorough investigation is required. (1 mark each for any three correct
answers)

Thank you.
Mark
Signed.

ANSWER 2

(i) The audit of Tik Tok is a first audit and will therefore require the setting up of
permanent notes file and for the team to familiarize themselves with the
company and its operations. This audit may also require more
experienced staff than future tax audits of the company. (1 Mark)

The following may have to be considered before commencement of

actual audit work.

(a) Before acceptance of the engagement, the partners must first

consider whether or not they can take on the work from an ethical,
legal and practical point of view. These appear to have been
considered by the partners prior to acceptance.

(b) Professional etiquette - It appears from the question that the firm is
not the statutory auditors of the company. It may therefore be
necessary to contact the statutory auditor with a view to discussing
risk areas, any special difficulties associated with the company and
simply as a courtesy.
 (c) Confirmation of appointment Tik Tok is a sole proprietor and may
therefore not have a directors minute book as with limited liability
companies. Appointment may therefore be evidenced by a letter
from Tik Tok to the firm.

(d) Letter of engagement The partners will draft a letter of

engagement detailing the work to be done for the signature of Tik
Tok. (1Mark each for any three correct answers)

(ii) This file usually contain documents and matters of continuing importance
for any future tax audits.

(a) Statutory matters concerning the conduct,accounts and tax audit

of the enterprise (eg. Tax audit of a bank will consider the Banking
Act).

(b) The rules and regulations of the enterprise. This is a sole proprietor
and there is none.

(c) Copies of documents of continuing importance and relevance to

the tax auditor.

(1) Letter of engagement

(2) Trade licence, and royalty agreements etc.
(3) Debenture deeds, loan agreements etc.
(4) Leases
(5) Addresses of the registered office and all other premises.
(6) An organizational chart showing ;
(a) The principal departments and sub-divisions thereof.
(b) Name of responsible officials and their designations and line
of responsibility
(7) List of books and other records, names, positions, specimens of
signatures and initials of persons responsible for the books and
documents, account codes and classification.
(8) History of the enterprise
(9) List of accounting matters of importance such as rates of
depreciation, valuation of stock and work in progress and research
and development.
(10) Note on matters discussed with the proprietor.
(11) Tik Toks internal audit report if any and accounting instructions if
any.
(12) List of properties and investments with notes on verification.
(1/ 2 mark each for any 10 correct answers)
 MEMORANDUM

TO: Director Tax solutions

FROM: Tax Auditor

DATE: 11/06/12

SUBJECT: TIK TOK ENTERPRISES-ANALYSIS OF BUSINESS RISK

INTRODUCTION

Business risk faced by Tik Tok comes in two forms, external risk arising from outside
the enterprise and internal risk arising from inside the enterprise.
(a) EXTERNAL RISK
These include but not limited to;
(1) Changing interest rate
(2) Changing exchange rate
(3) Price wars with competitors
(4) Untried technologies and ideas
(5) Natural hazards (eg. Fire or flood)
(6) Bad debts
(7) Litigation
(8) Changing legislation
(9) Public Opinion, attitudes
(10) Environmental matters (eg. electricity fluctuation)
(11) Import competition
(1 mark each for any five correct answers)
(b) INTERNAL RISK

This also includes but not limited to;

(1) Failure to modernize products, labour relation, marketing

(2) Employees
(3) The process of dealing with suppliers or customers.
(4) Being a sole proprietor, everything revolves around him.
(5) Cash flow including overtrading.
(6) Inappropriate acquisitions
(7) Excessive reliance on one of a few products, customers, suppliers.
(8) Internal controls.
(9) Fraud
(1 mark each for any five correct answers)
Thank you.
Mark
Signed.
ANSWER 3

(a) (i) The concept of directional testing recognizes that it is the purpose of the
audit test which will determine the direction of the test (ie. do we start by
testing raw data or final accounts balances?). (1 Mark)

(ii) Directional testing is based on two simple premises.

(1) Errors found in financial statements may be due to either over-or
understatements resulting from either omissions or misstatement of
the items. (1 Mark)

(2) The double entry system provides a set of links between assets,
liabilities, revenues and expenses included in the accounts.
To overstate an asset means an income account or liability may
have also been overstated (or another asset account or expense
account understated). (1 Mark)

(b)(i) Directional testing for over statement;

(1) Carrying out a primary test of an asset account balance (eg.

debtors) for overstatement leads to the testing of a reciprocal
population (eg. sales) (1 Mark)

(2) Overstatement tests start with the monetary population of the

account balance (ie accuracy tests to test that what is included
should be included). (1 Mark)

(ii) Directional testing for understatement;

(1) Testing sales income for understatement, the tax auditor obtains
evidence that other credit balances are not overstated and that
debit balances are not understated (eg. debtors). (1 Mark)

(2) Understatement tests are tests to detect omissions. The starting

point is the non-monetary population. (eg. when testing sales for
understatement the population for selection is normally
waybill/dispatch notes). (1 Mark)

Generally, by carrying out primary testing of all debit balances

(assets and expenses) for overstatement and all credit balances
(income and liabilities) for understatement the auditor, has
effectively tested all items in both directions. (1 Mark)

(c)(i) Motive for overstatement of profits may be due: to:

(1) Meet expectations and requirements of lenders and shareholders,
or to fulfill previously made forecasts
 (2) To fight off take-over bids
(3) To boost management remuneration when this is based on profit.
(1 mark each for any two correct answers)

(ii) Motive for understatement of profit may be to:

(1) Design to reduce tax liabilities

(2) Lower value of company assets for the purchases of capital gain
tax. (1 mark for one correct answer)

(d) The advantages of directional testing approach are;

(1) It gives focus to audit
(2) It reduces the time and effort on an audit.
(3) It helps ensure that overstatement or understatement (as
appropriate) has not occurred and therefore minimizes the risk of
material misstatement in the financial statement.
(4) It facilitates audit conclusions based on statistical sampling
techniques. (1 mark each for any three correct answers)

(e) Disadvantages are;

(1) There is a possible tendency not to obtain sufficient primary

evidence in the right direction (ie. Understatement when
overstatement is expected).
(2) There is a need to realize that all assets and liabilities and revenues
and expenses should be verified for all assertions in the financial
statements. (1 mark for one correct answer)

3(b) LTE Limited

The Managing Director

LTE Limited (1 Mark)
Accra

Dear Sir,
YEAR OF ASSESSMENT 2011 FINANCIAL STATEMENT
FOR THE YEAR ENDED DECEMBER 2011 FILE NO. XXXX
We are happy to receive your companys accounts for the year ended
December 31st, 2011. We have completed examination of the accounts
and wish to bring our observation to your notice.

1. Additions to Fixed Assets

Our examination indicates that additions amounted to
GH1,000,000. Kindly submit supporting documents attesting to
ownership and value. Take note that you are required by the
Internal Revenue Act (Act 592) to inform the Commissioner General
upon acquisition in order to attract capital allowance.
 2. Stocks
Kindly submit stock schedules to indicate stock in trade and
consumable stocks.

3. Debtors
Kindly submit schedules of debtors indicating trade debtors and
other debtors.
4. Bank Balance
You are required to produce bank statements supporting all your
bank accounts.

5. Creditors
Please furnish us with schedule of creditors indicating trade creditors
and other creditors.

6. Dividends
Kindly furnish us with evidence of taxes paid.

7. Addition to Stated Capital

Please indicate sources of funding of this addition.

8. Long Term Loan

Please furnish us with particulars of the additions.

Counting on your co-operation.

Thank you. (1/2 Mark each for any six correct answers)

Yours faithfully

Signed (1/2 Mark)

ANSWER 4

(a)(i) Private Audit Statutory

1. Undertaken at the instance of an Statutory obligation arising out

interested party or parties (such as sole of the Companies Code. This
trader or partnerships). requires that a professionally
qualified accountant audits
and certify the accounts of a
limited liability company.
2
Scope of audit determined by the Scope determined by
interested party or parties (in case of legislation in operation at the
partnerships time of audit.

3. Governed by contract Governed by contract

4. Report issued to interested party. Report to shareholders

(1/ 2 Mark each)

(a)(ii) External Audit Internal Audit

1. Independent of the organization Responsible to management,

managing director, Board of
Directors or Audit Committee

2. Responsibilities are fixed by statute Responsibilities are specified by

management

3. Report to shareholders Report to the Director or Audit

committee

4. Perform work to enable them express Work may range over many
an opinion on the truth and fairness of operational and financial areas
the accounts and activities as determined by
Management.

( Mark each)

(b)(i) Complete Audit

Complete audit usually apply to small companies where the volume of

transactions and complexity of records do not require more than one
attendance by the auditor. Auditors work begins as soon as the
companys financial year ends. (1 Mark)

(ii) Interim Audit

This usually applies to larger organizations. Due to the volume of testing to

be undertaken, in order to reach an opinion on the reliability of the
records, auditors find it necessary to proceed with the audit on interim
basis. Interim audits are arranged with the co-operation of the client and
may be bi-annual, quarterly or even monthly depending on the volume of
audit work considered necessary. (1 Mark)
(iii) Continuous Audit

Where the system of internal control operated by a large company

displays a fundamental and material weaknesses, the auditor may carry
out audit test on a higher proportion of transactions. Due to such
weaknesses, the auditor may carry out audit checks throughout the
period under consideration. (1 Mark)

(c) TJ CONSULTING SERVICES

The Managing Director

BT Express Limited (1/ 2 Mark)
Accra

25 June, 2012

Dear Sir,

FUNCTIONS AND RESPONSIBILITIES OF AN AUDIT COMMITTEE

Forward to the enquiry you made in connection with the setting up of the
Audit Committee in your company we wish to bring to your notice the
functions and responsibilities of an Audit Committee as follows;

(1) To review the financial results shown by both management

accounts and those presented to shareholders.

(2) To make recommendations for the improvement of management

control.

(3) To ensure that there are adequate procedures in place for the
review of interim statements, forecasts and other financial
information before distribution to shareholders.

(4) To assist external auditor in obtaining all information they need and
in resolving difficulties experienced by them in pursuing their
independent examination.

(5) To deal with any material reservation of the auditors regarding the
companys management, its records and its final accounts;
including the manner in which significant items are presented.

(6) To facilitate a satisfactory working relationship between the

management, and auditors, and between the internal and external
audit functions.
 (7) To be responsible for the appointment of auditors as well as fixing
their remuneration.

(8) To be available for consultation with the auditors at all times, if

necessary, without the presence of management to discuss
regularly and review the procedures employed by the auditors.

(10) To be concerned with all matters relating to the disclosure by the

accounts of a true and fair view for the benefit of all users.

We hope this explains the role expected of the audit committee.

(1 mark each for any eight correct answers)

Thank you.
Mark
Signed

ANSWER 5(a)

The following measures may be introduced to strengthen the independence of

the tax auditor in the tax audit of a public company;

(i) The payment of audit fees and appointment of auditors by a central

body.

(ii) The mandatory requirement of establishing audit committee for all listed
companies composed of non-executive directors and dealing directly
with auditors and accounting and tax issues.

(iii) Tax auditors could be required to make some formal declaration that they
are not involved with a client company in any way which might be seen
to impair their objectivity.

(iv) Tax auditors could be rotated by the chan ging of firms if tax audit
assignments become frequent.

(v) A system of peer reviews could be introduced where the reviewers brief
may include the assessment of the tax auditors independence from the
client. (2 marks each)
ANSWER 5(b)

The Chief Executive Officer

Tot Tot Mining Limited (1 mark)
Ghana

26th June, 2012

Dear Sir,

IMPLIED TERMS OF A TAX AUDIT CONTRACT- EXPLANATION

Obligations are imposed on a tax auditor when he accepts to undertake a tax

audit assignment. The obligations arise from the terms of the contract. There are
both express and implied terms of a contract which impact upon the auditor.
(2 Marks)

The following implied terms which contract law will impute into a tax audit
contract are as follows:

(i) The auditors have a duty to exercise reasonable care. (2 Marks)

(ii) The auditors have a duty to carry out the work required with reasonable
expediency. (2 marks)

(iii) The auditor has a right to reasonable remuneration. (2 Marks)

I hope this is clear enough. We are ready to provide any additional explanation
you may require.

Thank you.

(1 Mark)
Signed
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL I
PAPER 8 OIL, GAS AND OTHER MINERALS TAXATION
AUGUST 2012 EXAMINATIONS

TIME ALLOWED: THREE (3) HOURS

INSTRUCTIONS: ATTEMPT ALL QUESTIONS

Question 1

The natural resource sector is said to have a number of features that make its taxation not
only especially important for many countries including Ghana, but also particularly
challenging.

State and briefly explain five of these challenges. [20 Marks]

Question 2

A number of tax instruments can be deployed in the natural resource sector to enable
governments of resource-rich countries to earn revenue.

Discuss five of the main tax (and tax-like) instruments that are or might be deployed in
the natural resource sector for revenue generation. [20 Marks]

Question 3

In the spread of varying relationships between governments and the oil industry, two
basic and broad systems of granting rights to investors have developed over the years
the concessionary system and the contractual scheme.

Explain these two systems, stating their characteristics. [20 Marks]

Question 4

Distinguish between Brown Tax and Resource Rent Tax under Rent-based taxes in
mineral taxation. [20 Marks]

Question 5

Mining and Petroleum Agreements governing the exploration and development of natural
resources frequently include contractual assurances of stability.

Explain why companies want, and governments grant fiscal stability assurances.

[20 Marks]

END OF PAPER

1
 CHARTERD INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013
FINAL LEVEL 1
PAPER 8 OIL AND GAS AND OTHER MINERALS TAXATION

TIME ALLOWED THREE (3) HOURS

INSTRUCTIONS: ANSWER ALL QUESTIONS

Question 1

Explain, briefly the following sources of revenue accruing to the Government of Ghana from the
upstream petroleum operations in Ghana:

a) Royalty;
b) Carried Interest;
c) Additional Interest;
d) Additional Oil Entitlement; and
e) Surface Rentals.
(4 marks each)
(Total: 20 marks)

Question 2

a) Section 2 of the Petroleum Income Tax Law, 1987 (PNDCL 188) (PITL) provides the
basis of ascertainment of chargeable income. It stipulates that the chargeable income of a
person from petroleum operation is calculated by deducting from gross income for the
year, amounts allowed as deductions under section 3 of the PITL.

Required:

With reference to section 2 of PITL and Article 11.7 of the Model Petroleum Agreement,
(MPA), you are required to explain to a group of potential investors, what is meant by
gross income for purposes of determining chargeable income of a person in petroleum
operations in Ghana. Identify also, what gross income does not include.
(10 marks)

b) Outline the composition and strategic importance of Joint Management Committee (JMC) as
contained in the MPA. (10 marks)

1
Question 3

a) Explain to the management of Zizo Limited, the significance of unrelieved tax losses and
capital allowances for a mining company. Briefly advice on tax efficient ways of relieving
tax losses. (4 mark).

b) Zizo Limited, is a medium-sized mining company which has been in operation for several
years. The Company recorded tax losses from 2005 to 2007 years of assessment as follows:

Year 2005 2006 2007

Amount (GH) 200,000 150,000 100,000

However, from 2008 onwards Zizo Limited made the following assessable incomes after the
required adjustments to its accounting profit in accordance with the Internal Revenue Act,
2000 (Act 592) as amended:

Year 2010 2011 2012

Amount (GH) 150,000 160,000 200,000

Capital allowances for the company from the 2010 to 2012 years of assessment were as
follows:

Year 2010 2011 2012

Amount (GH) 60,000 55,000 60,000

You are required to:

Determine the chargeable income of Zizo Limited and tax liability, if any,from 2010 to 2012
years of assessment and comment on the outcome of the utilization of the losses and capital
allowance for each year of assessment.
(21 marks)

Total: (25 marks)

Question 4

a) Mr. Warmer is a specialist in oil and gas testing. He comes from Serbian and is ordinarily
resident in Serbia for tax purposes. His services are in high demand across the globe and
therefore, he shares his time with several companies in many jurisdictions.

2
 The Ghanaian upstream petroleum industry has been using the services of Mr. Warmer, who
visited Ghana on a number of occasions in 2012. Whilst in Ghana, he earned money from the
services he rendered to the players.

Information available from the Immigration Service as well as his passport disclosed the
following with respect to his travels:

Date From To
2January 2012 Serbia Ghana
13 January 2012 Ghana Sierra Leone
30 July 2012 Sierra Leone Ivory Coast
1 September 2012 Ivory Coast Ghana
13 September2012 Ghana United Arab Emirates
1 December 2012 United Arab Emirates Serbia

Required:

You are required to determine whether or not Mr. Warmer is taxable in Ghana. Support your
answer with relevant provisions of PITL and MPA. (10 marks)

b) The Public Interest and Accountability Committee (PIAC) was established under Section 51
of the Petroleum Revenue Management Act (Act 815) with the following objectives as spelt
out in Section 52:

To monitor and evaluate compliance with Act 815 by government and other relevant
institutions in the management and use of petroleum revenues and investments;
To provide space and platform for the public to debate whether spending prospects and
management and use of petroleum revenues conform to development priorities; and
To provide an independent assessment on the management and use of revenues to assist
Parliament and the executive in the oversight and performance of related functions.

The Committee is mandated by the law to publish a semi-annual and an annual report by the 15th
September and 15th March each year. Since its establishment, PIAC has issued two (2) reports in
compliance with Act 815.

You are required to identify at least five (5) non-compliance issues or violations of the
provisions of Act 815 disclosed by the PIAC report. (10 marks)

(Total 20 marks)

Question 5

Does the functions of the Petroleum Commission conflict with that of the Ghana National
Petroleum Corporation? - Discuss. (15 marks)

END OF QUESTIONS

3
 CHARTERD INSTITUTE OF TAXATION (GHANA)
AUGUST 2013 EXAMINATIONS
FINAL LEVEL 1 PAPER 8 OIL AND GAS AND OTHER MINERALS TAXATION
RECOMMENDED PASS MARKS 50%

EXAMINERS REPORT

Introduction

All the questions in this paper were compulsory and candidates were expected to answer or
attempt all questions.

Question 1

This question was a twenty (20) marks question that required candidates to briefly explain five
(5) sources of revenue that accrue to the Government of Ghana from the upstream petroleum
operations in Ghana.

This question was well attempted. A reasonably high number of candidates achieved the pass
mark in this question. Forty four (44) candidates representing sixty four percent (64%) achieved
either the pass mark of 50% or above. The remaining 25 candidates that failed in this question
was due to either one or a combination of the following reasons:

1. Candidates provided vague answers;

2. Candidates could not explain the percentage or rates of incomes receivable by Government.
Candidates could not also explain what counterpart contributions/costs Government (GNPC)
was expected to make to the petroleum operations; and
3. Candidates did not link or support their answers with the provisions of the Petroleum
Agreement, the Petroleum Income Tax Act, 1987 (PNDCL 188) or any other relevant
legislation and rather choose to discuss issues that they may have been hearing from the
media which in most cases may not be factual.

Question one was a fairly straight forward question. To achieve the desired marks therefore,
candidates needed to appreciate the key elements of the revenue types under consideration.

1
Question 2

This question is a two part question for 20 marks. Part A carried 10 marks and part B carried
10 marks. Section A of the question sought to test candidates understanding of the constituent
elements of gross income for purposes of ascertaining chargeable income from petroleum
operations as provided for in Section 2 of the Petroleum Income Tax Act, 1987 (PITL 188) and
the Petroleum Agreement. The question also requested candidates to identify what gross income
does not include.

The B aspect of the question required candidates to outline the composition and strategic
importance of the Joint Management Committee as contained in the Model Petroleum
Agreement (MPA).

Overall, twenty three (23) candidates representing 33% achieved the pass mark for this question.
Reasons why some candidates failed to achieve the pass mark for this question include:

1. Candidates confused gross income from petroleum operations with chargeable income and
discussed chargeable income instead of the gross income. Candidates did not therefore
answer the question asked.
2. Even those candidates who discussed gross income were not abreast of the composition or
elements of gross income;
3. Some candidates could not identify the incomes that are excluded from the gross income;
4. Regarding JMCs most candidates had little or no knowledge of the composition of the Joint
Management Committee, neither did they know the role of JMC in the petroleum industry;
and
5. Candidates failed to logically structure their answers to the extent that most candidates could
not pick-up easy marks allocated to introductions and conclusions, hence candidates did not
have good presentation of their answers.
General Comments:

Candidates generally gave common sense answers and were not meticulous enough about the
elements of gross income of petroleum operations.

Candidates did not care to understand the requirements of the question, hence most comments,
though true, did not answer the question.

2
Question 3

Question three (3) was a 25 marks question which had two parts. Part A constituting a theory
question of four (4) marks and question B had twenty one (21) marks for calculations and
commentary. Part A of the question required candidates to explain to management of a mining
company, the significance of unrelieved tax losses and capital allowances and advice briefly on
the tax efficient ways of relieving tax losses.

Part B of the question required candidates to compute the chargeable income and tax liability
(if any) of Zizo Limited (a mining company), taking cognisance of the interplay between tax
losses and capital allowances available to the company and further comment on the outcome of
the utilisation of the losses and capital allowances for each year of assessment.

Only eleven (11) candidates comprising sixteen percent (16%) of the total candidates were able
to achieve the minimum pass mark available for this question.

Key reasons for most candidates failing to achieve the pass mark may be attributed to:

1. Most candidates knew little or nothing about utilisation of unrelieved tax losses available
under the Internal Revenue Act, 2000 (Act 592) to mining companies. Most candidates were
under the mistaken belief that the word unrelieved meant that the company would not be
able to relieve the losses available to them;
2. Lack of knowledge by most candidates in relieving tax losses caused most candidates to
perform abysmally in the B part of the question (i.e. computation of chargeable income and
tax liability of Zizo Limited);
3. Some candidates also failed to comment on the outcome/effect of the relief of the tax losses
and capital allowances on Zizo Limited in each year of assessment; and
4. Most candidates that commented on the effect of the tax loss and capital allowance relief on
Zizo Limited were wrong as a result of the ignorance demonstrated in solving this question.
General Comments:

This question was the most poorly answered.

Candidates basically knew nothing or very little about what was expected of them.

3
Question 4

Question four (4) was a twenty (20) marker question comprising part A and B each for ten
(10) marks. Part A required candidates to determine whether or not an expatriate employee or
foreign national employee of a petroleum company was taxable in Ghana and support the
answers with the relevant statutory/legal provisions.

In part B, candidates were to outline at least five (5) non-compliance issues or violations of the
provisions of the Petroleum Revenue Management Act 815 as disclosed by the PIAC reports.

For this question, twenty-two (22) candidates representing thirty-two percent (32%) achieved the
pass mark.

Reasons why some candidates could not pass include:

1. For the A part of the question, most candidates just stated whether the expatriate was
taxable or not and did not explain further. This question indeed required some logical
analysis to arrive at the required conclusion;
2. Most candidates after discussing the provisions of Petroleum Income Tax Act (PITA) and the
Model Petroleum Agreement (MPA), wrongly concluded that the expatriate would still suffer
withholding tax of 15% on his income;
3. Most candidates discussed the Internal Revenue Act 592 (IRA) instead of the PITA and the
MPA;
4. With regards to the B part of the question, most candidates wrote about public discussions
(i.e. issues discussed on radios, televisions, etc.) rather that the issues outlined in the PIAC
reports as required by section 51 of the Petroleum Revenue Management Act, 2011 (Act 815)
(PRMA).

General Comments:

Candidates did not demonstrate knowledge of the contents of the PIAC reports as required by
section 51 of the PRMA.

Candidates did not take their time to understand the question, hence, they discussed other
issues/laws which were not related to the question.

4
Question 5

This question is a fifteen (15) mark question and part question of question one (1) of the
February, 2013 examination. It required that candidates discuss the conflict situation of the
Ghana National Petroleum Corporation (GNPC) and its resolution by the Petroleum Commission
(PC), discuss the functions of the PC, and the functions of GNPC.

This question was answered quite well with fifty-five percent (55%) of candidates (i.e. 38
candidates) either achieving or exceeding the pass mark.

However, some candidates made the following mistakes:

1. Some candidates just discussed how the petroleum commission has resolved the conflicting
position of the Ghana National Petroleum Corporation without identifying the respective
functions of the PC and the GNPC; and
2. Other candidates did not structure their answers logically.
General Comments:

This question was fairly well answered.

Summary Comment of Examiner

The August 2013 diet of the examination was less demanding than the February Diet. As such, it
was expected that students would perform better than the previous sitting. Students have
consistently been in the habit of writing answers based on public discussions instead of applying
the technical contents of the various laws. Going forward, it is expected that students develop
deeper understanding of the various statutes and practices of the Ghana Revenue Administration.
Where current developments are required in the examinations, it will involve the application of
the law and not discussion of public opinion.

Examiner: Isaac Nyame (FCIT)

5
 CHARTERD INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013
FINAL PART 1
PAPER 9 INTERNATIONAL TAXATION
Answer All Questions

TIME ALLOWED THREE (3) HOURS

Question 1

Techno Ghana Limited is the Ghanaian distributor of Pronto brand laptop computers. It
sources its stocks from its parent company, Techno International, in South Korea. The
only value added to the laptop computers by Techno Ghana Limited is the provision of
English language instruction manuals and delivery to wholesale customers. The printing
of the English instruction manuals are outsourced to an independent printing company
based in Accra.

In the financial year ending 31st December 2012, the price per laptop computer charged
by Techno Ghana Limited to wholesale customers is GH3,000. The cost per laptop
computer to Techno Ghana Limited is GH5,500 excluding the cost of the English
Language manual. The cost of adding the instruction manuals is GH10. There are five
similar independent distributors of comparable laptop computers in Ghana in 2012. The
independent distributors performed similar functions as Techno Ghana Limited. These
distributors earned 15% margin on distributing the comparable laptop computers.

Required

a. What is the most appropriate transfer pricing method to apply in this

circumstance? Give reason (s) for your answer. (4 marks)

b. Calculate the arms length price Techno Ghana Limited should have received the
laptops from its parent company, Techno International, in South Korea by using
the most appropriate transfer pricing method you identified in (a) above and
state the transfer pricing adjustment to be effected. (15 marks)

(Total: 19 marks)
Question 2

Define treaty shopping (3 marks)

Universal Ghana Limited is a company incorporated in Ghana. It shows all the shares in
Universal Mauritius which is a company incorporated and resident in Mauritius. The
Mauritius company owns all the shares in Universal South Africa Limited, a foreign
wholly-owned company established in South Africa.

Under the South African tax law, a dividend paid to a non-resident shareholder is a
liable to withholding tax at the rate of 20%. Assume that under the Ghana Africa double
tax treaty, a dividend paid to a shareholder who is a resident of Ghana is liable to
withholding tax at the rate of 8% and under Article 10 of the South Africa- Mauritius
double tax treaty, a dividend paid to a shareholder who is a resident of Mauritius is
liable to South African withholding tax at the rate of 3%. Mauritius gives a credit against
Mauritius corporate tax for South Africa corporate tax and dividend withholding tax, and
does not levy withholding tax on dividends paid by a company to a non-resident
shareholder.

Every 6 months Universal South Africa Limited pays a dividend to its Mauritius parent
company which is always US$4m and has been withholding tax on the dividend at 3%.

Required

i. Draw a diagram depicting the corporate shareholdings and the transactions

structures of the case. (3marks)

ii. What rate of withholding tax should the South African company collect on the
dividends?

Give reason (s) for your answer (3 marks)

iii. What would be the tax consequence if Universal Mauritius Limited paid a special
dividend to its parent company every 6 months of US$4m immediately after it
received the dividend from Universal South Africa Limited? (8 marks)

iv. What would be the tax consequence if Universal Ghana Limited held a call option
over the shares and could require Universal Mauritius Limited to sell the shares
in the South African company to it at cost? (8 marks)

(Total: 24 marks)
Question 3

Game Solutions B.V., a company resident in the Netherlands, owns a range of top
selling computer games. Media Market Limited, a company resident in Ghana, operates
a chain of retail computer stores that sell a wide range of computer hardware and
software.

Games Solutions B. V. agrees to sell its software in Ghana exclusively through Media
Market Limited stores for 5 y ears in consideration for Media Market Limited paying a
licence fee of $50,000.

The licence fee does not give Media Market Limited the right to produce Games
Solutions B. V. software for distribution to the public, or any other interest in the
copyright of the software. Media Market Limited purchases copies of Games Solutions
B. V.s computer software, which are received by media Market Limited as packaged
copies and resells them to the ultimate users Sales are not made on commission basis.

Assumption: Ghana and Netherlands treaty follows the OECD Models Tax Convention,
except that Article 12 (Royalties) permits source state taxation of royalties at a rate of
15%.

Required

a. Draw a diagram depicting the transactional structure of the case. (3 marks)

b. Would the distribution rights granted by Games Solutions B. V. to Media Market

Limited be viewed as being part of the exploitation rights of the copyright holder
(Games Solutions B. V.) and as a result regarded as being a royalty? Give
reasons for yours answer. (8 marks)

c. Assuming Ghana copyrights law provided that copyright include, among other
things, the right to reproduce copies of software and Media Market Limited was
granted the copyright, what will be the tax implication? (9 marks)

(Total: 20 marks)
Question 4

The application of the arms length principle is generally based on a comparison of

conditions in a controlled transaction with the conditions in transactions between
independent enterprises.

Required

Enumerate and briefly explain the five basic factors determining comparability analysis.

Question 5

The G20 Summit IN London on 2nd April, 2009 resolved to take action against non-
cooperative jurisdictions, including tax havens. They declared, We stand ready to
deploy sanctions to protect our public finances and financial systems. The era of
banking secrecy is over. We noted that the OECD has today published a list of
countries assessed by the Global Forum against the international standard for
exchange of tax information. As a result Ghana became the 100th member of the Global
Forum in April 2011 and committed to the international standard for Exchange of
Information for tax purposes.

Required

a. State the international standard for exchange of information for tax purposes.
(5 marks)

b. State and explain four types of international exchange of information for tax
purposes. (10 marks)

c. What are the objectives of international exchange of information for tax

purposes? (6 marks)

(Total: 21 marks)

END OF QUESTION PAPER

 CHARTERD INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST 2013
FINAL PART 1
PAPER 9 INTERNATIONAL TAXATION
Answer All Questions

TIME ALLOWED THREE (3) HOURS

Question 1

Techno Ghana Limited is the Ghanaian distributor of Pronto brand laptop computers. It
sources its stocks from its parent company, Techno International, in South Korea. The
only value added to the laptop computers by Techno Ghana Limited is the provision of
English language instruction manuals and delivery to wholesale customers. The printing
of the English instruction manuals are outsourced to an independent printing company
based in Accra.

In the financial year ending 31st December 2012, the price per laptop computer charged
by Techno Ghana Limited to wholesale customers is GH3,000. The cost per laptop
computer to Techno Ghana Limited is GH5,500 excluding the cost of the English
Language manual. The cost of adding the instruction manuals is GH10. There are five
similar independent distributors of comparable laptop computers in Ghana in 2012. The
independent distributors performed similar functions as Techno Ghana Limited. These
distributors earned 15% margin on distributing the comparable laptop computers.

Required

a. What is the most appropriate transfer pricing method to apply in this

circumstance? Give reason (s) for your answer. (4 marks)

b. Calculate the arms length price Techno Ghana Limited should have received the
laptops from its parent company, Techno International, in South Korea by using
the most appropriate transfer pricing method you identified in (a) above and
state the transfer pricing adjustment to be effected. (15 marks)

(Total: 19 marks)
Question 2

Define treaty shopping (3 marks)

Universal Ghana Limited is a company incorporated in Ghana. It shows all the shares in
Universal Mauritius which is a company incorporated and resident in Mauritius. The
Mauritius company owns all the shares in Universal South Africa Limited, a foreign
wholly-owned company established in South Africa.

Under the South African tax law, a dividend paid to a non-resident shareholder is a
liable to withholding tax at the rate of 20%. Assume that under the Ghana Africa double
tax treaty, a dividend paid to a shareholder who is a resident of Ghana is liable to
withholding tax at the rate of 8% and under Article 10 of the South Africa- Mauritius
double tax treaty, a dividend paid to a shareholder who is a resident of Mauritius is
liable to South African withholding tax at the rate of 3%. Mauritius gives a credit against
Mauritius corporate tax for South Africa corporate tax and dividend withholding tax, and
does not levy withholding tax on dividends paid by a company to a non-resident
shareholder.

Every 6 months Universal South Africa Limited pays a dividend to its Mauritius parent
company which is always US$4m and has been withholding tax on the dividend at 3%.

Required

i. Draw a diagram depicting the corporate shareholdings and the transactions

structures of the case. (3marks)

ii. What rate of withholding tax should the South African company collect on the
dividends?

Give reason (s) for your answer (3 marks)

iii. What would be the tax consequence if Universal Mauritius Limited paid a special
dividend to its parent company every 6 months of US$4m immediately after it
received the dividend from Universal South Africa Limited? (8 marks)

iv. What would be the tax consequence if Universal Ghana Limited held a call option
over the shares and could require Universal Mauritius Limited to sell the shares
in the South African company to it at cost? (8 marks)

(Total: 24 marks)
Question 3

Game Solutions B.V., a company resident in the Netherlands, owns a range of top
selling computer games. Media Market Limited, a company resident in Ghana, operates
a chain of retail computer stores that sell a wide range of computer hardware and
software.

Games Solutions B. V. agrees to sell its software in Ghana exclusively through Media
Market Limited stores for 5 y ears in consideration for Media Market Limited paying a
licence fee of $50,000.

The licence fee does not give Media Market Limited the right to produce Games
Solutions B. V. software for distribution to the public, or any other interest in the
copyright of the software. Media Market Limited purchases copies of Games Solutions
B. V.s computer software, which are received by media Market Limited as packaged
copies and resells them to the ultimate users Sales are not made on commission basis.

Assumption: Ghana and Netherlands treaty follows the OECD Models Tax Convention,
except that Article 12 (Royalties) permits source state taxation of royalties at a rate of
15%.

Required

a. Draw a diagram depicting the transactional structure of the case. (3 marks)

b. Would the distribution rights granted by Games Solutions B. V. to Media Market

Limited be viewed as being part of the exploitation rights of the copyright holder
(Games Solutions B. V.) and as a result regarded as being a royalty? Give
reasons for yours answer. (8 marks)

c. Assuming Ghana copyrights law provided that copyright include, among other
things, the right to reproduce copies of software and Media Market Limited was
granted the copyright, what will be the tax implication? (9 marks)

(Total: 20 marks)
Question 4

The application of the arms length principle is generally based on a comparison of

conditions in a controlled transaction with the conditions in transactions between
independent enterprises.

Required

Enumerate and briefly explain the five basic factors determining comparability analysis.

Question 5

The G20 Summit IN London on 2nd April, 2009 resolved to take action against non-
cooperative jurisdictions, including tax havens. They declared, We stand ready to
deploy sanctions to protect our public finances and financial systems. The era of
banking secrecy is over. We noted that the OECD has today published a list of
countries assessed by the Global Forum against the international standard for
exchange of tax information. As a result Ghana became the 100th member of the Global
Forum in April 2011 and committed to the international standard for Exchange of
Information for tax purposes.

Required

a. State the international standard for exchange of information for tax purposes.
(5 marks)

b. State and explain four types of international exchange of information for tax
purposes. (10 marks)

c. What are the objectives of international exchange of information for tax

purposes? (6 marks)

(Total: 21 marks)

END OF QUESTION PAPER

 International Taxation (August, 2013)

Examiners Report

Question 1

Some candidates who rightly identified the most appropriate Transfer Pricing method could not use the
method correctly to calculate the Transfer Price. As a result, they could not arrive at the correct Transfer
pricing adjustment to be effected. This led to candidates performing poorly. The performance of the
candidates portrayed that most candidates did not grasped.

a. The circumstance under which a particular transfer pricing method should be applied.
b. How to compute transfer pricing adjustment and transfer price using the transfer pricing
methods.

Question 2

Generally, the first part of the question was well answered. Candidates were able to define treaty
shopping. However, the second part was poorly answered by almost all candidates. Candidates lacked
the skill of illustrating case studies for ease of understanding. This led to candidates not grasping the
underlying concepts required to answer the questions. The third part of the question demanded a clear
application of the treaty without a proof of treaty abuse. However, the fourth part of the question
provided a clear case of an arrangement with the intention of treaty abuse. Even though most
candidates recognized the intent purpose, they failed to realize that the Ghana/South Africa treaty
should apply because of the concept of beneficial ownership. The last part of the question also tested
candidates ability to identify a clear case of arrangement which would necessitate the use of GAAR and
the provision of treaty abuse. The share option sale at cost arrangement would be ignored by the tax
authorities and the principle of substance over form concept would be invoked. The share would be
valued at market price and the capital gain (if any) subjected to capital gain tax, Generally, most
candidates performed poorly in this question.

Question 3

The first part of this question was poorly answered because most candidates were not skillful enough to
illustrate the case studies. The second and third parts of the question sought to test candidate
understanding of what constitute royalty. Most candidates could not distinguish between taxable
activities under Article 7 and Article 12 of the OECD and UN models treaties. Once a candidate failed to
identify the type of taxable activity in the first part of the question, the candidate definitely got into
difficulty in answering the third part. Generally, candidates performed averagely.

Question 4

This question was well answered by most candidates. Candidates scored high marks. However, some
candidates failed to explain the factors of comparability. For example for characteristics of goods,
property or services candidates were expected, for example to expatiate on trade mark versus a simple
cloned product and for functional analysis to explain function performed; risks assumed; assets used.
For contractual terms candidates are to explain how risks, benefits and responsibilities are divided,
analyze the contractual terms whether written or oral, explicit or implied and whether true terms differ
from written terms. Candidates were to analyze economic circumstances in terms of geographic
location, market size, competition and substitutes and for business strategies candidates were to explain
market penetration, innovation, diversification and specialization.

Question 5

This question was poorly answered by candidates. The first part of the question tested the
understanding of the basic standard of exchange of information for tax purposes. The standard can be
deduced from the basic information sharing provisions in the UN and OECD models of Double Tax
Convention and other bilateral/multilateral conventions on exchange of information for tax purposes.
The Standard requires exchange of information or request where foreseeable relevant to tax
administration or enforcement of all tax matters, without regard to a domestic tax interest, bank
secrecy, or dual criminality, availability of reliable information and powers to obtain it with safeguards
to protect taxpayers right and confidentiality. The second part required candidates to state and explain
the types of exchange of information for tax purposes. The type of exchange of information for tax
purpose include exchange of information on request (specific), spontaneous exchange of information,
automatic (or routine) exchange of information, industry-wide exchange of information, simultaneous
tax examinations and tax examinations abroad. The last part of the question tested candidates on the
purposes of exchange of information for tax purposes. This part was well answered by candidates. The
main purposes of exchange of information for tax purposes are to ensure the correct application of
international and domestic tax rules and to counteract tax avoidance and evasion.
 International Taxation (August, 2013)

Marking Scheme

1a

The Resale Price Method

This method tends to be most appropriate where a group company (Techno International) sells on to
another group company (Techno Ghana Limited) which makes the sale to the final (unconnected)
consumer with a minimum of processing or otherwise adding little or no value to the goods. It can be
used to check the transfer price from the viewpoint of either company although it would most likely be
used to verify the price paid by Techno Ghana Limited. (4 marks)

1b

Resale Price Method: Calculation of Transfer Price and Adjustment

Price charged to Ghanaian 3000 3000

customers

Margin of 15% 376.5 391.2*

Cost incurred by Techno Ghana 10 10

Limited

Price charged by Techno 2500

international, South Korea

Transfer Price 2598

*Not: 300015/115 = 391.2

From the calculation above the Ghanaian distributor should be making a margin of 391.20 on each
television set and not the 376.5 that it reported. There should be profit adjustment of 14.70 on each
television sold by Techno Ghana Limited. (15 marks)

2a

Treaty shopping is the structuring of an international transaction or operation so as to take advantage of

a particular treaty that a person otherwise would not be entitled to without the particular structure
being used.

(3 marks)
2b

(i)

Shareholdings and Transactions Structure

Double Taxation Treaties Domestic Tax Law

Universal Ghana
Limited

8%WHT on Dividend 100% Shares 0%WHT on Dividend

Universal Mauritius
Limited

3%WHT 100% Shares 20%WHT on Dividend

Universal South
Africa
(3 marks)

(ii)

Without any evidence of treaty abuse the 3% WHT on payment of the dividend to Universal Mauritius
Limited by Universal South Africa is in order.

(3 marks)

(iii)

The GAAB and the concept of beneficial ownership should apply here. The beneficial owner of the
investment in South Africa is Universal Ghana Limited. Therefore, the Ghana/South Africa Double
Taxation Agreement should apply. The dividend should be subjected to withholding tax rate of 8%.
(8 marks)
(iv)

The substance of the transaction is different from the form. Transaction should be disregarded and
GAAR applied. The share option exercised should be valued at marked value and not at cost. The
resultant capital gain (if any) should be subjected to capital gain tax. (8 marks)

3a.

Netherlands

Games Solutions BV

Exclusive distribution Purchase of package copy

Rights $50.000 of Games software

Ghana

Media Market Limited

Customers

(3 marks)

b.

In this transaction, the rights related to the copyright are limited to those necessary for the commercial
intermediary to distribute copies of the program. Media Market Limited is paying only for the
acquisition of the software copies and not to exploit any right in the software copyrights. Thus,
payments related to this type of transaction should be viewed as business profits taxable under Article 7
of the UN or the DECD Model Tax Convention. (8 marks)
c.

In this circumstance the right would be regarded as being part of the exploitation rights of the copyright
holder (Games Solutions B.V.) and as a result regarded as being a royalty. As such the payment is more
likely to be considered to be a royalty since Media Market Limited has the right to exploit a right in the
software copyrights. (9 marks)

4.

The five basic factors determining comparability analysis are:

a. Characteristics of goods, property or services

- For instance trade mark versus a simple cloned product
b. Functional analysis
- Functions performed; risks assumed; assets used
c. Contractual terms
- How are risks, benefits and responsibilities divided
- Analyze terms whether written or oral; explicit or implied
- When true terms differ from written terms: then further investigation
d. Economic circumstances
- Geographic; size market; competition, substitutes
e. Business strategies
- e.g. Market penetration; innovation; diversification/specialization

(1 mark for each factor and 2 marks for explaining each factor)

(Total : 15 marks)
5.

a.

The Standard requires

Exchange of information on request where forseeably relevant to tax administration or

enforcement of all tax matters.

- Without regard to a domestic tax interest, bank secrecy, or dual criminality

- Availability of reliable information and powers to obtain it
- With safeguards to protect taxpayers right and confidentiality
(5 marks)

b.

The following are the types of exchange of information for tax purposes

a. Exchange of information on request (Specific)

b. Spontaneous exchange of information
c. Automatic (or routine) exchange of information
d. Industry-wide exchange of information
e. Simultaneous tax examination
f. Tax examinations abroad
(2 marks for each type stated and explained up to max of 4)

(Total: 10 marks)

c.

To ensure a correct application of international and domestic tax rules; and

To counteract tax avoidance and evasion

(3 marks for each)

(Total: 6 marks)
 CHARTERED INSTITUTE OF TAXATION (GHANA)

PROFESSIONAL EXAMINATIONS - AUGUST 2011

LEVEL 3 PAPER 14 TAX AUDIT & SPECIAL INVESTIGATIONS

ATTEMPT ALL QUESTIONS TIME ALLOWED 3 HOURS

QUESTION 1:
a) You are required to state and explain the contents of a Tax Audit Report suitable for
submission to the Commissioner-General of the Ghana Revenue Authority.
(4marks)

b) The Ghana Revenue Authority has contracted your firm, All Die Be Die Consult to carry
out Tax Audit of Dzi Wo Fie Asem Limited for the years of assessment 2008 to 2009. The
following findings were made by the audit team and submitted to you as Audit
Supervisor for your consideration and issue of draft audit report for the attention of
your Assurance Manager-Tax Audit.

2008
1. Profit before tax - GH15,143,299.50
2. Depreciation - GH12,072,505.75
3. Capital Allowances b/f-01/01/2008 - GH3,106,433.24
4. Processing Machine Imported - US$12,506,401.12 ($1.00 = GH1.53)
5. Additions to Factory Building - GH1,450,222.70
6. Purchase of Motor Vehicle(Haulage Truck)- GH 406,523.24
7. Overstatement of Haulage Expenses - GH546,540.25
8. Managing Directors domestic
expenses charged as Administrative Expenses-GH480,000.00
9. Payments to Casual Labourers not taxed - GH5623,894.13
10. Overstatement of fuel & lubricants - GH423,415.45
11. Foreign Sales omitted from the books - US$1,258,000.14 ($1.00 = GH1.51)
12. Raw Material purchases duplicated - GH2,480,508.16
13. The Tax written down value of fixed assets brought down from year ending
31/12/2007 were as follows:
i) Class 2 - GH3,382,549.33
ii) Class 4 - GH890,974.33
iii) Class 5 - GH3,458,291.33
iv) Class 1 - GH16,500.00
 2009

1. Profit before Tax - GH21,803.453.17

2. Depreciation - GH15,856,203.38
3. Overstatement of Haulage expenses - GH889,453.29
4. Managing Directors domestic Expenses - GH250,891.41
5. Payment to Casual Labourers not Taxed - GH486,299.12
6. Local Sales Omitted - GH3,894,111.01

In addition, the team made the following observations:

i) The Company is an agro-processor with Tax File no.SKC 34980.

ii) It is based in Coaltar in the Suhum Kraboa Coaltar District of the Eastern Region
iii) Location Incentive - 50%
iv) Corporate Tax Rate - 25%
v) The Managing Director PAYE marginal tax rate is 25%.
vi) All fixed assets were acquired first working day of the year.
vii) Provisional assessment for the year of assessment 2008 was GH5,000,000.00,
payment for the year was GH3,850,000.00, Tax Credit Certificates amounted to
GH2,000,918.50.
Provisional Assessment for the year of assessment 2009 was GH7,000,000.00.
Payments amounted to GH4,860,000.00.Total value of Tax Credit Certificates
was GH860,738.30. (16 marks)

QUESTION 2:
a) State and explain the advantages in using Internal Control Questionnaires (ICQ) in an
audit. (5 marks)

b) An ideal method of evaluating a systems strengths and weaknesses is by means of an

INTERNAL CONTROL EVALUATION QUESTIONNAIRE (ICEQ). Basic questions in an ICEQ
are called control questions.

You are required to list control questions a tax auditor may ask in an ICEQ in respect of
the following items;
i) Cash and Bank
ii) Sales
iii) Purchases (10 marks)
c) Pay Cash Enterprises Limited is a newly established vehicle spare parts dealer at
Abossey Okai. The companys directors who are domiciled overseas have decided that
all payments by the company no matter how small are to be made by cheque.

Your reporting partner at ABT Associates, a firm of Tax Practitioners and Investigators
has requested you to draft an accounting procedure covering the payment by cheque
suitable for the purposes of the company.

Requirements:
State clearly, the points you will consider in drafting an accounting system covering
payments by cheques. (5 marks)

QUESTION 3:
a) You are required to state clearly the procedures you expect an audit firm to follow in
order to ensure quality of its audits. (6 marks)

b) You are the Tax Audit Manager in charge of quality assurance at Osama & Co., a firm
of Chartered Accountants and Tax Practitioners. The firm is currently carrying out
tax audit of Tom Jones Foods Limited, a food processing company based in Tema.
The Audit is to ascertain the liability of the company to all taxes for the years 2008
and 2009.

The audit team comprises Akosua Mary as supervisor, John K. as audit senior, Kwaku
Peter and Kwasi Martin as trainees. Tom Jones Foods, supplies to most of the big
supermarkets and hotels in Accra-Tema. The audited accounts of the company for
the financial years ending December 31, 2008 and 2009 show turnover of
GH9,841,186.35 and GH11,898,541.61 respectively. Total assets were
GH6,031,880.50 in 2008 and GH6,621,295.03 in 2009.

In line with your firms procedures, you have visited the team reviewed their
working papers and made the following observations:

1. No performance indicators were prepared and filed. Column for it has been
marked Not applicable. The audit planning checklist has not been signed by
Akosua.

2. Akosua is currently supervising two other jobs in addition to Tom Jones Foods.
Akosua has not visited the team at Tom Jones since introducing them at the
commencement of the audit two weeks ago.
 John K. has completed the audit of fixed assets GH1.3 million as at 31st
December, 2009 (GH1.3 million in 2008).

3. Kwaku Peter has completed sending out requests for confirmation of debtor
balances as at 31/12/2009 when trade debtors amounted to GH4.8 million
(GH2.5 million in 2008).

4. Kwasi Martin has been assigned to audit the expatriate payroll of the company.
The wage bill of the two expatriates (factory manager and quality assurance
manager) per the audited accounts is $540,000 ($1.00 = GH1.45) in 2009 and
$504,000 ($1.00 = GH1.39) in 2008. The expatriate wages for both years
constituted approximately 75% of the entire wage bill of the company for both
years.

Required:
Identify and comment on the implications of the actions of the audit team for the quality
control policies and procedures of Osama and Co. for the attention of your reporting partner.
(14 marks)

QUESTION 4:
Write short notes on the following:

1. Appointment of Auditors of Private Companies Act 179 (134). (6 marks)

2. Remuneration of Auditors Act 179 (134). (3 marks)
3. Removal of Auditors Act 179 (135). (5 marks)
4. Responsibilities of Auditors Act 179 (136). (6 marks)

QUSTION: 5
a) You are a Tax Audit Supervisor of Tutugyagu Tax Consult (T.T.C.). You firm has just
recruited six trainees, who are currently undergoing orientation. Your Training
Manager, Joe Mpre has requested you to deliver a briefing paper on the responsibility of
taxpayers and/or directors to keep books of accounts under:
i) Section 127 of the Internal Revenue Act, 2000 (Act 592); (3 marks)
ii) Section 29 of the Value Added Tax Act, 1998 (Act 546); (3 marks)
iii) Section 123 of the Companies Act, 1963 (Act 179). (3 marks)

b) The following is the balance sheet of Softbody Limited, a general merchant, for the
three years 2007 to 2009:

2007 2008 2009

GH000 GH000 GH000
Fixed Assets 20,4000 17,000 19,6000
Current Assets
Stock 10,200 8,500 7,800
Debtors 3,400 3,400 2,850
Cash and bank 2,550 1,700 3,800
16,150 13,600 14,450

Current Liabilities:
Trade Creditors 8,500 6,800 7,680
7,650 6,800 6,770
Net Assets 28,050 23,800 26,370

Stated Capital 21,050 11,050 11,050

Capital Surplus - 5,000 5,000
Income Surplus 1,900 4,350 2,820
Long Term Loan 5,100 3,400 7,500
28,050 23,800 26,370

i) In 2007, the company sold two warehouses and a block of SSNT Flats it owned to a
group of Chinese investors for a reported GH8,50 million. The directors (man and
wife) claim the cost of construction of the warehouses and the purchase cost of the
SSNIT flats total GH3.6 million. This transaction has not been effected in the books
of accounts of the company.

ii) The company transferred GH5.0 million each from Capital and Income Surplus to
Stated Capital. The company has never paid dividends since it inception ten years
ago.

You are required to assess critically, the tax implications of the two actions under
the Internal Revenue Act, 2000 (Act 592) in your capacity as Tax Audit Supervisor for
the attention of the directors of Softbody Limited. (11 marks)

END OF PAPER
 CHARTERED INSTITUTE OF TAXATION (GHANA)

PROFESSIONAL EXAMINATIONS - AUGUST 2011

LEVEL 3 PAPER 14 TAX AUDIT & SPECIAL INVESTIGATIONS

ANSWER 1:

a) The Contents of a Tax Audit Report:

i) Title:
The report must have an appropriate title, indicating the name of the company,
tax file number/TIN, the year or years of assessment and the subject matter of
the audit. (1/ 2 mark)

ii) Addressee:
The report should be appropriately addressed as required by the circumstances
of the engagement. In this case the addressee is the Commissioner-General,
Ghana Revenue Authority. (1/ 2 mark)

iii) The report should identify the financial statements of the entity, the year or
years of assessment and basis or bases periods. The Terms of Reference as per
the contract signed with the Ghana Revenue Authority. (1/ 2 mark)

iv) Summary of Work Done/Scope of the Audit:

The report should describe the scope of the audit by stating that the audit was
conducted in accordance with the Ghana Auditing Standards, the Ghana
Companies Act, 1963, (Act 179), internal Revenue Act, 2000 (Act 592), as
amended, the Value Added Tax Act, 1998 (Act 546) as amended and Customs,
Excise and Preventive Service (Management) Law, 1993 (PNDCL 330). (1/ 2
mark)

The reader of the report needs this as an assurance that the audit has been
carried out in accordance with established standards of practices, and in
accordance with the tax laws in operation in the year or years of assessment
under consideration.

v) Conclusion/Opinion:
This refers to the results of the audit. That is the tax liability or tax repayment
resulting from the audit. (1/ 2 mark)

i) Date of Report (1/ 2 mark)

ii) Auditors Address (1/ 2 mark)
iii) Signature (1/ 2 mark)
(Total 4 marks)
 5th July, 2011

The Commissioner-General, )
Ghana Revenue Authority, ) (1/ 2 mark)
Accra. )

Dear Sir,

TAX AUDIT: DZI WOFEI ASEM LIMITED-SKC 34980 )

FINANCIAL STATEMENT FOR THE YEARS ENDING ) (1/ 2 marks)
DECEMBER 31, 2008 AND 2009 )

We have completed the tax audit of Dzi Wo Fie Asem Limited for the years ended December 31,
2008 and 2009 and wish to bring our findings and conclusions to your notice. (1/ 2 mark)

1. Haulage Expenses Overstated:

The audit revealed that haulage expenses have been overstated by GH546,540.25 and
GH889,453.29 for the years of assessment 2008 and 2009 respectively. We have
added same in recomputing the companys tax liability. (1/ 2 mark)

2. Overstatement of Fuel and Lubricants:

Similarly, fuel and lubricants was overstated by GH423,415.45 in 2008 year of
assessment. Same have been added-back to profit in recomputing the companys
liability. (1/ 2 mark)

3. Sales Omitted:
Foreign sales amounting to GH1,899,580.01 was omitted from the sales account for
the year of assessment 2008 whilst local sales amounting GH3,894,111.01 was omitted
in 2009. Both have been add-back to profit in revising the companys assessment.
(1/ 2 mark)

4. Raw Material Purchases Duplicated:

Raw material purchases amounting to GH2,480,508.16 was found to have been
duplicated in 2008. We have added it back in revising the companys assessment.
(1/ 2 mark)

5. Payments to Casual Labourers:

The company made payments to casual labourers as wages but omitted to impose tax.
The payments amounted to GH563,894.13 andGH486,299.12 in 2008 and 2009
respectively. PAYE tax has been imposed at the marginal rate of 5% yielding
GH28,194.71 and GH24,314.96 for years of assessment 2008 and 2009 respectively.
(1/ 2 mark)
 6. Managing Directors Domestic Expenses:
The audit further revealed that domestic expenses of the Managing Director were
charged to the company. This has been treated as additional income in the hands of the
managing Director and subjected to PAYE tax at the managing directors marginal rate of
25%. (1/ 2 mark)

The expenses amounted to GH480,000.00 and GH250,891.41 in 2008 and 2009

respectively. This resulted in additional taxes of GH120,000.00 and GH62,722.85 in
2008 and 2009 respectively. These have been added to the companys liability.
(1/ 2 mark)

2008: YEAR OF ASSESSMENT

GH GH
Net Profit before Tax 15,143,299.50
Add-back: Depreciation 12,072,505.75
27,215,805.25
Add-backs Resulting from Audit:
Overstatement of haulage Expenses 546,540.25
Overstatement of fuel and Lubricants 423,415.45
Foreign Sales Omitted 1,899,580.21
Raw Material Purchases Duplicated 2,480,508.16 5,350,044.07

Assessable Income 32,565,849.32

Deduct Capital Allowances:
Balance brought forward 01/01/2008 3,106,433.24
Current 7,552,806.09 10,659,239.33
Chargeable Income 21,906,609.99
Tax Charged @ 35% 5,476,652.50
Less 50% Location Incentive 2,738,326.25
Tax Due 2,738,326.25
(2 marks)

2009: YEAR OF ASSESSMENT

Net Profit before Tax 21,803,453.17
Add-back: Depreciation 15,856.203.38
37,659656.55
Add-backs Resulting from Audit:
Overstatement of Haulage Expenses 889,453.29
Local Sales Omitted 3,894,111.01 4,783,564.30
Assessable Income 42,443,220.85
Deduct: Capital Allowances 5,402,294.02
Chargeable Income 37,040,926.83
Tax Chargeable @ 25% 9,260,231.71
Less: 50% Location Incentive 4,630,115.85
Tax Due 4,630,115.85
(2 marks)

The revised tax position as at December 31, 2009 is as follows:

YEAR OF CHARGEABLE TAX TAX TAX
ASSESSMENT INCOME C HARGED PAID OUTSTANDING
GH GH GH GH
2008 21,906,609.99 2,738,326.25 5,850,918.50 (3,112,592.25)
2009 37,040,926.83 4,630,115.85 5,720,738.30 (1.090.622.45)
(4,203,214.70)
(3 marks)
OTHER TAXES:
2008
PAYE tax due on:
Casual Labourers 563,894.13 @ 5% - 28,194.71
Managing Director Domestic Expenses
480,000.00 @ 25% - 120,000.00 148,194.71
(1 mark)

2009
Casual Labourers - 486,299.12 @ 5% - 24,314.96
Managing Directors Domestic Expenses
250,891.41 @ 25% - 62,722.85 87,037.80
Tax Overpaid (3,967,982.18)
(1 mark)

The amount overpaid resulting from the audit amounts to GH3,967,982.18.

APPENDIX:
CAPITAL ALLOWANCE COMPUTATION
CLASS 1 CLASS 2 CLASS 4 CLASS 5 TOTAL
40% 30% 20% 10%
2008
01/01 Bal. b/fwd 16,500.00 3,382,549.33 890,974.33 3,458,291.33 7,748,314.99
Additional ___-____ 19,541,316.95 ____-____ 1,450,222.10 20,991,539.05
16,500.00 22,923,866.28 890,974.33 4,908,513.43 28,739854.04
Allowance 6,600.00 6,877,159.88 178,194.87 490,851.34 7,552,806.09
TWDV c/f 9,900.00 16,046,706.40 712,779.46 4,417,662.09 21,187,047.95

2009
TWDV b/fwd 9,900.00 16,046,706.40 712,779.46 4,417,662.09 21,187,047.95
Allowance 3,960.00 4,814,011.92 142,555.89 441,766.21 5,402,294.02
5,940.00 11,232,694.48 570,223.57 3,975,895.88 15,784,753.93
 (2 marks)
ANSWER 2:
a) (i) Internal Control Questionnaire enables the tax auditor to ascertain the system of
internal control in existence.
(ii) It enables the tax auditor to review and assess the adequacy of the system.
(iii) It enables the tax auditor to identify areas of weaknesses.
(iv) It enable the tax auditor to draw up his audit programme (design a series of tests).

(v) It enables audit staff to familiarize themselves with the system quickly and
comprehensively.
(vi) The use of standard ICQ ensures that all the important questions are asked and the
important characteristics of a system are brought out.
(vii) Overall, the ICQ is a comprehensive, all inclusive method of ascertaining, recording and
evaluating a system of internal control. (1 mark each for any FIVE correct answers)

b) (i) Cash and Bank:

1. Can monies be received and not accounted for?
2. Can cash balances, bank accounts or other negotiable instruments be
misappropriated?
3. Can unauthorized payments be made?
4. Can authorized payments be made without deduction of appropriate taxes?
5. Can wage payments be made for work not done?
6. Can payroll be inflated with ghost names?
7. Can wages be paid without deduction of appropriate PAYE.
(1 mark each for any THREE correct answers)

(ii) Sales
1. Can goods be dispatched to a bad credit risk customer?
2. Can goods be despatched but not invoiced?
3. Can goods be invoiced but not recorded in the books?
4. Can debtors accounts be improperly credited?
(1 mark each for any TWO correct answers)

(iii) Purchases
1) Can goods or Services be received without a liability being recorded?
2) Is receipt of goods and services required in order to establish a liability?
3) Is liability recorded only for authorized items and at the proper amount?
4) Are all payments properly authorized?
5) Are all credits due from creditors?
6) Are all transactions properly accounted for?
7) Are all liabilities neither overstated nor understated at the end of the relevant
period?
8) That all unauthorized payments cannot be made?
9) Are petty cash balances properly stated at all times?
 (1 mark each for any FIVE correct answers)
c) The following points may be considered in drafting the accounting procedures for cheque
payments for cheque payments::
1) The procedures to be adopted in controlling the supply and issue of cheques for use
2) Responsibility for the issue of cheques for use.
3) Responsibility for the safe keeping of cheques.
4) Responsibility for the preparation of cheques.
5) Documents required to be used as authorization for the preparation of cheques.
6) Steps to ensure that payments cannot be made twice on the strength of the same
documents.
7) The names and status of persons authorized to sign cheques, limitations as to their
authority. The minimum number of signatories required for each cheque.
8) Safeguards to be adopted if cheques are signed mechanically or carry printed
signatures.
9) The extent to which cheques issued should be restrictively crossed, and the
circumstances, if any, in which blank or bearer cheques may be issued.
(1 mark each for any FIVE correct answers)

ANSWER 3:
a. To maintain quality of audits the following procedure may be followed:
1. Assign staff with the requisite competence to carry out the work. More careful
supervision and review are essential where trainees are used.
2. Proper briefing of staff.
3. Detailed audit planning.
4. Thorough review of business and audit risk.
5. Instructions for junior staff to bring any problems to the attention of supervisor.
6. Audit programmes and audit completion checklists be made available.
7. Technical training and updating of all staff.
8. Documentation in detail of all audit work.
9. Supervision of all audit work by supervisor.
10. Acknowledgement of all audit work.
11. Review of all working papers.
12. Final review of financial statements to ensure they make sense.
13. Monitoring of the firms quality control procedures.
(1 mark each for any SIX correct answers)
3(b)
OSAMA & CO.
MEMORANDUM

TO: Reporting Partner DATE: 15th July, 2011

FROM: Tax Audit Supervisor
SUBJECT: TOM JONES FOODS LIMITED TAX IMPLICATIONS OF QUALITY
CONTROL POLICIES AND PROCEDURES (1 mark)

1) Performance Indicators

It is essential to prepare performance indicators at the planning stage of the audit. This will
assist in understanding the business and in the identification of areas of potential risk.The audit
has been poorly planned and audit work has began before the audit plan has been reviewed by
the audit supervisor. The audit was not carried out effectively and efficiently. (3 marks)

2) Supervisors Assignments:

The senior team member has allocated to herself work on tangible assets which is less material
(19.7% of total assets) than trade debtors (72.7% of total assets) which has been assigned to an
audit trainee. Furthermore, fixed assets also appear to be a lower risk audit area than trade
debtors because the carrying amount of fixed assets is comparable with the prior year (GH1.3
million at both year ends), whereas trade debtors increased by 92%. (3 marks)

3. Debtors Confirmation:

Direct confirmation may be effective where trade debtors are material and it is reasonable to
expect customers to respond. However, it is well over 18 months since the end of the financial
year ending December 31, 2009 an alternative method may therefore be more appropriate and
effective. For example selecting a sample of debtors and monitoring current payment patterns
to provide evidence about the collectability of debtors (as well as corroborate their existence).

This is further evidence that the audit was inadequately planned. (3 marks)

4. Expatriate Wages:
The expatriate wages contributes 75% of the entire wage bill of the company. Coupled with the
fact that they are non-Ghanaians, this constitutes a high-risk audit area which should have been
assigned to a more experienced team member. Inability to raise correct assessment may cost
the company back taxes and penalties in any future tax audits by the Ghana Revenue Authority.
(3 marks)

Thank you. ) (1 mark)

(Signed) )
ANSWER 4:
1. Appointment of Auditors of Private Companies:
a) No person shall be appointed as auditor of a private company unless that person has
prior to the appointment consented to the appointment in writing and is duly
qualified under Section 270 of Act 179 (1963).

b) A partnership firm may be appointed, in the name of the firm, as auditors of a

company, but, whether or not that firm is a body corporate, the appointment shall
be deemed to be an appointment of the partners of the firm who, at the time of the
appointment, are duly qualified.

c) Auditors shall be appointed by ordinary resolution of the company.

d) The directors may appoint the first auditors and fill casual vacancy in the office of
the auditor.

e) Where the company does not have an auditor for a continuous period of three
months, the Registrar of Companies may appoint one.

f) An existing auditor shall continue in office until:

i) The auditor ceases to be qualified for appointment, or
ii) The auditor resigns from office by notice in writing to the company, or
iii) An ordinary resolution is duly passed at an Annual General Meeting in
accordance with Section 135 removing that auditor from office or appointing
any other person in place of that auditor.
iv) Where a casual vacancy occurs in the office of the auditor, the surviving or
continuing auditor or auditors may act.
(1 mark for any SIX correct answers)

2) The Remuneration of Auditors:

a. In case of auditors appointed by the directors or by the Registrar may be
fixed by the directors or the Registrar for a period expiring at the
conclusion of the next Annual General Meeting of the company;
(1 mark)

b. Subject to (a), the remuneration shall be fixed by an ordinary resolution

of the company or in a manner that the company by ordinary resolution
may determine. (1 mark)

For the purposes of Section (6) of Act 179, the sums paid or payable by
the company in respect of the auditors expenses shall be included in the
expression remuneration. (1 mark)
3) Removal of Auditors:
A resolution to remove an auditor or appoint another person shall not be
effective unless:

a) It is passed at an annual general meeting.

b) Written notice has been given to the company not less than 35 days before
the annual general meeting at which it is to be moved. Upon receipt, a copy
shall be given to the auditor;
c) The company gives members a copy of the resolution in the same manner
notices of meetings are given.
d) The auditor concerned is entitled to be heard on the resolution at the
meeting and, to
e) Send to the company a written statement, copies of which the company shall
send with every notice of the Annual General Meeting.
f) The company need not send or circulate the statement in (e);
i) If it is received by the company less than seven (7) days before the
meeting.
ii) If a court, on application made by the company or any other person who
claims to be aggrieved, so orders.
(1 mark each for any FIVE correct answers)

4) Responsibilities of an Auditor
a) The auditor is not an officer or agent of the company, but stand in a
fiduciary relationship with the company, and
b) Shall act in a manner that faithfully diligent, careful, and ordinarily skilful
auditors would act in the circumstances.
c) No provision whether contained in the regulations of the company, or in
a contract, or a resolution of a company shall relieve an auditor from a
duty to act in accordance with Section (a) or a liability incurred as a result
of a breach of that duty.
d) An auditor shall have right of access at all times to the books and
accounts and vouchers of the company and is entitled to require from the
officers of the company the information and explanation that the auditor
thinks necessary for the performance of the auditors functions.
e) The auditors are entitled to;
i) attend a general meeting of the company;
ii) receive the notices of and other communications relating to a
general meeting, and
iii) to be heard at a general meeting on any part of the business of
the meeting which concerns them as auditors.

f) The auditors may apply to court for directions in relation to a matter

arising in connection with the performance of their functions under
the Companies Act.
 g) The auditor shall communicate with the retiring auditor and
invite representations from him.

h) The auditor may undertake other duties in addition to their

statutory duty. (1 mark each for any SIX correct answers)

ANSWER 5:
a) BRIEFING PAPER: THE KEEPING OF BOOKS OF ACCOUNT
BY TAX AUDIT SUSPERVISOR

This paper is to provide an insight into the legal framework governing the keeping of proper
books of accounts by taxpayers/directors of companies.

Section 122 of Internal Revenue Act 2000 (Act 592):

1. This section provides that unless otherwise authorized by the Commissioner-General, a

person liable to tax under Act 592 other than an employee with respect to his
employment income shall maintain in Ghana the necessary records to explain the
information to be provided in a return or in any other document to be furnished to the
Commissioner-General under the Act or to enable an accurate determination of the tax
payable by that person.

2. Where a person does not maintain records as required by Section (1) above, the
Commissioner-General may adjust that persons liability to tax in a manner consistent
with the intention of the act..

3. The records shall be maintained for a period of six (6) years unless the Commissioner-
General otherwise specifies in writing.

4. The records to be maintained by a business shall include a record of all receipts and
payments, all revenue and expenditure, and all assets and liabilities of the business.
(1 mark each for any THREE correct answers)

Section 29 of the Valued Added Tax Act, 1998 (Act 546):

1. A taxable person shall keep the records and books of account that the Minister of
Finance may by regulations prescribe and as the Commissioner-General may direct and
shall produce them at the p lace and time that the Commissioner-General may by
general notice published in the Gazette or a national newspaper or in writing to a
taxable person, require
 2. The books and records shall be kept for a period of not less than six (6) years unless its
destruction is authorized by the Commissioner-General in writing.

3. A permission granted by the Commissioner-General in (2) shall specify the book,

document, account or records to which the permission relates.

4. On an application being made under Subsection (2), the Commissioner-General may

within six (6) months after the receipt of the application, examine the books,
documents, accounts and records to which the application relates and after the
expiration of the six months the applicant may proceed to destroy the books,
documents, accounts or records whether the Commissioner-General has examined
them or not.

5. Despite the provision in subsection (4), where in the opinion of the Commissioner-
General the examination required may extend for a period of more than six months, the
Commissioner-General shall take an inventory of the relevant documents and keep
them or as the Commissioner-General may direct until the examination is completed.
(1 mark each for THREE correct answers)

Section 123 of the Companies Act, 1963 (Act 179):

The Act requires that:

1. A company shall keep proper books of account with respect to its financial position and
changes in the books of account, and with respect to the control of and accounting for
property acquired whether for resale or for use in the companys business, and in
particular with respect to.
a) The sums of money received and expended by, or on behalf of the company and the
matters in respect of which the receipt and expenditure takes place, and
b) The sales and purchases by the company of property, goods and services, and
c) The assets and liabilities of the company and the interests of members in the
company.

2. For the purposes of subsection (1), books of account which do not give a true and fair
view of the state of the companys affairs and are not necessary for the preparation of
the proper profit and loss accounts and balance sheets in accordance with Sections 125
to 131 of the Companies Act are not proper books of account.

3. The books of account may be kept by making entries in bound volumes, or subject to
compliance with subsections (2) and (3) of Section 264, by a system of mechanical
recording, or otherwise.

4. The books of account shall be kept at the registered office of the company or at any
other place that the directors consider fit, and shall be open during normal business
hours to inspection by the directors, secretary and auditors of the company.
 (1 mark each for any THREE correct answers)

I hope this explains the legal framework regarding the responsibilities of taxpayers/directors
of business in the keeping of proper books of accounts. Thank you.

ANSWER 5(B):

The Directors )
Softbody Limited, )
Accra. )
) 11/ 2 mark)
Dear Directors, )
)
TAX IMPLICATIONS OF SALE OF FIXED ASSETS AND TRANSFER )
TO STATED CAPITAL )

i)SALE OF FIXED ASSETS:

The warehouses and flats sold were business assets and would therefore attract capital gains
tax under the Internal Revenue Act, 2000 (Act 592).

However, the tax auditor would rely on the work of an expert, in this case a valuer to assess the
market value of the properties sold. Where this value is higher than the amount declared by the
directors as the sales value, he Commissioner-General of Ghana Revenue Authority may rely on
the value declared by the valuers. (2 marks)

ii)TRANSFER OF SURPLUS:
Section 45 of the Internal Revenue Act, 2000 (Act 592) provides the following with respect to
undistributed profits of companies:

1) Where the Commissioner-General is satisfied that a company controlled by not more

than five (5) persons and their associates does not distribute to its shareholders as
dividends a reasonable part of its income from all sources for a basis period within a
reasonable time after the end of the basis period, the Commissioner-General may, by
notice in writing, treat that part of the companys income which the Commissioner-
General determines as distributed as dividends paid to its shareholders during that
period or any other period. (2 marks)

2. In determining whether a company has distributed a reasonable part of its income from
all sources for a basis period, the Commissioner-General shall consider:

a) The current requirements of the companys business after accounting for any
adjustments which the Commissioner-General may make under Section 70 or 112;
and (2 marks)
b) Any other requirements necessary or advisable for the maintenance and
development t of the business. (2 marks)

From the foregoing provisions, it may be necessary for the company to declare and pay
dividend to avoid intervention by the Commissioner-General. This is because the
company has never paid dividend since inception ten (10) years ago. The company is
also controlled by two (2) people (man and wife) who may also be the shareholders.
Declaration of dividend by the Commissioner-General may not be in the interest of the
company as it may go contrary to the business plans of the company. (2 marks)

Thank you. )
)
Yours faithfully, ) (11/ 2 mark)
Tax Audit Supervisor )
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
AUGUST, 2014
PAPER 7 TAX AUDIT & INVESTIGATIONS

TIME ALLOWED: 3 HOURS

ATTEMPT ALL QUESTIONS

Question 1
Manja Plc. has been submitting its self-assessment returns for the past years to the
Large Taxpayer Office (LTO) of Ghana Revenue Authority. For the past four years, the
Research and Monitoring Unit had detected some risks and other anomalies associated
with the companys self-assessment tax returns. Intelligent report continuously received
by the tax office revealed that, the company has been in good business and that other
companies in the same industry with it may likely follow its step regarding payment of
taxes. The tax office thereafter recommended the company for investigation as a result
of which, your firm a Chartered Accountants and Tax Consultants has been selected to
undertake tax investigation into the affairs of the company

You are required to:

(a) Explain the major differences between Tax Audit and Statutory Audit? (6 Marks).

(b) Outline and explain the stages usually involved in the tax audit investigation.

(10 marks)
(c) Explain briefly the circumstances where tax audit investigation could be terminated
(4 Marks)
(Total: 20 Marks)
Question 2
1 You are auditing the financial statement and records of Adongo Real Estate and
Construction Limited for the year of assessment January to December 2012. Included in
the returns submitted by the company was profit on disposal of the Land. You have
obtained the following information relating to the disposal of the land.

According to the Financial Controller, the Company signed an agreement on 15th June
2010 to buy a piece of land for GHC128,835.00. He settled the full payment on 26th
August 2010 when he obtained a mortgage loan on the land.

The vendor transferred the land to the company on 14th November 2010. It incurred
stamp duty of GHC1, 288.00 and legal fees of GHC1, 576.00 on the purchase.

The Company wanted to cultivate mango trees on the land. It spent GHC16, 976.00 on
leveling, drainage and fencing of the land to facilitate the cultivation. In February
2011, the cultivated trees were partially damaged by fire set by a neighbour and the
company received a compensation of GH28,750.00 for the damages. And in March
2012, the company received insurance recovery of GH10, 520.00 for damages due to
flood.
1
The cultivation of the mango did not go too well and the company advertised to sell the
land. A buyer responded and paid a deposit of GH29,076.00 while waiting for his bank
loan to be approved. The bank turned down the loan application and the company
retained the deposit. A dispute arose regarding the title to the land and the company
engaged a lawyer to defend its right to the land. The legal fee was GH13, 852.00.

Another buyer agreed to buy the land for GH270, 842 and an agreement was signed to
that effect on 14th October 2012. The payment was settled on 13 November 2012 and
the title was transferred to the buyer on 15th December 2012. In securing a buyer for the
land, the company incurred the following expenditure:
valuation fee GH16,292.00;
advertisement: GH 11,222.00;
brokerage fee GH:26,420.00;
legal fees GH 5,000.00.

The company had earlier bought and sold another piece of land in 2011 and has a loss
relief of GH9,000.00 available to him.

Required:
(i) Determine, with reason, the date of acquisition and disposal of the land, giving
reason for the choice you made. (5 mark)

(ii) The cost base of the chargeable assets (5 marks)

(iii) Compute the correct capital gain or loss for Adongo Real Estate and Construction
Limited in respect of the property disposed and the tax payable if any. (10marks)

(Total: 20 Marks)
Question 3

You are the senior auditor in charge of the audit of Bianca Limited a manufacturing
company. In an attempt to understand their accounting system, you have been talking
to the Payroll Supervisor who has commented on the strength of the companys payroll
internal control system. She has assured you that, their internal control system
guarantees the completeness, accuracy and validity of the payroll accounting records.

REQUIRED:
(a) Using the above assertion by the payroll supervisor, state whether you agree with
her that, an internal control system can guarantee the completeness, accuracy and
validity of the records, supporting your argument with practical examples from a
payroll system. (10marks)

2
(b) The supervisor has also asked you to explain some internal control terminology
which she does not understand. Explain the meaning of the following terms, using
payroll examples different from those you have given above.
Segregation of duties
Approval and control of document. (6marks)

c) During the audit of Bianca limited for the year ended on 31st March, 2014 the audit
team has come across certain personal expenses of the Directors and other Top
Management which had been debited to Profit and Loss account. The audit team
has disallowed it on the grounds that they were not wholly, exclusively and
necessarily incurred to earn the income of the company. The company had argued
that these were part of the conditions of services of the their employess.

As an audit supervisor reviewing the work of the team, how would you deal with the
situation? (4marks)
(Total: 20 Marks)
Question 4
Saibo Ghana Company Limited (SGCL) is a mining company operating at Soawa in
Western Region. Ninety per centum of the companys share capital was acquired in
February, 2011, by the Saibo Group headquartered in Cheenaland in Asia. There is no
facility in Ghana for converting SGCLs products into intermediate or finished goods.
For the year 2013, SGCL submitted VAT & NHIL returns (VAT 20 forms) summarized
as follows:
Item GH
Standard Rate Output 339,663
Output VAT & NHIL 50,949
Zero Rate Supplies 65,912,896
Exempt Supplies 0.00
Relief Supplies 0.00
Local Inputs 1,221,557
Local Input VAT & NHIL 183,234
Imports 16,503,800
Input VAT & NHIL on Imports 2,475,570
Total Input 17,725,356
Total Input VAT & NHIL 2,658,803
Deductible Input VAT & NHIL 2,658,803
Net Payment/(Net Credit) (2,607,854)
3
Mr. Yung Bi Gang, Chief Financial Officer of SGCL recently travelled to Accra for the
sole purpose of getting the Head of Audit at the Large Taxpayer Office (LTO) of Ghana
Revenue Authority to initiate an on-site audit of SGCLs VAT & NHIL returns for the
year.
As the officer assigned to perform the audit, you are required to:
(a) State the benefit under Section 25 (1) of the Value Added Tax, 1998 (Act 546),
as amended, which might have served as the prime motivation for requesting the
audit. (2 marks)
(b) Any other motivation relating to the general economic environment in the country
creating a disincentive for having debts which remain unpaid over a long time.

(1 mark)

(c) Explain how a taxable person might qualify to enjoy the benefit in accordance
with Section 25 (1) & (2) of the Value Added Tax, 1998 (Act 546), as amended.
(2 marks)

(d) What other requirements should be met before SGCL would qualify to benefit
from the facility? (5 marks)

(e) Assess the amount payable by or refundable to SGCL if, in the course of the
audit, you found that
(i) three returns had each been submitted a day late;
(ii) the proceeds of scrapped equipment and some old containers for storing
engine oil sold during the year under review amounting to GH345,000
had been included in the value of zero-rate supplies;
(iii) input VAT & NHIL amounting to GH88,580 incurred on food items
imported from Cheenaland for expatriates had been included in the
deductible input VAT & NHIL during the year;
(iv) SGCL had paid a total of GH57,500 for hotel accommodation and
restaurant meals and included the tax effect in the deductible input VAT &
NHIL for the year. (10 marks)
(Total 20 marks)

4
Question 5
You are the audit supervisor responsible for review of the audit on Snipe Company
Limited. You are currently reviewing the audit working papers and proposed adjustment
report on the financial statements of the company for the year ended 31 December,
2013. The financial statements recognize revenue of GH85 million, profit before tax of
GH650,000 and total assets of GH175 million.

During the year Snipe Company Limiteds factory was extended by the self-construction
of a new processing area, at a total cost of GH5 million. Included in the costs
capitalized are borrowing costs of GH289,000, incurred during the six-month period of
construction. A loan of GH4 million carrying an interest rate of 5% was taken out in
respect of the construction on 1st March 2013, when construction started. The new
processing area was ready for use on 1st November, 2013, and began to be used on
1st December 2013. Its estimated useful life is 15 years.

REQUIRED:
In respect of your file review of Capital Allowance claimable by the company,
Comment on the matters that should be considered, and the evidence you would expect
to find regarding the new processing area.

(20 marks)

END Of PAPER
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATAIONS

AUGUST, 2014

FINAL LEVEL 1 PAPER 8 OIL, GAS & OTHER MINERALS TAXATION

TIME ALLOWED: THREE HOURS

ATTEMPT ALL QUESTIONS

Questions 1

There are many contract structures that countries use to grant exploration and production
rights to oil and gas companies. But there are three main ones referred to as the Home
Government Contracts or World Fiscal Systems for oil and gas. Identify the three main
contractual arrangements, explain their main features and also specify the differences in
their structures, if any. (25 marks)

Question 2

The petroleum industry has three different but related operations. Mention the three
operations and explain the processes involved in each operation. (20 marks)

Question 3

The Petroleum Revenue Management Act, 2011 (Act 815) provides for disbursement from
the Petroleum Holding Fund. Discuss how the disbursement is required to be made and how
the amounts disbursed are to be used. (25 marks)

Question 4(a)

Companies involved in the exploration and production of oil and gas have the option of
choosing between two accounting approaches. Discuss the two accounting approaches and
also state the differences between the two approaches.

(b) Explain briefly the following and also state their differences, if any.

(i) Depletion;
(ii) Depreciation; and
(iii) Amortisation. (12 Marks)

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END OF PAPER
QUESTION 5
Minecom Ltd. is a mining company operating in the Lake mining area in Ghana for the past twenty
years. It has disposed of 25% of its exploration and production rights in the Lake mining area for a
sum of GH20,000,000 in 2013. In the same year Minecom Ltd acquire 10% exploration and
production rights in the XYZ mining area for GH15,000,000.

From the tax returns filed by Minecom Ltd, the highlights of its 2013 revenue and expenditure are as
follows:
Revenue GH
Consideration received from sale of exploration and production rights 20,000,000
Gross income from its operations in 2013 100,000,000
Gross Dividend from a resident company in which it has 30% voting rights 10,000
Total Revenue 120,010,000
Expenses include the following:
Operating Cost 20,000,000
Depreciation 10,000,000
Exploration and production rights (XYZ mining area) 15,000,000
Administrative Expenses 5,000,000

Profit before tax 30,000,000

The written down values of classes of assets brought forward from 2012 are as follows:
Class 1 assets 1,000,000
Class 2 assets 2,500,000
Class 3 Assets 3,000,000
Class 4 Assets 500,000

Identify the tax types that Minecom Ltd will be liable to pay and also compute the liability for each
tax type. State the assumptions underlying your calculations.

Additional Information

The capital allowance rates for the classes of assets are as follows:

Class 1 40% on reducing balance basis

Class 2 30% on reducing balance basis
Class 3 20% on straight line basis
Class 4 20% on reducing balance basis

TAX RATES
Corporate - 35%,
Capital Gains Tax 15%
Gift Tax 15%
Branch Profit 10%
Withholding Tax Rates
Dividends and Interest - 10%
Royalties and Natural Resource Payments 10%
Management and Technical Services Fee 15% (18 Marks)

Page 1 of 2
END OF PAPER
MARKING SCHEME

Q1. The three contractual arrangements are the Royalty/Tax Regime also known as the
Concession, Production Sharing Contract and Risk Service Agreement. (4 marks)

The Royalty Tax Regime is a contractual arrangement under which

A State grants petroleum exploration and production rights to a contractor.
Contractor carries risk of exploration failure
The State levies royalty on production and tax on income as revenue to the State.
The contractor has the right to export the oil and gas less any domestic supply arrangement.

Page 1 of 2
END OF PAPER
 (5 marks)

Production Sharing Contract is a contractual arrangement under which

Exploration and production rights are granted to a contractor by a State.
Contractor carries economic risk of exploration.
The state as the resource owner is entitled to a proportion of the oil and gas produced.
The contractor keeps agreed proportion of the oil to cover cost.
The remaining oil which is the profit oil is shared between the contractor and the state.
(5 marks)

Risk Service Contract is a contractual arrangement under which

The State hires a contractor to explore and produce oil and gas for a fee.
The contractor shares economic risk with the State.
The contractor keeps an agreed proportion of the oil or gas to cover cost and fee.
The State keeps the remaining oil and gas.
(5 marks)

Main Differences
Risk The state does not carry any risk in the Royalty/Tax Regime and the Production
Sharing Contract. The State share risk with the Contractor in the Risk Service Contract
(1 mark)

Royalty Under the Royalty/ Tax Regime, royalty could be in cash or kind. In the case of
Production Sharing Contract and the Risk Service Contract the State as the resource owner is
entitled to an agreed percentage of the oil. (I mark)

Profit Tax Payable in cash under Royalty Tax Regime, payable in kind under Production
Sharing Contract. In some countries tax jurisdictions oil is lifted in lieu of profit tax under the
Royalty/Tax Regime. No tax is paid under the Risk Service Contract. The State keeps the
remaining oil after compensating the State as the resource owner and the Contractor for its
costs and fees under the Risk Service Contract. (1 mark)

Cost Oil Production Sharing Contract and the Risk Service Agreement have cost oil. The
Royalty tax/Regime has no cost oil. Cost /expenses are allowed as deduction under the
Royalty Tax/Regime (1 mark)

Profit Oil Production Sharing Contract and some types of the Risk Service Contract have
profit oil. The Royalty/Tax Regime has no profit oil. (1 mark)

Fee No fee payable to the Contractor under Royalty/Tax Regime and Production Sharing
Contract. Fee payable under Risk Service Contract. (1 mark)

Q2. The three different but related petroleum operations include the Upstream, Midstream and
Downstream Petroleum Operations. (3 marks)
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END OF PAPER
 The upstream oil and gas operations involve exploration, evaluation and appraisal,
development, and production of oil and gas. (3 marks)

Exploration means the search for petroleum by geological, geophysical and other methods,
and the drilling of exploration wells. (2 marks)
Evaluation and Appraisal means analysis of seismic data and other information, and drilling
of wells to determine the commerciality of a discovery. (2 marks)
Development This refers to the drilling of development wells, construction and installation
of equipments and facilities for production. (2 marks)
Production refers to the activities undertaken to extract, save, treat and transport oil and
gas to storage or offloading points. (2 marks)

The Midstream oil and gas operations include storage and transportation of oil and gas.
Oil is transported by tanker, pipeline, barge, truck. Gas is transported mainly through
pipelines. (3 marks)

The downstream petroleum operations include oil refineries, petrochemical plants, fuel
product distribution and retail outlets. Fuel products include gasoline, diesel, jet fuel,
heating oil, asphalt, lubricants, synthetic rubber, plastics, fertilizers, antifreeze, pesticides,
natural gas, propane, etc. (3 marks)

Q3. The Petroleum Revenue Management Act, 2011 (Act 815) provides for the disbursement of
petroleum revenue into the Consolidated Fund in support of the Budget (Annual Budget
Funding Amount); into the Ghana Petroleum Funds (Ghana Stabilisation Fund and the
Heritage Fund); and for exceptional deductions. (5 marks)

The Annual Budget Funding Amount The ABFA is a percentage of petroleum revenue
transferred into the Consolidated Fund to support the national budget. According to the Law
the ABFA shall not be more that seventy percent of the Benchmark Revenue an estimate
of expected revenue from petroleum. The percentage of the Benchmark Revenue allocated
to the ABFA each year is approved by Parliament. The ABFA is part of the national budget
and its use is subject to the same budgetary process to ensure responsible use and effective
monitoring of expenditure.

The ABFA is to be used to maximize the rate of economic growth; to promote equality of
economic opportunity with a view to ensure the well-being of citizens; to undertake even
and balanced developments of the regions; and ts use is to be guided by a medium-term
expenditure framework aligned with a long-term national development plan approved by
Parliament The law also provides that the ABFA should be used on specified programmes
where the long-term national development plan is not in place. The Minister is required to
prioritise not more than four areas out of twelve areas specified in the Act for the use of the
petroleum revenue. The Minister has selected the following areas which were approved by
Parliament:
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END OF PAPER
 1. Expenditure and Amortisation of loans for oil and gas infrastructure;
2. Agriculture Modernisation;
3. Roads and other infrastructure; and
4. Capacity Building (including oil and gas)

The ABFA may also be used as collateral for debts and other liabilities of Government for a
period of not more than ten years after the commencement of the PRMA. (10 marks)

Ghana Petroleum Funds made up of Ghana Stabilisation Fund and Ghana Heritage Fund.
Petroleum revenue that exceeds one quarter of the ABFA in each quarter is transferred into
the Ghana Petroleum Funds. The Ghana Heritage Fund receives a minimum of thirty percent
of the excess revenue and is to be used to provide an endowment to support development
for future generations when petroleum reserves have been depleted. (5 marks)

The Ghana Stabilisation Fund receives the balance of the excess revenue and is to be used to
sustain public expenditure during periods of unanticipated petroleum revenue shortfalls.

Transfer for Exceptional Purposes Transfer can only be made for exceptional purposes
from the Petroleum Holding Fund to refund tax overpayment and to pay management fees;
to pay royalties in accordance with relevant laws where petroleum operations are carried
out onshore, and to pay benefits to any community which have been adversely affected by
petroleum operations. (5 marks)

Q4. (a) The two accounting approaches are the Successful Efforts Method and the Full Cost
Method. (2 marks)

The Successful Efforts Method allows a company to capitalize only those expenses incurred
in respect of search for petroleum that results into discovery of petroleum. Costs
associated with unsuccessful searches for petroleum are expensed. According to the
proponents of the Successful Efforts Method, the ultimate objective for any search for
petroleum is to discover and produce petroleum, and therefore only costs associated with
successful efforts should be capitalised. Also, because there is no effect on productive assets
of a company if the company is unsuccessful in its efforts, costs and expenses associated
with the unsuccessful efforts should be expensed. (3 marks)

The Full Cost Method allows all costs incurred in respect of search for petroleum to be
capitalised, regardless of the outcome. The reasons adduced by the proponents of this
method are that the main activity of upstream petroleum company is exploration and
production of oil and gas. Therefore all costs incurred in that regard, whether successful or
unsuccessful, should be capitalised. (3 marks)

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 The main difference between the two according approach is the treatment of exploration
costs associated with unsuccessful search for petroleum. (1 mark)

(b) (i) Depletion is an accounting method for accounting for the reduction of the reserves of
natural resources, such as minerals and petroleum, when under exploitation. Its purpose is
to reflect accurately the reducing value of the natural resources at the balance sheet date.
(2.5 marks)

(ii) Depreciation It is an accounting concept which means a decrease in the value of a

tangible asset or the allocation or the writing off of the cost of a tangible asset over its useful
life to reflect the decrease in the value of the asset. Tangible assets decrease in value due to
wear and tear, effluxion of time, and obsolescence. There are two main methods of
computing depreciation. These are the declining balance method and the straight line
method. (2.5 marks)

(iii) Amortisation It is an accounting method of writing off or reducing the value of an

intangible asset, such as debt, goodwill, etc. to reflect their reduced value over time.
(2.5 marks)

Depletion, Depreciation and Amortisation are similar. They are all accounting methods of
writing off the value of assets so as to reflect their actual value at the balance sheet date.
The difference relates to the type of asset. Depleteion is used when writing off the value of
reserves of natural resources. Depreciation is used for writing off the value of tangible
assets, and amortisation is used for intangible assets. (1.5 marks)

Q5. (a) Ring Fencing This refers to the segregation of the operations of a company into
separate income streams for regulatory reasons or for tax purposes. Cost from one
operation is not allowed to be deducted from the income of another operation.

Under the Petroleum Income Tax Law, 1987 (PNDC Law 188) the income from
contract area of a petroleum agreement is ring fenced for tax purposes. That is cost
from one contract area cannot be deducted from the revenue of another contract
area belonging to the same person. Under the Internal Revenue Act, 2000 (Act 592)
the income from a mining area is ring fenced for tax purposes. That is expenses
incurred in one mining area cannot be deducted from the revenue of another mining
area belonging to the same person. (3 marks)

(b) Finance Lease This is a commercial arrangement under which a lessor leases an asset
to a lessee. The lessee pays rentals for the use of the asset. The lessor recovers a large part
of or all the cost of the asset from the lease rentals paid. Under finance lease arrangements
the lessee has the option to acquire ownership of the asset.

Under the Internal Revenue Act, 2000 (Act 592), a lease is a finance lease where

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END OF PAPER
(a) the lease agreement provides for transfer of ownership following the end of the lease
term, or the lessee has an option to purchase the asset after expiry of the lease term for
a fixed or an agreed price, or
(b) the lease term exceeds seventy-five percent of the useful life of the leased asset; or
(c) the estimated residual value of the asset after expiry of the lease term is less than
twenty percent of its market value at the commencement of the lease; or
(d) the present value of the minimum lease payments equals or exceeds ninety percent of
the market value of the asset at the commencement of the lease term; or
(e) the leased asset is custom-made for the lessee and after expiry of the leased term it will
not be usable by anyone other than the lessee.

The lease rental payable by the lessee is treated as an expense. The lessor is not entitled to
capital allowance in respect of the asset. The lessor may deduct a capital amount
determined in accordance with guidance issued by the Commissioner-General from the
income from the lease rental to arrive at the taxable profit. (6 marks)

(c ) Thin Capitalisation A company is typically financed ( or capitalised) through a mixture

of debt and equity. Thin capitalisation refers to a situation where a company is financed
through a relatively high level of debt compared to equity. Thinly capitalised companies are
sometimes referred to as Highly leveraged or highly geared.

The way a company is financed has significant effect on the amount of profit it reports
for tax purposes. Interest payable or paid on debt is allowed as deduction to arrive at
the taxable profit of a company. Thus the higher the level of debt , the higher the
interest deducted and consequently the lower the taxable profit.

Countries therefore put in place rules that set limits on interest that can be deducted in
calculating the taxable profit of any person. The limit on the deductible interest is set by
reference to the ratio of interest bearing debt and equity. That is debt equity ratio.
Where debt exceeds the debt equity ratio, the interest on the excess debt is not allowed
as deduction in calculating the taxable profit.

Under the Internal Revenue Act, 2000 (Act 592), the debt equity ratio is two is to one.
(2:1) (3 marks)

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 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
PAPER 7 - TAX AUDIT AND INVESTIGATIONS

AUGUST 2012

FINAL LEVEL 1

TIME ALLOWED - 3 HOURS

ATTEMPT ALL QUESTIONS

QUESTION 1:

Tax auditors are requested to carry out procedures designed to obtain

sufficient and appropriate audit evidence to determine with reasonable
confidence whether the financial statement are free of material misstatement.

Amongst the various methods of obtaining audit evidence in tax audits is

analytical review.

(i) You are required to explain clearly what analytical review technique is
in a briefing paper to a group of newly recruited audit juniors.(5 Marks)

(ii) The analytical review technique is usually applied throughout an audit.

Explain any three occasions where it is most important with examples.
(2 Marks)

(iii) Explain any three factors that may influence your use of analytical
review in a tax audit assignment. (3 Marks)

(iv) Live Together Ltd. (LTL) is a dealer in iron rods. DDT Consult is a firm of
tax consultants and investment advisors. DDT has won a contract to
carry out a tax audit of LTL for the year ended 2011. You have been
selected to lead the audit team in your capacity as audit senior.

The following information was obtained from the Medium Taxpayer

Office (MTO) of GRA where the companys tax file is located.
 1

LIVE TOGETHER LIMITED

TRADING PROFIT AND LOSS ACCOUNT
FOR YEAR ENDED DECEMEBER 31 (EXTRACT

(All figures in GH000) 2010 2011 Budget 2011

Sales 10,000 10,330 10,660
Cost of Sales 6600 7,650 7083
Gross Profit 3300 2,980 3,583
Wages 1300 1,180 1,166
Overheads 1160 1,250 1,230
Net Profit 870 550 1,180
Stock 970 883 1,030
Creditors 1186 1,316 1,230

In addition to above you have also obtained the following economic indicators
from the Research Unit of Ghana Revenue Authority;

- rate of inflation - 15%

- economic sector rate of growth in real terms - 15%
- gross profit ratio - 35%
- stock turnover ratio - 45 days
- ratio of creditors to sales - 13%
- ratio of wages to sales - 11%

You are required to apply analytical review techniques to above data and
draw conclusions there-from for the attention of the Director-Assurance in a
suitable form. (10 Marks)
(Total 20 Marks)

QUESTION 2:
(i) Tik Tok Enterprises is a dealer in computers and accessories with 25
employees. Tik Tok has just hired your firm to undertake a tax audit of its
 accounts for the past five years to 31st December 2011 prior to conversion
to a limited liability status.

Your Director Tax Solutions has directed you in your capacity as audit
senior to prepare a paper suitable for briefing newly recruited audit clerks
on the steps required to be taken before commencement of actual audit
work. (4 Marks)

(ii) The tax audit has just commenced and your team leader has requested
you to set up the permanent notes file for Tik Tok. You are required to
state clearly the contents of this file and any other matters you consider
necessary for inclusion. (5 Marks)
2

( iii) It is generally accepted that businesses face risks both internal and
external and an understanding of these risks gives the tax auditor a
thorough knowledge and understanding of the clients/taxpayers
business and may also suggest where misstatements may occur in the
financial statement. The proprietor of Tik Tok has requested your firm to
advise him on possible risks faced by him.

You are required to identify and explain four (4) internal and four (4)
external risks faced by Tik Tok Enterprises. You are to communicate these
in a suitable form to your Director Tax solutions. (11 Marks)

(Total 20 Marks)

QUESTION 3

(a)(i) A key feature of many tax audit tests is the concept of directional testing.

Explain clearly what you understand by this concept. (11/ 2 Mark)

(ii) Directional testing is based on two simple premises.

You are required to explain your understanding of these premises.

(2 Marks)

(b) You have been assigned to lead a team of tax auditors to carry out the
audit of Tuff Gong Limited. Part of your duty is to carry out a briefing
session for the team before commencement of actual audit work.

You have directed them in the course of the briefing to carry out
 directional testing for;
(i) Overstatement, and (2 Marks)
(ii) Understatement. (3 Marks)

Explain clearly what you hope to achieve by this instruction to the team.

(c) Give two reasons each why managers may want to;
(i) Overstate profit (2 Marks)
(ii) Understate profit (1 Mark)

(d) State advantages of directional testing. (3 Marks)

(e) State any disadvantage of directional testing. (1 Mark)

(f) The following is the extract of the financial statement of LTE Ltd. A general
merchant based in Accra.

LTE LIMITED

Balance sheet as at December 31

2010 2011
GH000 GH000

Fix Assets 11,500 12,500

Depreciation 2,825 3,100
8,675 9,400

Current Asset

Stocks 6,000 7,347

Debtors 2,100 2,075
Bank 2,275 4,628
10,375 14,050

Current Liabilities

Taxation 1,450 1,600

Creditors 1,600 1,700
Dividends proposed 250 300
3,300 3,600
Net Current Assets 7,075 10,450
 Total Assets 15,750 19,850

2010 2011
GH000 GH000
Financed By:

Stated Capital 9,000 11,500

Income Surplus 3,750 4,600
Long-term Loan 3,000 3,750
15,750 19,850

Ignore trading profit and loss account.

You are required to carry out a desk audit of above balance sheet and
write a report suitable for submission to the managing director of LTE
Limited.
(4 Marks) (Total 20 Marks)

QUESTION 4:

(a) Compare and contrast the following;

(i) Private audit and statutory audit (4 Marks)

(ii) External audit and Internal audit (4 Marks)

(b) Explain briefly your understanding of the following types of audits;

(i) Complete audit (1 Mark)
(ii) Interim Audit (1 Mark)
(iii) Continuous Audit (1 Mark)

(c) An Accra-based client of your firm, BT Express Limited is contemplating

setting up an Audit Committee in view of the fast expanding nature and
complexity of their operations.
 You are required to advise the company on the functions and
responsibilities of an Audit Committee in your capacity as an audit senior
of TJ Consulting Services. (9 Marks)
(Total 20 Marks)

QUESTION 5

(a) Tax auditors who do not comply with tax auditing standards when
performing tax audits face the risk of regulatory action by the chartered
Institute of Taxation.

Suggest how the independence of the tax auditor might be

strengthened. (10 Marks)

(b) When tax auditors accept appointment, they enter into a legal contract
which imposes certain obligations both express and implied, on them.

You are required to state and explain any implied terms that may be
imputed in a tax audit contract.

You are to communicate this in appropriate form to the C.E.O. of ToT ToT
Mining Limited, a company listed on the Ghana Stock Exchange.
(10 Marks)

(Total 20 Marks)

END OF PAPER
ANSWER 1

BRIEFING PAPER (1/ 2 Mark)

ANALYTICAL REVIEW TECHNIQUE IN TAX AUDITS

(i) Analytical review studies the relationship between elements of financial

information expected to conform to a predictable pattern based on:

(a) the organisations experience

(b) financial and non-financial information
(c) comparison of comparable information with that of prior period or
periods
(d) comparison of information with anticipated results and
(e) comparison with information relating to similar organizations.
(1 mark each for any four correct answers)

PREPARED BY: .. }
} Marks
DATE: 28TH JUNE, 2012 }

(ii)
(a) At the planning stage The auditor applies the technique to identify
areas of potential risk or new developments so that he can plan his
other audit procedures in these areas.

(b) Obtaining evidence It is used alone or in conjunction with internal

control reliance and substantive testing to ensure efficiency and
economy.

(c) At the final review stage of the audit analytical review techniques
can provide support for the conclusions arrived at as a result of
other work. It can also be used to assess the overall reasonableness
of the financial statements as a whole.
(1 mark each for any two correct answers)

(III) The following factors may influence my use of analytical review

technique.
 (a) The nature of the entity and its operations. A long and well-
established company with branches across the country which has
changed little over the years will lend itself to the use of analytical
review.

(b) Knowledge gained in previous tax audits of the enterprise if any.

The auditor will have experience of those areas where errors and
difficulties arose and of those areas of greatest audit risk.

(c) Managements own use of analytical review procedures. Where

management has a reliable system of budgetary control then the
auditor will have already obtained explanations for variances.

(d) Availability of non-financial information to back up financial

information. Many companies record non-financial statistics.

(e) The reliability relevance and comparability of the information

available.

(f) The cost effectiveness of the use of analytical review in relation to

other forms of evidence.

(g) The availability of high quality staff with much intelligence,

experience and training.
(1 mark each for any three correct answers)

DDT CONSULT
MEMORANDUM

TO: DIRECTOR-ASSURANCE

FROM: TEAM LEADER Mark

DATE: 28/06/12

SUBJECT: LIVE TOGETHER LIMITED ANALYTICAL REVIEW OF THE FINANCIAL

STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011

(1) Computation of estimated sales:

- GH10,000.00 x 1.15 x 1.15 -13,225.00. The difference is significant and
must be investigated.

(2) Estimated Gross Profit GH10,830.00 x 35% = GH3,790.50

 Actual rate is 2,980.00/10,830.00 x 100% = 27.5%

This is a clear departure from the industrial average and must be

investigated.

(3) Stock should be about 45 days worth GH7,650.00 x 45/365 = 943.00.

Actual is lower but not significant.

(4) Creditors should be GH10,330.00 x 13% - GH1,343.00

This appears to confirm the actual stock figure.

(5) Estimated wages GH10,330.00 x 11% = GH1,136.30

This appears to agree with the actual and budget. This can be confirmed
by the number of staff on roll in 2011.

(6) Other expenses may have also risen by 15% but this could be examined
on individual basis. (2 Marks each for any three correct answers)

Conclusion

(1) Stock and creditors appear to agree with expectations and may not
require indepth investigation.

(2) Overheads appear to be inline but disaggregation is required to enable

treatment of individual items.

(3) Sales are lower than expected. This may require indepth investigation of
cause.

(4) Gross Profit is much lower than expected. Stock and creditors figures
agree with expectations therefore the lower gross profit may not be
attributed to cut-off errors. It seems theft of stock or cash has occurred.
Thorough investigation is required. (1 mark each for any three correct
answers)

Thank you.
Mark
Signed.

ANSWER 2

(i) The audit of Tik Tok is a first audit and will therefore require the setting up of
permanent notes file and for the team to familiarize themselves with the
 company and its operations. This audit may also require more
experienced staff than future tax audits of the company. (1 Mark)

The following may have to be considered before commencement of

actual audit work.

(a) Before acceptance of the engagement, the partners must first

consider whether or not they can take on the work from an ethical,
legal and practical point of view. These appear to have been
considered by the partners prior to acceptance.

(b) Professional etiquette - It appears from the question that the firm is
not the statutory auditors of the company. It may therefore be
necessary to contact the statutory auditor with a view to discussing
risk areas, any special difficulties associated with the company and
simply as a courtesy.

(c) Confirmation of appointment Tik Tok is a sole proprietor and may

therefore not have a directors minute book as with limited liability
companies. Appointment may therefore be evidenced by a letter
from Tik Tok to the firm.

(d) Letter of engagement The partners will draft a letter of

engagement detailing the work to be done for the signature of Tik
Tok. (1Mark each for any three correct answers)

(ii) This file usually contain documents and matters of continuing importance
for any future tax audits.

(a) Statutory matters concerning the conduct,accounts and tax audit

of the enterprise (eg. Tax audit of a bank will consider the Banking
Act).

(b) The rules and regulations of the enterprise. This is a sole proprietor
and there is none.

(c) Copies of documents of continuing importance and relevance to

the tax auditor.

(1) Letter of engagement

(2) Trade licence, and royalty agreements etc.
(3) Debenture deeds, loan agreements etc.
(4) Leases
(5) Addresses of the registered office and all other premises.
 (6) An organizational chart showing ;
(a) The principal departments and sub-divisions thereof.
(b) Name of responsible officials and their designations and line
of responsibility
(7) List of books and other records, names, positions, specimens of
signatures and initials of persons responsible for the books and
documents, account codes and classification.
(8) History of the enterprise
(9) List of accounting matters of importance such as rates of
depreciation, valuation of stock and work in progress and research
and development.
(10) Note on matters discussed with the proprietor.
(11) Tik Toks internal audit report if any and accounting instructions if
any.
(12) List of properties and investments with notes on verification.
(1/ 2 mark each for any 10 correct answers)

MEMORANDUM

TO: Director Tax solutions

FROM: Tax Auditor

DATE: 11/06/12

SUBJECT: TIK TOK ENTERPRISES-ANALYSIS OF BUSINESS RISK

INTRODUCTION

Business risk faced by Tik Tok comes in two forms, external risk arising from outside
the enterprise and internal risk arising from inside the enterprise.

(a) EXTERNAL RISK

These include but not limited to;

(1) Changing interest rate

(2) Changing exchange rate
(3) Price wars with competitors
(4) Untried technologies and ideas
(5) Natural hazards (eg. Fire or flood)
 (6) Bad debts
(7) Litigation
(8) Changing legislation
(9) Public Opinion, attitudes
(10) Environmental matters (eg. electricity fluctuation)
(11) Import competition
(1 mark each for any five correct answers)

(b) INTERNAL RISK

This also includes but not limited to;

(1) Failure to modernize products, labour relation, marketing

(2) Employees
(3) The process of dealing with suppliers or customers.
(4) Being a sole proprietor, everything revolves around him.
(5) Cash flow including overtrading.
(6) Inappropriate acquisitions
(7) Excessive reliance on one of a few products, customers, suppliers.
(8) Internal controls.
(9) Fraud
(1 mark each for any five correct answers)

Thank you.
Mark
Signed.

ANSWER 3

(a) (i) The concept of directional testing recognizes that it is the purpose of the
audit test which will determine the direction of the test (ie. do we start by
testing raw data or final accounts balances?). (1 Mark)

(ii) Directional testing is based on two simple premises.

(1) Errors found in financial statements may be due to either over-or
understatements resulting from either omissions or misstatement of
the items. (1 Mark)

(2) The double entry system provides a set of links between assets,
liabilities, revenues and expenses included in the accounts.
 To overstate an asset means an income account or liability may
have also been overstated (or another asset account or expense
account understated). (1 Mark)

(b)(i) Directional testing for over statement;

(1) Carrying out a primary test of an asset account balance (eg.

debtors) for overstatement leads to the testing of a reciprocal
population (eg. sales) (1 Mark)

(2) Overstatement tests start with the monetary population of the

account balance (ie accuracy tests to test that what is included
should be included). (1 Mark)

(ii) Directional testing for understatement;

(1) Testing sales income for understatement, the tax auditor obtains
evidence that other credit balances are not overstated and that
debit balances are not understated (eg. debtors). (1 Mark)

(2) Understatement tests are tests to detect omissions. The starting

point is the non-monetary population. (eg. when testing sales for
understatement the population for selection is normally
waybill/dispatch notes). (1 Mark)

Generally, by carrying out primary testing of all debit balances

(assets and expenses) for overstatement and all credit balances
(income and liabilities) for understatement the auditor, has
effectively tested all items in both directions. (1 Mark)

(c)(i) Motive for overstatement of profits may be due: to:

(1) Meet expectations and requirements of lenders and shareholders,
or to fulfill previously made forecasts
(2) To fight off take-over bids
(3) To boost management remuneration when this is based on profit.
(1 mark each for any two correct answers)

(ii) Motive for understatement of profit may be to:

(1) Design to reduce tax liabilities

(2) Lower value of company assets for the purchases of capital gain
tax. (1 mark for one correct answer)

(d) The advantages of directional testing approach are;

 (1) It gives focus to audit
(2) It reduces the time and effort on an audit.
(3) It helps ensure that overstatement or understatement (as
appropriate) has not occurred and therefore minimizes the risk of
material misstatement in the financial statement.
(4) It facilitates audit conclusions based on statistical sampling
techniques. (1 mark each for any three correct answers)

(e) Disadvantages are;

(1) There is a possible tendency not to obtain sufficient primary

evidence in the right direction (ie. Understatement when
overstatement is expected).
(2) There is a need to realize that all assets and liabilities and revenues
and expenses should be verified for all assertions in the financial
statements. (1 mark for one correct answer)

3(b) LTE Limited

The Managing Director

LTE Limited (1 Mark)
Accra

Dear Sir,

YEAR OF ASSESSMENT 2011 FINANCIAL STATEMENT

FOR THE YEAR ENDED DECEMBER 2011 FILE NO. XXXX

We are happy to receive your companys accounts for the year ended
December 31st, 2011. We have completed examination of the accounts
and wish to bring our observation to your notice.

1. Additions to Fixed Assets

Our examination indicates that additions amounted to

GH1,000,000. Kindly submit supporting documents attesting to
ownership and value. Take note that you are required by the
Internal Revenue Act (Act 592) to inform the Commissioner General
upon acquisition in order to attract capital allowance.

2. Stocks
Kindly submit stock schedules to indicate stock in trade and
consumable stocks.
 3. Debtors
Kindly submit schedules of debtors indicating trade debtors and
other debtors.

4. Bank Balance
You are required to produce bank statements supporting all your
bank accounts.

5. Creditors
Please furnish us with schedule of creditors indicating trade creditors
and other creditors.

6. Dividends
Kindly furnish us with evidence of taxes paid.

7. Addition to Stated Capital

Please indicate sources of funding of this addition.

8. Long Term Loan

Please furnish us with particulars of the additions.

Counting on your co-operation.

Thank you. (1/2 Mark each for any six correct answers)

Yours faithfully

Signed (1/2 Mark)

ANSWER 4

(a)(i) Private Audit Statutory

1. Undertaken at the instance of an Statutory obligation arising out

interested party or parties (such as sole of the Companies Code. This
trader or partnerships). requires that a professionally
qualified accountant audits
and certify the accounts of a
limited liability company.
2
Scope of audit determined by the Scope determined by
interested party or parties (in case of legislation in operation at the
 partnerships time of audit.

3. Governed by contract Governed by contract

4. Report issued to interested party. Report to shareholders

(1/ 2 Mark each)

(a)(ii) External Audit Internal Audit

1. Independent of the organization Responsible to management,

managing director, Board of
Directors or Audit Committee

2. Responsibilities are fixed by statute Responsibilities are specified by

management

3. Report to shareholders Report to the Director or Audit

committee

4. Perform work to enable them express Work may range over many
an opinion on the truth and fairness of operational and financial areas
the accounts and activities as determined by
Management.

( Mark each)

(b)(i) Complete Audit

Complete audit usually apply to small companies where the volume of

transactions and complexity of records do not require more than one
attendance by the auditor. Auditors work begins as soon as the
companys financial year ends. (1 Mark)

(ii) Interim Audit

 This usually applies to larger organizations. Due to the volume of testing to
be undertaken, in order to reach an opinion on the reliability of the
records, auditors find it necessary to proceed with the audit on interim
basis. Interim audits are arranged with the co-operation of the client and
may be bi-annual, quarterly or even monthly depending on the volume of
audit work considered necessary. (1 Mark)

(iii) Continuous Audit

Where the system of internal control operated by a large company

displays a fundamental and material weaknesses, the auditor may carry
out audit test on a higher proportion of transactions. Due to such
weaknesses, the auditor may carry out audit checks throughout the
period under consideration. (1 Mark)

(c) TJ CONSULTING SERVICES

The Managing Director

BT Express Limited (1/ 2 Mark)
Accra

25 June, 2012

Dear Sir,

FUNCTIONS AND RESPONSIBILITIES OF AN AUDIT COMMITTEE

Forward to the enquiry you made in connection with the setting up of the
Audit Committee in your company we wish to bring to your notice the
functions and responsibilities of an Audit Committee as follows;

(1) To review the financial results shown by both management

accounts and those presented to shareholders.

(2) To make recommendations for the improvement of management

control.

(3) To ensure that there are adequate procedures in place for the
review of interim statements, forecasts and other financial
information before distribution to shareholders.
 (4) To assist external auditor in obtaining all information they need and
in resolving difficulties experienced by them in pursuing their
independent examination.

(5) To deal with any material reservation of the auditors regarding the
companys management, its records and its final accounts;
including the manner in which significant items are presented.

(6) To facilitate a satisfactory working relationship between the

management, and auditors, and between the internal and external
audit functions.

(7) To be responsible for the appointment of auditors as well as fixing

their remuneration.

(8) To be available for consultation with the auditors at all times, if

necessary, without the presence of management to discuss
regularly and review the procedures employed by the auditors.

(10) To be concerned with all matters relating to the disclosure by the

accounts of a true and fair view for the benefit of all users.

We hope this explains the role expected of the audit committee.

(1 mark each for any eight correct answers)

Thank you.
Mark
Signed

ANSWER 5(a)

The following measures may be introduced to strengthen the independence of

the tax auditor in the tax audit of a public company;

(i) The payment of audit fees and appointment of auditors by a central

body.

(ii) The mandatory requirement of establishing audit committee for all listed
companies composed of non-executive directors and dealing directly
with auditors and accounting and tax issues.
(iii) Tax auditors could be required to make some formal declaration that they
are not involved with a client company in any way which might be seen
to impair their objectivity.

(iv) Tax auditors could be rotated by the chan ging of firms if tax audit
assignments become frequent.

(v) A system of peer reviews could be introduced where the reviewers brief
may include the assessment of the tax auditors independence from the
client. (2 marks each)

ANSWER 5(b)

The Chief Executive Officer

Tot Tot Mining Limited (1 mark)
Ghana

26th June, 2012

Dear Sir,

IMPLIED TERMS OF A TAX AUDIT CONTRACT- EXPLANATION

Obligations are imposed on a tax auditor when he accepts to undertake a tax

audit assignment. The obligations arise from the terms of the contract. There are
both express and implied terms of a contract which impact upon the auditor.
(2 Marks)

The following implied terms which contract law will impute into a tax audit
contract are as follows:

(i) The auditors have a duty to exercise reasonable care. (2 Marks)

(ii) The auditors have a duty to carry out the work required with reasonable
expediency. (2 marks)

(iii) The auditor has a right to reasonable remuneration. (2 Marks)

I hope this is clear enough. We are ready to provide any additional explanation
you may require.

Thank you.
 (1 Mark)
Signed
 UK/GHANA DOUBLE TAXATION CONVENTION

SIGNED 20 JANUARY 1993

Entered into force 10 August 1994

Effective in United Kingdom from 1 April 1995 for corporation tax and from 6
April 1995 for income tax and capital gains tax

Effective in Ghana from 1 January 1995

Double Taxation Agreements are reproduced under the terms of Crown Copyright
Policy Guidance issued by HMSO.
CONTENTS

Article 1 (Personal scope) ......................................................................................... 3

Article 2 (Taxes covered) .......................................................................................... 3
Article 3 (General definitions) .................................................................................. 4
Article 4 (Fiscal domicile)......................................................................................... 5
Article 5 (Permanent establishment) ......................................................................... 6
Article 6 (Income from immovable property)........................................................... 8
Article 7 (Business profits)........................................................................................ 8
Article 8 (Shipping and air transport) ....................................................................... 9
Article 9 (Associated enterprises) ........................................................................... 10
Article 10 (Dividends)............................................................................................. 11
Article 11 (Interest) ................................................................................................. 12
Article 12 (Royalties) .............................................................................................. 13
Article 13 (Capital gains) ........................................................................................ 15
Article 14 (Independent personal services)............................................................. 15
Article 15 (Dependent personal services) ............................................................... 16
Article 16 (Directors' fees) ...................................................................................... 16
Article 17 (Management and technical fees)........................................................... 17
Article 18 (Artistes and athletes)............................................................................. 18
Article 19 (Pensions) ............................................................................................... 18
Article 20 (Government service)............................................................................. 19
Article 21 (Students) ............................................................................................... 19
Article 22 (Teachers)............................................................................................... 20
Article 23 (Other income) ....................................................................................... 20
Article 24 (Limitation of relief) .............................................................................. 20
Article 25 (Elimination of double taxation) ............................................................ 21
Article 26 (Non-discrimination).............................................................................. 22
Article 27 (Mutual agreement procedure)............................................................... 23
Article 28 (Exchange of information) ..................................................................... 24
Article 29 (Members of diplomatic or permanent missions and consular posts) ... 24
Article 30 (Entry into force).................................................................................... 24
Article 31 (Termination) ......................................................................................... 25
CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM
OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT
OF THE REPUBLIC OF GHANA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of the Republic of Ghana;

Desiring to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and capital gains;
Have agreed as follows:

Article 1
Personal scope

This Convention shall apply to persons who are residents of one or both of the
Contracting States.

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Article 2
Taxes covered

(1) The taxes which are the subject of this Convention are:

(a) in the case of the United Kingdom:

(i) the income tax;

(ii) the corporation tax; and

(iii) the capital gains tax;

(hereinafter referred to as "United Kingdom tax");

(b) in the case of Ghana:

(i) the income tax;

(ii) the capital gains tax;

(iii) the petroleum income tax;

(iv) the minerals and mining tax;

(hereinafter referred to as "Ghana tax").

(2) This Convention shall also apply to any identical or substantially similar taxes which
are imposed by either Contracting State after the date of signature of this Convention in
addition to, or in place of, the taxes of that Contracting State referred to in paragraph (1)
of this Article. The competent authorities of the Contracting States shall notify each other
of any substantial changes which have been made in their respective taxation laws.

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Article 3
General definitions

(1) For the purposes of this Convention, unless the context otherwise requires:

(a) the term "United Kingdom" means Great Britain and Northern Ireland, including
any area outside the territorial sea of the United Kingdom which in accordance with
international law has been or may hereafter be designated, under the laws of the
United Kingdom concerning the Continental Shelf, as an area within which the rights
of the United Kingdom with respect to the sea bed and sub-soil and their natural
resources may be exercised;

(b) The term "Ghana" means the Republic of Ghana including any area outside the
territorial sea of Ghana which in accordance with international law has been or may
hereafter be designated, under the laws of Ghana concerning the Continental Shelf, as
an area within which the rights of Ghana with respect to the sea bed and sub-soil and
their natural resources may be exercised;

(c) the term "national" means:

(i) in relation to the United Kingdom, any British citizen, or any British subject
not possessing the citizenship of any other Commonwealth country or territory,
provided he has the right of abode in the United Kingdom; and any legal
person, partnership, association or other entity deriving its status as such from
the law in force in the United Kingdom;

(ii) in relation to Ghana, any citizen of Ghana and any legal person,
partnership, association or other entity deriving its status as such from the law
in force in Ghana;

(d) the terms "a Contracting State" and "the other Contracting State" mean the United
Kingdom or Ghana, as the context requires;

(e) the term "person" comprises an individual, a company and any other body of
persons, but does not include a partnership;

(f) the term "company" means any body corporate or any entity which is treated as a
body corporate for tax purposes;
 (g) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;

(h) the term "international traffic" means any transport by a ship or aircraft operated
by an enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;

(i) the term "competent authority" means, in the case of the United Kingdom, the
Commissioners of Inland Revenue or their authorised representative, and, in the case
of Ghana, the Commissioner of the Internal Revenue Service or his authorised
representative.

(2) As regards the application of this Convention by a Contracting State any term not
otherwise defined shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State relating to the taxes which are the subject of
this Convention.

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Article 4
Fiscal domicile

(1) For the purposes of this Convention, the term "resident of a Contracting State" means
any person who, under the laws of that State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar nature; the
term does not include any individual who is liable to tax in that Contracting State only if
he derives income or capital gains from sources therein.

(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a
resident of both Contracting States, then his status shall be determined in accordance with
the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he has a

permanent home available to him; if he has a permanent home available to him in
both Contracting States, he shall be deemed to be a resident of the Contracting State
with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be
determined, or if he has no permanent home available to him in either Contracting
State, he shall be deemed to be a resident of the Contracting State in which he has an
habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he

shall be deemed to be a resident of the Contracting State of which he is a national;
 (d) if he is a national of both Contracting States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual agreement.

(3) Where by reason of the provisions of paragraph (1) of this Article a person other than
an individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the Contracting State in which its place of effective management is situated.

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Article 5
Permanent establishment

(1) For the purposes of this Convention, the term "permanent establishment" means a
fixed place of business through which the business of an enterprise is wholly or partly
carried on.

(2) The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural
resources;

(g) a building site or construction or installation project which exists for more than six
months;

(h) the provision of supervisory activities for more than three months on a building
site or construction or installation project; and

(i) installation or the provision of supervisory activities in connection therewith

incidental to the sale of machinery or equipment where the charges payable for such
activities exceed 10 per cent of the free on board sale price of the machinery or
equipment.

(3) Notwithstanding the preceding provisions of this Article, the term "permanent
establishment" shall be deemed not to include:
 (a) the use of facilities solely for the purpose of storage, display or delivery of goods
or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of
activities mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that the
overall activity of the fixed place of business resulting from this combination is of a
preparatory or auxiliary character.

(4) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a
person other than an agent of an independent status to whom paragraph (5) of this
Article applies is acting on behalf of an enterprise and has, and habitually exercises, in
a Contracting State an authority to conclude contracts on behalf of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that State in respect of
any activities which that person undertakes for the enterprise, unless the activities of such
person are limited to those mentioned in paragraph (3) of this Article which, if exercised
through a fixed place of business, would not make this fixed place of business a
permanent establishment under the provisions of that paragraph.

(5) An enterprise shall not be deemed to have a permanent establishment in a Contracting

State merely because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status, provided that such persons
are acting in the ordinary course of their business.

(6) The fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or which
carries on business in that other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent establishment of the
other.

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 Article 6
Income from immovable property

(1) Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other State.

(2) The term "immovable property" shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term shall in any
case include property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed payments
as consideration for the working of, or the right to work, mineral deposits, sources and
other natural resources; ships and aircraft shall not be regarded as immovable property.

(3) The provisions of paragraph (1) of this Article shall apply to income derived from the
direct use, letting, or use in any other form of immovable property.

(4) The provisions of paragraphs (1) and (3) of this Article shall also apply to the income
from immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.

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Article 7
Business profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State
unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much of
them as is attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3) of this Article, where an enterprise of a
Contracting State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities under the same
or similar conditions and dealing wholly independently with the enterprise of which it is a
permanent establishment.

(3) In determining the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the permanent establishment,
including a reasonable allocation of executive and general administrative expenses
incurred for the purposes of the enterprise as a whole, whether in the Contracting State in
which the permanent establishment is situated or elsewhere. However, no such deduction
shall be allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head office of
the enterprise or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents or other rights, or by way of commission, for
specific services performed or for management, or except in the case of a banking
enterprise, by way of interest on moneys lent to the permanent establishment. Likewise,
no account shall be taken, in the determination of the profits of a permanent
establishment, of amounts charged (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return for the use of
patents or other rights, or by way of commission for specific services performed or for
management, or except in the case of a banking enterprise, by way of interest on moneys
lent to the head office of the enterprise or any of its other offices.

(4) No profits shall be attributed to a permanent establishment by reason of the mere

purchase by that permanent establishment of goods or merchandise for the enterprise.

(5) Where profits include items of income or capital gains which are dealt with separately
in other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.

(6) Insofar as it has been customary in a Contracting State to determine according to its
law the profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph (2) shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance with the principles
contained in this Article.

(7) For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.

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Article 8
Shipping and air transport

(1) Profits derived by a resident of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.

(2) For the purposes of this Article, profits from the operation of ships or aircraft in
international traffic include:

(a) income from the rental on a bareboat basis of ships or aircraft; and
 (b) profits from the use, maintenance or rental of containers (including trailers and
related equipment for the transport of containers) used for the transport of goods or
merchandise;

where such rental or such use, maintenance or rental, as the case may be, is incidental to
the operation of ships or aircraft in international traffic.

(3) Where profits within paragraphs (1) or (2) of this Article are derived by a resident of a
Contracting State from participation in a pool, a joint business, or an international
operating agency, the profits attributable to that resident shall be taxable only in the
Contracting State of which he is a resident.

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Article 9
Associated enterprises

(1) Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the

management, control or capital of an enterprise of the other Contracting State; or

(b) the same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State;

and in either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, may be included by a Contracting State in the profits of
that enterprise and taxed accordingly.

(2) Where a Contracting State includes in the profits of an enterprise of that State and
taxes accordingly profits on which an enterprise of the other Contracting State has
been charged to tax in that other State and the profits so included are profits which would
have accrued to the enterprise of the first-mentioned State if the conditions made between
the two enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the amount of
the tax charged therein on those profits. In determining such adjustment, due regard shall
be had to the other provisions of this Convention and the competent authorities of the
Contracting States shall if necessary consult each other.

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 Article 10
Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident

of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that State, but if
the recipient is the beneficial owner of the dividends and is subject to tax in respect of the
dividends in that other Contracting State the tax so charged shall not exceed:

(a) 7.5 per cent of the gross amount of the dividends if the beneficial owner is a
company which controls, directly or indirectly, at least 10 per cent of the voting
power in the company paying the dividends;

(b) 15 per cent of the gross amount of the dividends in all other cases.

(3) The term "dividends" as used in this Article means income from shares, or other
rights, not being debt-claims, participating in profits, as well as income from other
corporate rights assimilated to income from shares by the taxation laws of the State of
which the company making the distribution is a resident and also includes any other item
which, under the laws of the Contracting State of which the company paying the dividend
is a resident, is treated as a dividend or distribution of a company.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14 of this
Convention, as the case may be, shall apply.

(5) Where a company which is a resident of a Contracting State derives profits or income
from the other Contracting State, that other State may not impose any tax on the
dividends paid by the company, except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated in that
other State, nor subject the company's undistributed profits to a tax on undistributed
profits, even if the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in that other State.

(6) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
dividends is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those dividends.
(7) The provisions of this Article shall not apply if the right giving rise to the dividends
was created or assigned mainly for the purpose of taking advantage of this Article.

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Article 11
Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises
and according to the laws of that State, but if the recipient is the beneficial owner of the
interest and is subject to tax in respect of the interest in that other Contracting State the
tax so charged shall not exceed 12.5 per cent of the gross amount of the interest.

(3) The term "interest" as used in this Article means income from debt-claims of every
kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtor's profits, and in particular, income from government securities
and income from bonds or debentures. The term "interest" shall not include any item
which is treated as a distribution under the provisions of Article 10 of this Convention.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the interest, being a resident of a Contracting State, carries on
business in the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14 of this Convention, as the case may
be, shall apply.

(5) Interest shall be deemed to arise in a Contracting State when the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base, then such interest shall be deemed
to arise in the State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the interest paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount of interest. In such case, the excess part of
the payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.
(7) Any provision in the laws of either Contracting State relating only to interest paid to a
non-resident company shall not operate so as to require such interest paid to a company
which is a resident of the other Contracting State to be treated as a distribution or
dividend by the company paying such interest. The preceding sentence shall not apply to
interest paid to a company which is a resident of one of the Contracting States in which
more than 50 per cent of the voting power is controlled, directly or indirectly, by a person
or persons who are residents of the other Contracting State.

(8) The relief from tax provided for in paragraph (2) of this Article shall not apply if the
beneficial owner of the interest:

(a) is exempt from tax on that interest in the Contracting State of which he is a
resident; and

(b) sells, or contracts to sell, the debt-claim from which that interest is derived within
three months from the date on which he acquired that debt-claim.

(9) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the debt-claim
in respect of which the interest is paid to take advantage of this Article by means of that
creation or assignment.

(10) Notwithstanding the provisions of paragraph (2) of this Article, interest arising in a
Contracting State shall be exempt from tax in that State if it is derived and beneficially
owned by the Government of the other Contracting State or a local authority thereof or
any agency or instrumentality of that Government or local authority or by the
Commonwealth Development Corporation.

(11) Notwithstanding the provisions of Article 7 of this Convention and of paragraph (2)
of this Article, interest arising in Ghana which is paid to and beneficially owned by a
resident of the United Kingdom shall be exempt from tax in Ghana if it is paid in respect
of a loan made, guaranteed or insured, or any other debt-claim or credit guaranteed or
insured by the United Kingdom Export Credits Guarantee Department.

(12) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
interest is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of that interest.

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Article 12
Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
(2) However, such royalties may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the beneficial owner of
the royalties and is subject to tax in respect of the royalties in that other Contracting State
the tax so charged shall not exceed 12.5 per cent of the gross amount of the royalties.

(3) The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or
scientific work (but not including cinematograph films, and films or tapes for radio or
television broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for information (know-how) concerning industrial, commercial or scientific
experience.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, through a permanent establishment situated
therein, or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties are paid is
effectively connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14 of this Convention, as the case may be, shall apply.

(5) Royalties shall be deemed to arise in a Contracting State where the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or fixed base in connection with which
the obligation to pay the royalties was incurred, and such royalties are borne by such
permanent establishment or fixed base, then such royalties shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the royalties paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.

(7) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the right or
property in respect of which the royalties are paid to take advantage of this Article by
means of that creation or assignment.

(8) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
royalties is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those royalties.

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 Article 13
Capital gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable
property referred to in Article 6 of this Convention and situated in the other Contracting
State may be taxed in that other State.

(2) Gains derived by a resident of a Contracting State from the alienation of:

(a) shares deriving their value or the greater part of their value directly or indirectly
from immovable property situated in the other Contracting State, or

(b) an interest in a partnership or trust the assets of which consist principally of

immovable property situated in the other Contracting State, or of shares referred to in
sub-paragraph (a) above,

may be taxed in that other State.

(3) Gains from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.

(4) Gains derived by a resident of a Contracting State from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to the operation of
such ships or aircraft, shall be taxable only in that State.

(5) Gains from the alienation of any property other than that referred to in paragraphs (1),
(2), (3) and (4) of this Article shall be taxable only in the Contracting State of which the
alienator is a resident.

(6) The provisions of paragraph (5) of this Article shall not affect the right of a
Contracting State to levy according to its law a tax on capital gains from the alienation of
any property derived by an individual who is a resident of the other Contracting State and
has been a resident of the first-mentioned Contracting State at any time during the five
years immediately preceding the alienation of the property.

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Article 14
Independent personal services

(1) Subject to the provisions of Article 17 of this Convention income derived by a

resident of a Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that State unless he has a fixed base
regularly available to him in the other Contracting State for the purpose of performing his
activities. If he has such a fixed base, the income may be taxed in the other State but only
so much of it as is attributable to that fixed base.

(2) The term "professional services" includes especially independent scientific, literary,
artistic, educational or teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.

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Article 15
Dependent personal services

(1) Subject to the provisions of Articles 16, 19, 20, 21 and 22 of this Convention, salaries,
wages and other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived
by a resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days within any period of twelve months; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Article, remuneration derived in

respect of an employment exercised aboard a ship or aircraft operated in international
traffic may be taxed in the Contracting State of which the enterprise operating the ship or
aircraft is a resident.

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Article 16
Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a resident
of the other Contracting State may be taxed in that other State.
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Article 17
Management and technical fees

(1) Management fees arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.

(2) However, such management fees may also be taxed in the Contracting State in which
they arise, and according to the law of that State, but if the recipient is the beneficial
owner of the management fees the tax so charged shall not exceed 10 per cent of the
gross amount of the management fees.

(3) The term "management fees" as used in this Article means payments of any kind to
any person, other than to an employee of the person making the payments, in
consideration for any services of a managerial, technical or consultancy nature.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the management fees, being a resident of a Contracting State, carries
on business in the other Contracting State in which the management fees arise through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the obligation in respect of
which the management fees are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the
case may be, shall apply.

(5) A resident of one of the Contracting States who derives and beneficially owns
management fees which arise in the other Contracting State may elect, for any year of
assessment or financial year, that the tax chargeable in respect of those management fees
in the Contracting State in which they arise shall be calculated as if he had a permanent
establishment or fixed base in the last-mentioned Contracting State and as if those
management fees were taxable in accordance with Article 7 or Article 14, as the case may
be, as profits attributable to that permanent establishment or fixed base.

(6) Management fees shall be deemed to arise in a Contracting State when the payer is
that State itself, a political subdivision, a local authority or a resident of that State.
Where, however, the person paying the management fees, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment or a fixed
base in connection with which the obligation to pay the management fees was incurred,
and where such management fees are borne by such permanent establishment or fixed
base then such management fees shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.

(7) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the management fees paid
exceeds, for whatever reason, the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the law of each Contracting State, due regard
being had to the other provisions of this Convention.

(8) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the rights in
respect of which the management fees are paid to take advantage of this Article by means
of that creation or assignment.

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Article 18
Artistes and athletes

(1) Notwithstanding the provisions of Article 14 and Article 15 of this Convention,

income derived by a resident of a Contracting State as an entertainer, such as a theatre,
motion picture, radio or television artiste, or a musician, or as an athlete, from his
personal activities as such exercised in the other Contracting State, may be taxed in that
other State.

(2) Where income in respect of personal activities exercised by an entertainer or an

athlete in his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15
of this Convention, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.

(3) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, income
derived from activities as defined in paragraph (1) performed under a cultural agreement
or arrangement between the Contracting States shall be exempt from tax in the
Contracting State in which those activities are exercised.

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Article 19
Pensions

(1) Subject to the provisions of paragraph (2) of Article 20 of this Convention, pensions
and other similar remuneration paid in consideration of past employment to a resident of
a Contracting State who is subject to tax in that State in respect thereof and any annuity
paid to such a resident shall be taxable only in that State.

(2) The term "annuity" means a stated sum payable periodically at stated times during life
or during a specified or ascertainable period of time under an obligation to make the
payments in return for adequate and full consideration in money or money's worth.
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Article 20
Government service
(1)
(a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.
(b) Notwithstanding the provisions of sub-paragraph (1)(a) of this Article, such
remuneration shall be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering
the services.

(2)
(a) Any pension paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.

(b) Notwithstanding the provisions of sub-paragraph (2)(a) of this Article, such

pension shall be taxable only in the other Contracting State if the individual is a
resident of and a national of that State.

(3) The provisions of Articles 15, 16 and 19 of this Convention shall apply to
remuneration and pensions in respect of services rendered in connection with a business
carried on by a Contracting State or a political subdivision or a local authority thereof.

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Article 21
Students

Payments which a student or business apprentice who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who is
present in the first-mentioned State solely for the purpose of his education or training
receives for the purpose of his maintenance, education or training shall not be taxed in
that first-mentioned State, provided that such payments arise from sources outside that
State.

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 Article 22
Teachers

(1) A professor or teacher who visits one of the Contracting States for the purpose of
teaching or engaging in research at a university or any other recognised educational
institution in that Contracting State and who, immediately before that visit, was a resident
of the other Contracting State shall be exempted from tax by the first-mentioned
Contracting State in respect of any remuneration received for such teaching or research
for a period not exceeding two years from the date of his first arrival in that State for such
purpose.

(2) The exemption provided in this Article may be applied by the Contracting State in
which the teaching or research is performed either to the current payments to such
professor or teacher in anticipation of fulfilment of the requirements of paragraph (1) or
by way of withholding and refund, but in both cases exemption shall be conditional upon
fulfilment of the requirements of paragraph (1).

(3) This Article shall apply to income from research only if such research is undertaken
by the professor or teacher in the public interest and not primarily for the benefit of some
other private person or persons.

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Article 23
Other income

Items of income beneficially owned by a resident of a Contracting State, wherever

arising, which are not dealt with in the foregoing Articles of this Convention, other
than income paid out of trusts or the estates of deceased persons in the course of
administration, shall be taxable only in that State provided that the beneficial owner is
subject to tax in respect of those items of income in that State.

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Article 24
Limitation of relief

(1) Where under any provision of this Convention any income is relieved from tax in a
Contracting State and, under the law in force in the other Contracting State, a person, in
respect of that income, is subject to tax by reference to the amount thereof which is
remitted to or received in that other Contracting State and not by reference to the full
amount thereof, then the relief to be allowed under this Convention in the first-mentioned
Contracting State shall apply only to so much of the income as is taxed in the other
Contracting State.

(2) Where under Article 13 of this Convention gains may only be taxed in one of the
Contracting States, and under the law in force in that State a person is subject to tax in
respect of those gains by reference to the amount thereof which is received in that State
and not by reference to the full amount thereof, that Article shall apply only to so much
of the gains as are taxed in that State.

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Article 25
Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance
as a credit against United Kingdom tax of tax payable in a territory outside the United
Kingdom (which shall not affect the general principle hereof):

(a) Ghana tax payable under the laws of Ghana and in accordance with this
Convention, whether directly or by deduction, on profits, income or chargeable gains
from sources within Ghana (excluding in the case of a dividend, tax payable in respect
of the profits out of which the dividend is paid) shall be allowed as a credit against
any United Kingdom tax computed by reference to the same profits, income or
chargeable gains by reference to which the Ghana tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Ghana to a

company which is a resident of the United Kingdom and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any Ghana tax for which credit may
be allowed under the provisions of sub-paragraph (a) of this paragraph) the Ghana tax
payable by the company in respect of the profits out of which such dividend is paid.

(2) Subject to the provisions of the law of Ghana regarding the allowance as a credit
against Ghana tax of tax payable in a territory outside Ghana (which shall not affect the
general principle hereof):

(a) United Kingdom tax payable under the laws of the United Kingdom and in
accordance with this Convention, whether directly or by deduction, on profits, income
or chargeable gains from sources within the United Kingdom (excluding in the case of
a dividend, tax payable in respect of the profits out of which the dividend is paid)
shall be allowed as a credit against any Ghana tax computed by reference to the same
profits, income or chargeable gains by reference to which United Kingdom tax is
computed.

(b) In the case of a dividend paid by a company which is a resident of the United
Kingdom to a company which is resident in Ghana and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any United Kingdom tax for which
credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the
United Kingdom tax payable by the company in respect of the profits out of which
such dividend is paid. In any case the amount of tax credit to be granted under this
paragraph shall not exceed the proportion of the Ghana tax which such profits, income
 or chargeable gains bear to the entire profits, income or chargeable gains chargeable
to Ghana tax.

(3) For the purposes of paragraphs (1) and (2) of this Article, profits and income owned
by a resident of a Contracting State which may be taxed in the other Contracting State in
accordance with this Convention shall be deemed to arise from sources in that other
Contracting State.

(4) For the purpose of paragraph (1) of this Article, the term "Ghana tax payable" shall be
deemed to include any amount which would have been payable as Ghana tax for any year
but for an exemption or reduction of tax granted for that year on any part thereof under
any of the following provisions of Ghana law:

(a) Sections 12 and 13 of the Investment Code 1985 (PNDCL. 116) but in the case of
Section 12 excluding the exemption or reduction of tax granted to any enterprise
solely in respect of activities specified in Part A. Manufacturing Industries: (a)
manufacturing for export; Sections 3(1)(f), 3(1)(tt), 4A and 4B of the Income Tax
Decree 1975 (SMCD5.); Sections 23 and 26 of the Minerals and Mining Law 1986
(PNDCL. 153), so far as they were in force on, and have not been modified since, the
date of signature of this Convention, or have been modified only in minor respects so
as not to affect their general character; or

(b) any other provision which may subsequently be made granting an exemption or
reduction of tax which is agreed by the competent authorities of the Contracting
States to be of a substantially similar character, if it has not been modified thereafter
or has been modified only in minor respects so as not to affect its general character.

Provided that relief from United Kingdom tax shall not be given by virtue of this
paragraph in respect of income from any source if the income arises in a period starting
more than ten years after the exemption from, or reduction of, Ghana tax was first
granted in respect of that source.

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Article 26
Non-discrimination

(1) Nationals of a Contracting State shall not be subjected in the other Contracting State
to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that other
State in the same circumstances are or may be subjected.

(2) The taxation on a permanent establishment which an enterprise of a Contracting State

has in the other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the same activities.

(3) Except where the provisions of paragraph (1) of Article 9, paragraph (6) of Article 11,
paragraph (6) of Article 12 or paragraph (7) of Article 17 of this Convention apply, and
subject to the provisions of paragraph (7) of Article 11, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a resident
of the first-mentioned State.

(4) Enterprises of a Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other Contracting State,
shall not be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned State are or may be
subjected.

(5) Nothing contained in this Article shall be construed as obliging either Contracting
State to grant to individuals not resident in that State any of the personal allowances,
reliefs and reductions for tax purposes which are granted to individuals so resident or to
its nationals.

(6) The provisions of this Article shall apply to the taxes which are the subject of this
Convention.

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Article 27
Mutual agreement procedure

(1) Where a resident of a Contracting State considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in accordance with the
provisions of this Convention, he may, irrespective of the remedies provided by the
domestic law of those States, present his case to the competent authority of the
Contracting State of which he is a resident.

(2) The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Convention.

(3) The competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or application
of the Convention.

(4) The competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs.

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 Article 28
Exchange of information

(1) The competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Convention or of the domestic laws
of the Contracting States concerning taxes covered by this Convention insofar as the
taxation thereunder is not contrary to this Convention, in particular to prevent fraud and
to facilitate the administration of statutory provisions against legal avoidance. Any
information received by a Contracting State shall be treated as secret and shall be
disclosed only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes covered by this Convention. Such
persons or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial decisions.

(2) In no case shall the provisions of paragraph (1) of this Article be construed so as to
impose on the competent authority of either Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative
practice prevailing in either Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal
course of the administration of either Contracting State;

(c) to supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information the disclosure of
which would be contrary to public policy.

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Article 29
Members of diplomatic or permanent missions and consular posts

Nothing in this Convention shall affect any fiscal privileges accorded to members of
diplomatic or permanent missions or consular posts under the general rules of
international law or under the provisions of special agreements.

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Article 30
Entry into force

(1) Each of the Contracting States shall notify to the other through diplomatic channels
the completion of the procedures required by its law for the bringing into force of this
Convention. This Convention shall enter into force on the date of the later of these
notifications and shall thereupon have effect:
 (a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the Convention enters into force;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the Convention
enters into force;

(b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax on or after 1st January in the calendar year next following that
in which the Convention enters into force.

(2) The Convention between the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of the Republic of Ghana for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
and Capital Gains signed at London on 29th November 1977 shall be superseded by this
Convention and the Arrangement between the Government of the United Kingdom of
Great Britain and Northern Ireland and the Government of the Gold Coast for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income which was made in 1947 shall terminate and cease to have effect in
respect of the taxes to which this Convention applies in accordance with the provisions of
paragraph (1) of this Article.

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Article 31
Termination

(1) This Convention shall remain in force until termination by one of the Contracting
States. Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of any
calendar year. In such event, the Convention shall cease to have effect:

(a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the notice is given;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the notice is given;
 (b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax for the year of assessment beginning on or after 1st January in
the calendar year next following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto by their respective

Governments, have signed this Convention.

Done in duplicate at Accra, Ghana this 20th day of January 1993.

For the Government of the For the Government of

United Kingdom of the Republic of Ghana:
Great Britain and
Northern Ireland:

Chalker of Wallasey K. Botchwey

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 UK/GHANA DOUBLE TAXATION CONVENTION

SIGNED 20 JANUARY 1993

Entered into force 10 August 1994

Effective in United Kingdom from 1 April 1995 for corporation tax and from 6
April 1995 for income tax and capital gains tax

Effective in Ghana from 1 January 1995

Double Taxation Agreements are reproduced under the terms of Crown Copyright
Policy Guidance issued by HMSO.
CONTENTS

Article 1 (Personal scope) ......................................................................................... 3

Article 2 (Taxes covered) .......................................................................................... 3
Article 3 (General definitions) .................................................................................. 4
Article 4 (Fiscal domicile)......................................................................................... 5
Article 5 (Permanent establishment) ......................................................................... 6
Article 6 (Income from immovable property)........................................................... 8
Article 7 (Business profits)........................................................................................ 8
Article 8 (Shipping and air transport) ....................................................................... 9
Article 9 (Associated enterprises) ........................................................................... 10
Article 10 (Dividends)............................................................................................. 11
Article 11 (Interest) ................................................................................................. 12
Article 12 (Royalties) .............................................................................................. 13
Article 13 (Capital gains) ........................................................................................ 15
Article 14 (Independent personal services)............................................................. 15
Article 15 (Dependent personal services) ............................................................... 16
Article 16 (Directors' fees) ...................................................................................... 16
Article 17 (Management and technical fees)........................................................... 17
Article 18 (Artistes and athletes)............................................................................. 18
Article 19 (Pensions) ............................................................................................... 18
Article 20 (Government service)............................................................................. 19
Article 21 (Students) ............................................................................................... 19
Article 22 (Teachers)............................................................................................... 20
Article 23 (Other income) ....................................................................................... 20
Article 24 (Limitation of relief) .............................................................................. 20
Article 25 (Elimination of double taxation) ............................................................ 21
Article 26 (Non-discrimination).............................................................................. 22
Article 27 (Mutual agreement procedure)............................................................... 23
Article 28 (Exchange of information) ..................................................................... 24
Article 29 (Members of diplomatic or permanent missions and consular posts) ... 24
Article 30 (Entry into force).................................................................................... 24
Article 31 (Termination) ......................................................................................... 25
CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM
OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT
OF THE REPUBLIC OF GHANA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of the Republic of Ghana;

Desiring to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and capital gains;
Have agreed as follows:

Article 1
Personal scope

This Convention shall apply to persons who are residents of one or both of the
Contracting States.

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Article 2
Taxes covered

(1) The taxes which are the subject of this Convention are:

(a) in the case of the United Kingdom:

(i) the income tax;

(ii) the corporation tax; and

(iii) the capital gains tax;

(hereinafter referred to as "United Kingdom tax");

(b) in the case of Ghana:

(i) the income tax;

(ii) the capital gains tax;

(iii) the petroleum income tax;

(iv) the minerals and mining tax;

(hereinafter referred to as "Ghana tax").

(2) This Convention shall also apply to any identical or substantially similar taxes which
are imposed by either Contracting State after the date of signature of this Convention in
addition to, or in place of, the taxes of that Contracting State referred to in paragraph (1)
of this Article. The competent authorities of the Contracting States shall notify each other
of any substantial changes which have been made in their respective taxation laws.

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Article 3
General definitions

(1) For the purposes of this Convention, unless the context otherwise requires:

(a) the term "United Kingdom" means Great Britain and Northern Ireland, including
any area outside the territorial sea of the United Kingdom which in accordance with
international law has been or may hereafter be designated, under the laws of the
United Kingdom concerning the Continental Shelf, as an area within which the rights
of the United Kingdom with respect to the sea bed and sub-soil and their natural
resources may be exercised;

(b) The term "Ghana" means the Republic of Ghana including any area outside the
territorial sea of Ghana which in accordance with international law has been or may
hereafter be designated, under the laws of Ghana concerning the Continental Shelf, as
an area within which the rights of Ghana with respect to the sea bed and sub-soil and
their natural resources may be exercised;

(c) the term "national" means:

(i) in relation to the United Kingdom, any British citizen, or any British subject
not possessing the citizenship of any other Commonwealth country or territory,
provided he has the right of abode in the United Kingdom; and any legal
person, partnership, association or other entity deriving its status as such from
the law in force in the United Kingdom;

(ii) in relation to Ghana, any citizen of Ghana and any legal person,
partnership, association or other entity deriving its status as such from the law
in force in Ghana;

(d) the terms "a Contracting State" and "the other Contracting State" mean the United
Kingdom or Ghana, as the context requires;

(e) the term "person" comprises an individual, a company and any other body of
persons, but does not include a partnership;

(f) the term "company" means any body corporate or any entity which is treated as a
body corporate for tax purposes;
 (g) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;

(h) the term "international traffic" means any transport by a ship or aircraft operated
by an enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;

(i) the term "competent authority" means, in the case of the United Kingdom, the
Commissioners of Inland Revenue or their authorised representative, and, in the case
of Ghana, the Commissioner of the Internal Revenue Service or his authorised
representative.

(2) As regards the application of this Convention by a Contracting State any term not
otherwise defined shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State relating to the taxes which are the subject of
this Convention.

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Article 4
Fiscal domicile

(1) For the purposes of this Convention, the term "resident of a Contracting State" means
any person who, under the laws of that State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar nature; the
term does not include any individual who is liable to tax in that Contracting State only if
he derives income or capital gains from sources therein.

(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a
resident of both Contracting States, then his status shall be determined in accordance with
the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he has a

permanent home available to him; if he has a permanent home available to him in
both Contracting States, he shall be deemed to be a resident of the Contracting State
with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be
determined, or if he has no permanent home available to him in either Contracting
State, he shall be deemed to be a resident of the Contracting State in which he has an
habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he

shall be deemed to be a resident of the Contracting State of which he is a national;
 (d) if he is a national of both Contracting States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual agreement.

(3) Where by reason of the provisions of paragraph (1) of this Article a person other than
an individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the Contracting State in which its place of effective management is situated.

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Article 5
Permanent establishment

(1) For the purposes of this Convention, the term "permanent establishment" means a
fixed place of business through which the business of an enterprise is wholly or partly
carried on.

(2) The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural
resources;

(g) a building site or construction or installation project which exists for more than six
months;

(h) the provision of supervisory activities for more than three months on a building
site or construction or installation project; and

(i) installation or the provision of supervisory activities in connection therewith

incidental to the sale of machinery or equipment where the charges payable for such
activities exceed 10 per cent of the free on board sale price of the machinery or
equipment.

(3) Notwithstanding the preceding provisions of this Article, the term "permanent
establishment" shall be deemed not to include:
 (a) the use of facilities solely for the purpose of storage, display or delivery of goods
or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of
activities mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that the
overall activity of the fixed place of business resulting from this combination is of a
preparatory or auxiliary character.

(4) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a
person other than an agent of an independent status to whom paragraph (5) of this
Article applies is acting on behalf of an enterprise and has, and habitually exercises, in
a Contracting State an authority to conclude contracts on behalf of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that State in respect of
any activities which that person undertakes for the enterprise, unless the activities of such
person are limited to those mentioned in paragraph (3) of this Article which, if exercised
through a fixed place of business, would not make this fixed place of business a
permanent establishment under the provisions of that paragraph.

(5) An enterprise shall not be deemed to have a permanent establishment in a Contracting

State merely because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status, provided that such persons
are acting in the ordinary course of their business.

(6) The fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or which
carries on business in that other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent establishment of the
other.

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 Article 6
Income from immovable property

(1) Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other State.

(2) The term "immovable property" shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term shall in any
case include property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed payments
as consideration for the working of, or the right to work, mineral deposits, sources and
other natural resources; ships and aircraft shall not be regarded as immovable property.

(3) The provisions of paragraph (1) of this Article shall apply to income derived from the
direct use, letting, or use in any other form of immovable property.

(4) The provisions of paragraphs (1) and (3) of this Article shall also apply to the income
from immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.

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Article 7
Business profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State
unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much of
them as is attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3) of this Article, where an enterprise of a
Contracting State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities under the same
or similar conditions and dealing wholly independently with the enterprise of which it is a
permanent establishment.

(3) In determining the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the permanent establishment,
including a reasonable allocation of executive and general administrative expenses
incurred for the purposes of the enterprise as a whole, whether in the Contracting State in
which the permanent establishment is situated or elsewhere. However, no such deduction
shall be allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head office of
the enterprise or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents or other rights, or by way of commission, for
specific services performed or for management, or except in the case of a banking
enterprise, by way of interest on moneys lent to the permanent establishment. Likewise,
no account shall be taken, in the determination of the profits of a permanent
establishment, of amounts charged (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return for the use of
patents or other rights, or by way of commission for specific services performed or for
management, or except in the case of a banking enterprise, by way of interest on moneys
lent to the head office of the enterprise or any of its other offices.

(4) No profits shall be attributed to a permanent establishment by reason of the mere

purchase by that permanent establishment of goods or merchandise for the enterprise.

(5) Where profits include items of income or capital gains which are dealt with separately
in other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.

(6) Insofar as it has been customary in a Contracting State to determine according to its
law the profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph (2) shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance with the principles
contained in this Article.

(7) For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.

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Article 8
Shipping and air transport

(1) Profits derived by a resident of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.

(2) For the purposes of this Article, profits from the operation of ships or aircraft in
international traffic include:

(a) income from the rental on a bareboat basis of ships or aircraft; and
 (b) profits from the use, maintenance or rental of containers (including trailers and
related equipment for the transport of containers) used for the transport of goods or
merchandise;

where such rental or such use, maintenance or rental, as the case may be, is incidental to
the operation of ships or aircraft in international traffic.

(3) Where profits within paragraphs (1) or (2) of this Article are derived by a resident of a
Contracting State from participation in a pool, a joint business, or an international
operating agency, the profits attributable to that resident shall be taxable only in the
Contracting State of which he is a resident.

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Article 9
Associated enterprises

(1) Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the

management, control or capital of an enterprise of the other Contracting State; or

(b) the same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State;

and in either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, may be included by a Contracting State in the profits of
that enterprise and taxed accordingly.

(2) Where a Contracting State includes in the profits of an enterprise of that State and
taxes accordingly profits on which an enterprise of the other Contracting State has
been charged to tax in that other State and the profits so included are profits which would
have accrued to the enterprise of the first-mentioned State if the conditions made between
the two enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the amount of
the tax charged therein on those profits. In determining such adjustment, due regard shall
be had to the other provisions of this Convention and the competent authorities of the
Contracting States shall if necessary consult each other.

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 Article 10
Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident

of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that State, but if
the recipient is the beneficial owner of the dividends and is subject to tax in respect of the
dividends in that other Contracting State the tax so charged shall not exceed:

(a) 7.5 per cent of the gross amount of the dividends if the beneficial owner is a
company which controls, directly or indirectly, at least 10 per cent of the voting
power in the company paying the dividends;

(b) 15 per cent of the gross amount of the dividends in all other cases.

(3) The term "dividends" as used in this Article means income from shares, or other
rights, not being debt-claims, participating in profits, as well as income from other
corporate rights assimilated to income from shares by the taxation laws of the State of
which the company making the distribution is a resident and also includes any other item
which, under the laws of the Contracting State of which the company paying the dividend
is a resident, is treated as a dividend or distribution of a company.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14 of this
Convention, as the case may be, shall apply.

(5) Where a company which is a resident of a Contracting State derives profits or income
from the other Contracting State, that other State may not impose any tax on the
dividends paid by the company, except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated in that
other State, nor subject the company's undistributed profits to a tax on undistributed
profits, even if the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in that other State.

(6) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
dividends is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those dividends.
(7) The provisions of this Article shall not apply if the right giving rise to the dividends
was created or assigned mainly for the purpose of taking advantage of this Article.

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Article 11
Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises
and according to the laws of that State, but if the recipient is the beneficial owner of the
interest and is subject to tax in respect of the interest in that other Contracting State the
tax so charged shall not exceed 12.5 per cent of the gross amount of the interest.

(3) The term "interest" as used in this Article means income from debt-claims of every
kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtor's profits, and in particular, income from government securities
and income from bonds or debentures. The term "interest" shall not include any item
which is treated as a distribution under the provisions of Article 10 of this Convention.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the interest, being a resident of a Contracting State, carries on
business in the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14 of this Convention, as the case may
be, shall apply.

(5) Interest shall be deemed to arise in a Contracting State when the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base, then such interest shall be deemed
to arise in the State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the interest paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount of interest. In such case, the excess part of
the payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.
(7) Any provision in the laws of either Contracting State relating only to interest paid to a
non-resident company shall not operate so as to require such interest paid to a company
which is a resident of the other Contracting State to be treated as a distribution or
dividend by the company paying such interest. The preceding sentence shall not apply to
interest paid to a company which is a resident of one of the Contracting States in which
more than 50 per cent of the voting power is controlled, directly or indirectly, by a person
or persons who are residents of the other Contracting State.

(8) The relief from tax provided for in paragraph (2) of this Article shall not apply if the
beneficial owner of the interest:

(a) is exempt from tax on that interest in the Contracting State of which he is a
resident; and

(b) sells, or contracts to sell, the debt-claim from which that interest is derived within
three months from the date on which he acquired that debt-claim.

(9) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the debt-claim
in respect of which the interest is paid to take advantage of this Article by means of that
creation or assignment.

(10) Notwithstanding the provisions of paragraph (2) of this Article, interest arising in a
Contracting State shall be exempt from tax in that State if it is derived and beneficially
owned by the Government of the other Contracting State or a local authority thereof or
any agency or instrumentality of that Government or local authority or by the
Commonwealth Development Corporation.

(11) Notwithstanding the provisions of Article 7 of this Convention and of paragraph (2)
of this Article, interest arising in Ghana which is paid to and beneficially owned by a
resident of the United Kingdom shall be exempt from tax in Ghana if it is paid in respect
of a loan made, guaranteed or insured, or any other debt-claim or credit guaranteed or
insured by the United Kingdom Export Credits Guarantee Department.

(12) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
interest is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of that interest.

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Article 12
Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
(2) However, such royalties may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the beneficial owner of
the royalties and is subject to tax in respect of the royalties in that other Contracting State
the tax so charged shall not exceed 12.5 per cent of the gross amount of the royalties.

(3) The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or
scientific work (but not including cinematograph films, and films or tapes for radio or
television broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for information (know-how) concerning industrial, commercial or scientific
experience.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, through a permanent establishment situated
therein, or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties are paid is
effectively connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14 of this Convention, as the case may be, shall apply.

(5) Royalties shall be deemed to arise in a Contracting State where the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or fixed base in connection with which
the obligation to pay the royalties was incurred, and such royalties are borne by such
permanent establishment or fixed base, then such royalties shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the royalties paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.

(7) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the right or
property in respect of which the royalties are paid to take advantage of this Article by
means of that creation or assignment.

(8) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
royalties is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those royalties.

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 Article 13
Capital gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable
property referred to in Article 6 of this Convention and situated in the other Contracting
State may be taxed in that other State.

(2) Gains derived by a resident of a Contracting State from the alienation of:

(a) shares deriving their value or the greater part of their value directly or indirectly
from immovable property situated in the other Contracting State, or

(b) an interest in a partnership or trust the assets of which consist principally of

immovable property situated in the other Contracting State, or of shares referred to in
sub-paragraph (a) above,

may be taxed in that other State.

(3) Gains from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.

(4) Gains derived by a resident of a Contracting State from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to the operation of
such ships or aircraft, shall be taxable only in that State.

(5) Gains from the alienation of any property other than that referred to in paragraphs (1),
(2), (3) and (4) of this Article shall be taxable only in the Contracting State of which the
alienator is a resident.

(6) The provisions of paragraph (5) of this Article shall not affect the right of a
Contracting State to levy according to its law a tax on capital gains from the alienation of
any property derived by an individual who is a resident of the other Contracting State and
has been a resident of the first-mentioned Contracting State at any time during the five
years immediately preceding the alienation of the property.

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Article 14
Independent personal services

(1) Subject to the provisions of Article 17 of this Convention income derived by a

resident of a Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that State unless he has a fixed base
regularly available to him in the other Contracting State for the purpose of performing his
activities. If he has such a fixed base, the income may be taxed in the other State but only
so much of it as is attributable to that fixed base.

(2) The term "professional services" includes especially independent scientific, literary,
artistic, educational or teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.

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Article 15
Dependent personal services

(1) Subject to the provisions of Articles 16, 19, 20, 21 and 22 of this Convention, salaries,
wages and other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived
by a resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days within any period of twelve months; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Article, remuneration derived in

respect of an employment exercised aboard a ship or aircraft operated in international
traffic may be taxed in the Contracting State of which the enterprise operating the ship or
aircraft is a resident.

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Article 16
Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a resident
of the other Contracting State may be taxed in that other State.
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Article 17
Management and technical fees

(1) Management fees arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.

(2) However, such management fees may also be taxed in the Contracting State in which
they arise, and according to the law of that State, but if the recipient is the beneficial
owner of the management fees the tax so charged shall not exceed 10 per cent of the
gross amount of the management fees.

(3) The term "management fees" as used in this Article means payments of any kind to
any person, other than to an employee of the person making the payments, in
consideration for any services of a managerial, technical or consultancy nature.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the management fees, being a resident of a Contracting State, carries
on business in the other Contracting State in which the management fees arise through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the obligation in respect of
which the management fees are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the
case may be, shall apply.

(5) A resident of one of the Contracting States who derives and beneficially owns
management fees which arise in the other Contracting State may elect, for any year of
assessment or financial year, that the tax chargeable in respect of those management fees
in the Contracting State in which they arise shall be calculated as if he had a permanent
establishment or fixed base in the last-mentioned Contracting State and as if those
management fees were taxable in accordance with Article 7 or Article 14, as the case may
be, as profits attributable to that permanent establishment or fixed base.

(6) Management fees shall be deemed to arise in a Contracting State when the payer is
that State itself, a political subdivision, a local authority or a resident of that State.
Where, however, the person paying the management fees, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment or a fixed
base in connection with which the obligation to pay the management fees was incurred,
and where such management fees are borne by such permanent establishment or fixed
base then such management fees shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.

(7) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the management fees paid
exceeds, for whatever reason, the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the law of each Contracting State, due regard
being had to the other provisions of this Convention.

(8) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the rights in
respect of which the management fees are paid to take advantage of this Article by means
of that creation or assignment.

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Article 18
Artistes and athletes

(1) Notwithstanding the provisions of Article 14 and Article 15 of this Convention,

income derived by a resident of a Contracting State as an entertainer, such as a theatre,
motion picture, radio or television artiste, or a musician, or as an athlete, from his
personal activities as such exercised in the other Contracting State, may be taxed in that
other State.

(2) Where income in respect of personal activities exercised by an entertainer or an

athlete in his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15
of this Convention, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.

(3) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, income
derived from activities as defined in paragraph (1) performed under a cultural agreement
or arrangement between the Contracting States shall be exempt from tax in the
Contracting State in which those activities are exercised.

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Article 19
Pensions

(1) Subject to the provisions of paragraph (2) of Article 20 of this Convention, pensions
and other similar remuneration paid in consideration of past employment to a resident of
a Contracting State who is subject to tax in that State in respect thereof and any annuity
paid to such a resident shall be taxable only in that State.

(2) The term "annuity" means a stated sum payable periodically at stated times during life
or during a specified or ascertainable period of time under an obligation to make the
payments in return for adequate and full consideration in money or money's worth.
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Article 20
Government service
(1)
(a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.
(b) Notwithstanding the provisions of sub-paragraph (1)(a) of this Article, such
remuneration shall be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering
the services.

(2)
(a) Any pension paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.

(b) Notwithstanding the provisions of sub-paragraph (2)(a) of this Article, such

pension shall be taxable only in the other Contracting State if the individual is a
resident of and a national of that State.

(3) The provisions of Articles 15, 16 and 19 of this Convention shall apply to
remuneration and pensions in respect of services rendered in connection with a business
carried on by a Contracting State or a political subdivision or a local authority thereof.

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Article 21
Students

Payments which a student or business apprentice who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who is
present in the first-mentioned State solely for the purpose of his education or training
receives for the purpose of his maintenance, education or training shall not be taxed in
that first-mentioned State, provided that such payments arise from sources outside that
State.

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 Article 22
Teachers

(1) A professor or teacher who visits one of the Contracting States for the purpose of
teaching or engaging in research at a university or any other recognised educational
institution in that Contracting State and who, immediately before that visit, was a resident
of the other Contracting State shall be exempted from tax by the first-mentioned
Contracting State in respect of any remuneration received for such teaching or research
for a period not exceeding two years from the date of his first arrival in that State for such
purpose.

(2) The exemption provided in this Article may be applied by the Contracting State in
which the teaching or research is performed either to the current payments to such
professor or teacher in anticipation of fulfilment of the requirements of paragraph (1) or
by way of withholding and refund, but in both cases exemption shall be conditional upon
fulfilment of the requirements of paragraph (1).

(3) This Article shall apply to income from research only if such research is undertaken
by the professor or teacher in the public interest and not primarily for the benefit of some
other private person or persons.

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Article 23
Other income

Items of income beneficially owned by a resident of a Contracting State, wherever

arising, which are not dealt with in the foregoing Articles of this Convention, other
than income paid out of trusts or the estates of deceased persons in the course of
administration, shall be taxable only in that State provided that the beneficial owner is
subject to tax in respect of those items of income in that State.

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Article 24
Limitation of relief

(1) Where under any provision of this Convention any income is relieved from tax in a
Contracting State and, under the law in force in the other Contracting State, a person, in
respect of that income, is subject to tax by reference to the amount thereof which is
remitted to or received in that other Contracting State and not by reference to the full
amount thereof, then the relief to be allowed under this Convention in the first-mentioned
Contracting State shall apply only to so much of the income as is taxed in the other
Contracting State.

(2) Where under Article 13 of this Convention gains may only be taxed in one of the
Contracting States, and under the law in force in that State a person is subject to tax in
respect of those gains by reference to the amount thereof which is received in that State
and not by reference to the full amount thereof, that Article shall apply only to so much
of the gains as are taxed in that State.

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Article 25
Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance
as a credit against United Kingdom tax of tax payable in a territory outside the United
Kingdom (which shall not affect the general principle hereof):

(a) Ghana tax payable under the laws of Ghana and in accordance with this
Convention, whether directly or by deduction, on profits, income or chargeable gains
from sources within Ghana (excluding in the case of a dividend, tax payable in respect
of the profits out of which the dividend is paid) shall be allowed as a credit against
any United Kingdom tax computed by reference to the same profits, income or
chargeable gains by reference to which the Ghana tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Ghana to a

company which is a resident of the United Kingdom and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any Ghana tax for which credit may
be allowed under the provisions of sub-paragraph (a) of this paragraph) the Ghana tax
payable by the company in respect of the profits out of which such dividend is paid.

(2) Subject to the provisions of the law of Ghana regarding the allowance as a credit
against Ghana tax of tax payable in a territory outside Ghana (which shall not affect the
general principle hereof):

(a) United Kingdom tax payable under the laws of the United Kingdom and in
accordance with this Convention, whether directly or by deduction, on profits, income
or chargeable gains from sources within the United Kingdom (excluding in the case of
a dividend, tax payable in respect of the profits out of which the dividend is paid)
shall be allowed as a credit against any Ghana tax computed by reference to the same
profits, income or chargeable gains by reference to which United Kingdom tax is
computed.

(b) In the case of a dividend paid by a company which is a resident of the United
Kingdom to a company which is resident in Ghana and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any United Kingdom tax for which
credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the
United Kingdom tax payable by the company in respect of the profits out of which
such dividend is paid. In any case the amount of tax credit to be granted under this
paragraph shall not exceed the proportion of the Ghana tax which such profits, income
 or chargeable gains bear to the entire profits, income or chargeable gains chargeable
to Ghana tax.

(3) For the purposes of paragraphs (1) and (2) of this Article, profits and income owned
by a resident of a Contracting State which may be taxed in the other Contracting State in
accordance with this Convention shall be deemed to arise from sources in that other
Contracting State.

(4) For the purpose of paragraph (1) of this Article, the term "Ghana tax payable" shall be
deemed to include any amount which would have been payable as Ghana tax for any year
but for an exemption or reduction of tax granted for that year on any part thereof under
any of the following provisions of Ghana law:

(a) Sections 12 and 13 of the Investment Code 1985 (PNDCL. 116) but in the case of
Section 12 excluding the exemption or reduction of tax granted to any enterprise
solely in respect of activities specified in Part A. Manufacturing Industries: (a)
manufacturing for export; Sections 3(1)(f), 3(1)(tt), 4A and 4B of the Income Tax
Decree 1975 (SMCD5.); Sections 23 and 26 of the Minerals and Mining Law 1986
(PNDCL. 153), so far as they were in force on, and have not been modified since, the
date of signature of this Convention, or have been modified only in minor respects so
as not to affect their general character; or

(b) any other provision which may subsequently be made granting an exemption or
reduction of tax which is agreed by the competent authorities of the Contracting
States to be of a substantially similar character, if it has not been modified thereafter
or has been modified only in minor respects so as not to affect its general character.

Provided that relief from United Kingdom tax shall not be given by virtue of this
paragraph in respect of income from any source if the income arises in a period starting
more than ten years after the exemption from, or reduction of, Ghana tax was first
granted in respect of that source.

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Article 26
Non-discrimination

(1) Nationals of a Contracting State shall not be subjected in the other Contracting State
to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that other
State in the same circumstances are or may be subjected.

(2) The taxation on a permanent establishment which an enterprise of a Contracting State

has in the other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the same activities.

(3) Except where the provisions of paragraph (1) of Article 9, paragraph (6) of Article 11,
paragraph (6) of Article 12 or paragraph (7) of Article 17 of this Convention apply, and
subject to the provisions of paragraph (7) of Article 11, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a resident
of the first-mentioned State.

(4) Enterprises of a Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other Contracting State,
shall not be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned State are or may be
subjected.

(5) Nothing contained in this Article shall be construed as obliging either Contracting
State to grant to individuals not resident in that State any of the personal allowances,
reliefs and reductions for tax purposes which are granted to individuals so resident or to
its nationals.

(6) The provisions of this Article shall apply to the taxes which are the subject of this
Convention.

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Article 27
Mutual agreement procedure

(1) Where a resident of a Contracting State considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in accordance with the
provisions of this Convention, he may, irrespective of the remedies provided by the
domestic law of those States, present his case to the competent authority of the
Contracting State of which he is a resident.

(2) The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Convention.

(3) The competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or application
of the Convention.

(4) The competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs.

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 Article 28
Exchange of information

(1) The competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Convention or of the domestic laws
of the Contracting States concerning taxes covered by this Convention insofar as the
taxation thereunder is not contrary to this Convention, in particular to prevent fraud and
to facilitate the administration of statutory provisions against legal avoidance. Any
information received by a Contracting State shall be treated as secret and shall be
disclosed only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes covered by this Convention. Such
persons or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial decisions.

(2) In no case shall the provisions of paragraph (1) of this Article be construed so as to
impose on the competent authority of either Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative
practice prevailing in either Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal
course of the administration of either Contracting State;

(c) to supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information the disclosure of
which would be contrary to public policy.

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Article 29
Members of diplomatic or permanent missions and consular posts

Nothing in this Convention shall affect any fiscal privileges accorded to members of
diplomatic or permanent missions or consular posts under the general rules of
international law or under the provisions of special agreements.

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Article 30
Entry into force

(1) Each of the Contracting States shall notify to the other through diplomatic channels
the completion of the procedures required by its law for the bringing into force of this
Convention. This Convention shall enter into force on the date of the later of these
notifications and shall thereupon have effect:
 (a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the Convention enters into force;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the Convention
enters into force;

(b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax on or after 1st January in the calendar year next following that
in which the Convention enters into force.

(2) The Convention between the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of the Republic of Ghana for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
and Capital Gains signed at London on 29th November 1977 shall be superseded by this
Convention and the Arrangement between the Government of the United Kingdom of
Great Britain and Northern Ireland and the Government of the Gold Coast for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income which was made in 1947 shall terminate and cease to have effect in
respect of the taxes to which this Convention applies in accordance with the provisions of
paragraph (1) of this Article.

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Article 31
Termination

(1) This Convention shall remain in force until termination by one of the Contracting
States. Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of any
calendar year. In such event, the Convention shall cease to have effect:

(a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the notice is given;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the notice is given;
 (b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax for the year of assessment beginning on or after 1st January in
the calendar year next following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto by their respective

Governments, have signed this Convention.

Done in duplicate at Accra, Ghana this 20th day of January 1993.

For the Government of the For the Government of

United Kingdom of the Republic of Ghana:
Great Britain and
Northern Ireland:

Chalker of Wallasey K. Botchwey

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13 (2008) Nr. 1

T R A C TAT E N B L A D
VAN HET

KONINKRIJK DER NEDERLANDEN

JAARGANG 2008 Nr. 109

A. TITEL

Verdrag tussen het Koninkrijk der Nederlanden en de Republiek

Ghana tot het vermijden van dubbele belasting en het voorkomen van
het ontgaan van belastingen met betrekking tot belastingen naar het
inkomen en naar vermogenswinsten;
(met Protocol)
Accra, 10 maart 2008

B. TEKST

Convention between the Kingdom of the Netherlands and the

Republic of Ghana for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on
capital gains
The Government of the Kingdom of the Netherlands
and
The Government of the Republic of Ghana,
Desiring that a convention for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and on
capital gains be concluded by both States,

Have agreed as follows:

109 2

CHAPTER I
SCOPE OF THE CONVENTION

Article 1
Persons covered
This Convention shall apply to persons who are residents of one or
both of the Contracting States.

Article 2
Taxes covered
1. This Convention shall apply to taxes on income and on capital
gains imposed on behalf of a Contracting State or of its political subdi-
visions or local authorities, irrespective of the manner in which they are
levied.
2. There shall be regarded as taxes on income and on capital gains all
taxes imposed on total income, and on total capital gains or on elements
of income, including taxes on gains from the alienation of movable or
immovable property, taxes on the total amounts of wages or salaries paid
by enterprises.
3. The existing taxes to which the Convention shall apply are in par-
ticular:
a) in the Netherlands:
de inkomstenbelasting (income tax);
de loonbelasting (wages tax);
de vennootschapsbelasting (company tax) including the Go-
vernment share in the net profits of the exploitation of natural re-
sources levied pursuant to the Mijnbouwwet (the Mining Act);
de dividendbelasting (dividend tax);
(hereinafter referred to as Netherlands tax);
b) in the Republic of Ghana:
the income tax; and
the capital gains tax;
(hereinafter referred to as Ghana tax).
4. The Convention shall apply also to any identical or substantially
similar taxes that are imposed after the date of signature of the Conven-
tion in addition to, or in place of, the existing taxes. The competent au-
thorities of the Contracting States shall notify each other of any signifi-
cant changes that have been made in their respective taxation laws.
 3 109
CHAPTER II
DEFINITIONS

Article 3
General definitions
1. For the purposes of this Convention, unless the context otherwise
requires:
a) the terms a Contracting State and the other Contracting State
mean the Kingdom of the Netherlands (the Netherlands) or Ghana, as
the context requires;
b) the term the Netherlands means the part of the Kingdom of the
Netherlands that is situated in Europe, including its territorial sea, and
any area beyond the territorial sea within which the Netherlands, in
accordance with international law, exercises jurisdiction or sovereign
rights;
c) the term Ghana means the territory of the Republic of Ghana
including the territorial sea and any area outside the territorial sea within
which, in accordance with international law, the Republic of Ghana has
sovereign rights for the purpose of exploring and exploiting the natural
resources of the seabed and its subsoil and the superjacent waters;
d) the term person includes an individual, a company and any other
body of persons;
e) the term company means any body corporate or any entity that
is treated as a body corporate for tax purposes;
f) the terms enterprise of a Contracting State and enterprise of the
other Contracting State mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
g) the term international traffic means any transport by a ship or air-
craft operated by an enterprise of a Contracting State, except when the
ship or aircraft is operated solely between places in the other Contrac-
ting State;
h) the term competent authority means:
(i) in the Netherlands, the Minister of Finance or his authorised
representative;
(ii) in the case of Ghana, the Commissioner of the Internal Revenue
or his authorised representative.
i) the term national means:
any individual possessing the nationality of a Contracting State;
any legal person, partnership or association deriving its status
as such from the laws in force in a Contracting State;
j) the term pension fund means any person that:
(i) is established under the laws of a Contracting State;
109 4

(ii) is operated primarily to administer or provide pensions, retire-

ment benefits or other similar remuneration or earn income for
the benefit of such persons; and
(iii) is exempt from taxes on income in that Contracting State with
respect to itself and its income derived from activities described
in clause ii).
2. As regards the application of the Convention at any time by a Con-
tracting State, any term not defined therein shall, unless the context other-
wise requires, have the meaning that it has at that time under the law of
that State for the purposes of the taxes to which the Convention applies,
any meaning under the applicable tax laws of that State prevai-
ling over a meaning given to the term under other laws of that State.
Article 4
Resident
1. For the purposes of this Convention, the term resident of a Con-
tracting State means any person who, under the laws of that State, is
liable to tax therein by reason of his domicile, residence, place of ma-
nagement or any other criterion of a similar nature. This term, however,
does not include any person who is liable to tax in that State in respect
only of income and capital gains from sources in that State.
2. The term resident of a Contracting State also includes that State,
any political subdivision or local authority thereof and a pension fund
established and regulated under the laws of that Contracting State.
3. Where by reason of the provisions of paragraph 1 an individual is
a resident of both Contracting States, then his status shall be determined
as follows:
a) he shall be deemed to be a resident only of the State in which he
has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a resident only
of the State with which his personal and economic relations are closer
(centre of vital interests);
b) if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident only of the State in which he
has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he
shall be deemed to be a resident only of the State of which he is a
national;
d) if he is a national of both States or of neither of them, the compe-
tent authorities of the Contracting States shall settle the question by
mutual agreement.
 5 109
4. Where by reason of the provisions of paragraph 1 a person other
than an individual is a resident of both Contracting States, then it shall
be deemed to be a resident only of the State in which its place of effec-
tive management is situated.
Article 5
Permanent establishment
1. For the purposes of this Convention, the term permanent esta-
blishment means a fixed place of business through which the business
of an enterprise is wholly or partly carried on.
2. The term permanent establishment includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop, and
f) a mine, an oil or gas well, a quarry or any other place of extrac-
tion of natural resources.
3. The term permanent establishment likewise encompasses:
a) a building site, a construction, assembly or installation project or
supervisory activities in connection therewith, but only where such site,
project or activities continue for a period of more than nine months;
b) the provision of supervisory activities unconnected with a building
site, a construction, assembly or installation project referred to in sub-
paragraph a) of this paragraph, but only where such activities continue
for more than nine months.
4. Notwithstanding the preceding provisions of this Article, the term
permanent establishment shall be deemed not to include:
a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise or of collecting information, for the
enterprise;
e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
f) the maintenance of a fixed place of business solely for any combi-
nation of activities mentioned in subparagraphs a) to e), provided that
109 6

the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a per-
son other than an agent of an independent status to whom paragraph 6
applies is acting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude contracts in the
name of the enterprise, that enterprise shall be deemed to have a perma-
nent establishment in that State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 4 which, if exercised
through a fixed place of business, would not make this fixed place of
business a permanent establishment under the provisions of that para-
graph.
6. An enterprise shall not be deemed to have a permanent establish-
ment in a Contracting State merely because it carries on business in that
State through a broker, general commission agent or any other agent of
an independent status, provided that such persons are acting in the ordi-
nary course of their business.
7. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State
(whether through a permanent establishment or otherwise), shall not of
itself constitute either company a permanent establishment of the other.

CHAPTER III
TAXATION OF INCOME

Article 6
Income from immovable property
1. Income derived by a resident of a Contracting State from immo-
vable property (including income from agriculture or forestry) situated
in the other Contracting State may be taxed in that other State.
2. The term immovable property shall have the meaning which it
has under the law of the Contracting State in which the property in ques-
tion is situated. The term shall in any case include property accessory to
immovable property, livestock and equipment used in agriculture and
forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or
fixed payments as consideration for the working of, or the right to work,
 7 109
mineral deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from
the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income from
immovable property used for the performance of independent personal
services.
Article 7
Business profits
1. The profits of an enterprise of a Contracting State shall be taxable
only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If
the enterprise carries on business as aforesaid, the profits of the enter-
prise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in each
Contracting State be attributed to that permanent establishment the pro-
fits which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise
of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall
be allowed as deductions expenses which are reasonably incurred for the
purposes of the permanent establishment, including executive and ge-
neral administrative expenses so incurred, whether in the State in which
the permanent establishment is situated or elsewhere.
However, no such deduction shall be allowed in respect of amounts,
if any, paid (otherwise than towards reimbursement of actual expenses)
by the permanent establishment to the head office of the enterprise or
any of its other offices, by way of royalties, fees or other similar pay-
ments in return for the use of patents or other rights, or by way of com-
mission, for specific services performed or for management, or except in
the case of a banking enterprise, by way of interest on moneys lent to
the permanent establishment.
Likewise, no account shall be taken, in the determination of the pro-
fits of a permanent establishment, for amounts charged (otherwise than
towards reimbursement of actual expenses) by the permanent establish-
109 8

ment to the head office of the enterprise or any of its other offices, by
way of royalties, fees or other similar payments in return for the use of
patents or other rights, or by way of commission for specific services
performed or for management, or except in the case of a banking enter-
prise, by way of interest on moneys lent to the head office of the enter-
prise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to deter-
mine the profits to be attributed to a permanent establishment on the
basis of an apportionment of the total profits of the enterprise to its vari-
ous parts, nothing in paragraph 2 shall preclude that Contracting State
from determining the profits to be taxed by such an apportionment as
may be customary; the method of apportionment adopted shall, however,
be such that the result shall be in accordance with the principles con-
tained in this Article.
5. No profits shall be attributed to a permanent establishment by rea-
son of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be
attributed to the permanent establishment shall be determined by the
same method year by year unless there is good and sufficient reason to
the contrary.
7. Where profits include items of income which are dealt with sepa-
rately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.

Article 8
Shipping and air transport
1. Profits from the operation of ships or aircraft in international traf-
fic shall be taxable only in the Contracting State in which the enterprise
is situated. Those profits shall include profits derived by the enterprise
from the use, maintenance or rental of containers used for the transport
of goods or merchandise in international traffic where such use, mainte-
nance or rental as the case may be, are incidental to the operation of
ships or aircraft in international traffic.
2. The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating
agency.
 9 109
Article 9
Associated enterprises
1. Where
a) an enterprise of a Contracting State participates directly or indi-
rectly in the management, control or capital of an enterprise of the other
Contracting State, or
b) the same persons participate directly or indirectly in the manage-
ment, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ from
those which would be made between independent enterprises, then any
profits which would, but for those conditions, have accrued to one of the
enterprises, but, by reason of those conditions, have not so accrued, may
be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise
of that State and taxes accordingly profits on which an enterprise of
the other Contracting State has been charged to tax in that other State
and the profits so included are profits which would have accrued to the
enterprise of the first mentioned State if the conditions made between
the two enterprises had been those which would have been made be-
tween independent enterprises, then that other State shall make an appro-
priate adjustment to the amount of the tax charged therein on those pro-
fits. In determining such adjustment, due regard shall be had to the other
provisions of this Convention and the competent authorities of the Con-
tracting States shall if necessary consult each other.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting
State to a resident of the other Contracting State may be taxed in that
other State.
2. However, such dividends may also be taxed in the Contracting
State of which the company paying the dividends is a resident and
according to the laws of that State, but if the beneficial owner of the
dividends is a resident of the other Contracting State, the tax so charged
shall not exceed:
a) 5 per cent of the gross amount of the dividends if the beneficial
owner is a company (other than a partnership) which holds directly at
least 10 per cent of the capital of the company paying the dividends;
b) 10 per cent of the gross amount of the dividends in all other cases.
109 10

3. The competent authorities of the Contracting States shall by mu-

tual agreement settle the mode of application of paragraph 2.
4. The provisions of paragraph 2 shall not affect the taxation of the
company in respect of the profits out of which the dividends are paid.
5. The term dividends as used in this Article means income from
shares, jouissance shares or jouissance rights, mining shares, foun-
ders shares or other rights, not being debt-claims, participating in pro-
fits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the
State of which the company making the distribution is a resident and
also includes any other item which, under the laws of the Contracting
State of which the company paying the dividend is a resident, is treated
as a dividend or distribution of dividends of a company.
6. The provisions of paragraphs 1 and 2 shall not apply if the benefi-
cial owner of the dividends, being a resident of a Contracting State, car-
ries on business in the other Contracting State, of which the company
paying the dividends is a resident, through a permanent establishment
situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the holding in respect of
which the dividends are paid is effectively connected with such perma-
nent establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
7. Where a company which is a resident of a Contracting State
derives profits or income from the other Contracting State, that other
State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State
or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base
situated in that other State, nor subject the companys undistributed pro-
fits to a tax on the companys undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or
income arising in such other State.

Article 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State
in which it arises and according to the laws of that State, but if the be-
 11 109
neficial owner of the interest is a resident of the other Contracting State,
the tax so charged shall not exceed 8 per cent of the gross amount of the
interest.
3. Notwithstanding the provisions of paragraph 2, interest referred to
in paragraph 1 shall be exempt from tax in the Contracting State where
the interest arises if the recipient is the beneficial owner of the interest
and if:
a) the payer or the recipient of the interest is the Government of a
Contracting State itself, a public body, a political subdivision or local
authority thereof or the central bank of a Contracting State; or
b) the interest is paid in connection with a loan granted, approved,
guaranteed or insured by the Government of a Contracting State, the
central bank of a Contracting State, or any agency or instrumentality
(including a financial institution) owned or controlled by the Govern-
ment of a Contracting State.
4. Notwithstanding the provisions of paragraph 2, interest as referred
to in paragraph 1 may be taxed only in the Contracting State of which
the recipient is a resident if the recipient is the beneficial owner of the
interest and the interest is paid in connection with:
a) a loan granted by a bank or any other financial institution (inclu-
ding an insurance company) or a pension fund;
b) the sale on credit of any industrial, commercial or scientific equip-
ment;
c) the sale on credit of any goods by one enterprise to another enter-
prise.
5. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraphs 2, 3 and 4.
6. The term interest as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and
whether or not carrying a right to participate in the debtors profits, and
in particular, income from government securities and income from bonds
or debentures, including premiums and prizes attaching to such securi-
ties, bonds or debentures. Penalty charges for late payment shall not be
regarded as interest for the purpose of this Article.
7. The provisions of paragraphs 1 and 2 shall not apply if the be-
neficial owner of the interest, being a resident of a Contracting State,
carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed base situ-
ated therein, and the debt-claim in respect of which the interest is paid
109 12

is effectively connected with such permanent establishment or fixed

base. In such case the provisions of Article 7 or Article 14 as the case
may be, shall apply.
8. Interest shall be deemed to arise in a Contracting State when the
payer is that State itself, a political subdivision, a local authority or a
resident of that State. Where, however, the person paying the interest,
whether he is a resident of a Contracting State or not, has in a Contrac-
ting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and
such interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which the per-
manent establishment or fixed base is situated.
9. Where, by reason of a special relationship between the payer and
the beneficial owner or between both of them and some other person,
the amount of the interest, having regard to the debt-claim for which it
is paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to
the other provisions of this Convention.

Article 12
Royalties and technical service fees
1. Royalties or technical service fees arising in a Contracting State
and paid to a resident of the other Contracting Statemay be taxed in that
other State.
2. However, such royalties or technical service fees may also be taxed
in the Contracting State in which they arise and according to the laws
of that State, but if the beneficial owner of the royalties or technical
service fees is a resident of the other Contracting State, the tax so
charged shall not exceed 8 per cent of the gross amount of the royalties
or technical service fees.
3. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraph 2.
4. The term royalties as used in this Article means payments of any
kind received as a consideration for the use of, or the right to use, any
copyright of literary, artistic or scientific work including cinematograph
films or films or tapes used for radio or television broadcasting, any pa-
 13 109
tent, trade mark, design or model, plan, secret formula or process, or for
the use of, or the right to use information concerning industrial, com-
mercial or scientific experience.
5. The term technical service fees as used in this Article means
payments of any kind to any person, other than to an employee of the
person making the payments, in consideration for any services of a
managerial, technical or consultancy nature. Provided that the term
technical service fees shall not include any payments in consideration
for supervisory activities in connection with a building site or construc-
tion, assembly or installation project or for supervisory activities in con-
nection with installation incidental to the sale of machinery or parts
thereof and income referred to in paragraph 1 of Article 14.
6. The provisions of paragraphs 1 and 2 shall not apply if the be-
neficial owner of the royalties or technical service fees, being a resident
of a Contracting State, carries on business in the other Contracting State
in which the royalties or technical service fees arise, through a perma-
nent establishment situated therein, or performs in that other State inde-
pendent personal services from a fixed base situated therein, and the
right or property in respect of which the royalties or technical service
fees are paid is effectively connected with such permanent establishment
or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
7. Royalties or technical service fees shall be deemed to arise in a
Contracting State when the payer is that State itself, a political subdivi-
sion, a local authority or a resident of that State. Where, however, the
person paying the royalties or technical service fees, whether he is a resi-
dent of a Contracting State or not, has in a Contracting State a perma-
nent establishment or a fixed base in connection with which the liability
to pay the royalties or technical service fees was incurred, and such roy-
alties or technical service fees are borne by such permanent establish-
ment or fixed base, then such royalties or technical service fees shall be
deemed to arise in the State in which the permanent establishment or
fixed base is situated.
8. Where, by reason of a special relationship between the payer and
the beneficial owner or between both of them and some other person,
the amount of the royalties or technical service fees, having regard to
the use, right or information for which they are paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention.
109 14

Article 13
Capital gains
1. Gains derived by a resident of a Contracting State from the aliena-
tion of immovable property referred to in Article 6 and situated in the
other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the
business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or of movable pro-
perty pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing inde-
pendent personal services, including such gains from the alienation of
such a permanent establishment (alone or with the whole enterprise) or
of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft, shall be
taxable only in that State.
4. Gains derived by a resident of a Contracting State from the aliena-
tion of shares in a company deriving more than 90 per cent of their
value, directly or indirectly, from immovable property situated in the
other Contracting State (other than shares listed on a stock exchange of
either Contracting State) may be taxed in that other State provided that
the resident owns, directly or indirectly, a minimum of 5 per cent of the
issued shares.
5. Gains from the alienation of any property other than that referred
to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting
State of which the alienator is a resident.
6. Notwithstanding the provisions of paragraph 5, the Netherlands
may, in accordance with its own laws, including the interpretation of the
term alienation, levy tax on gains derived by an individual who is a
resident of Ghana from the alienation of shares in, jouissance rights or
debt-claims on a company whose capital is divided into shares and
which, under the laws of the Netherlands, is a resident of the Nether-
lands, and from the alienation of part of the rights attached to the said
shares, jouissance rights or debt-claims, if that individual either
alone or with his or her spouse or one of their relations by blood or
marriage in the direct line directly or indirectly holds at least 5 per cent
of the issued capital of a particular class of shares in that company. This
provision shall apply only if the individual who derives the gains has
been a resident of the Netherlands in the course of the last ten years pre-
 15 109
ceding the year in which the gains are derived and provided that, at the
time he became a resident of Ghana, the above-mentioned conditions
regarding share ownership in the said company were satisfied.
In cases where, under the domestic laws of the Netherlands, an assess-
ment has been issued to the individual in respect of the alienation of the
aforesaid shares deemed to have taken place at the time of his emigra-
tion from the Netherlands, the above shall apply only insofar as part of
the assessment is still outstanding.
7. Notwithstanding the provisions of paragraph 5, gains from the
alienation of any property within the meaning of paragraph 5 situated in
Ghana derived by an individual who has been a resident of Ghana and
who has become a resident of the Netherlands, may be taxed in Ghana
if the alienation of the property occurs within any period of five years
next following the date on which the individual ceased to be a resident
of Ghana.
Article 14
Independent personal services
1. Income derived by a resident of a Contracting State in respect of
professional services or other activities of an independent character shall
be taxable only in that State, unless:
a) he has a fixed base regularly available to him in the other Contrac-
ting State for the purpose of performing his activities; in that case, only
so much of the income as is attributable to that fixed base may be taxed
in that other Contracting State; or
b) his stay in the other Contracting State is for a period or periods
amounting to or exceeding in the aggregate of nine months in any twelve
month period commencing or ending in the fiscal year concerned; in that
case, only so much of the income as is derived from his activities per-
formed in that other Contracting State may be taxed in that other State.
2. The term professional services includes especially independent
scientific, literary, artistic, educational or teaching activities as well as
the independent activities of physicians, lawyers, engineers, architects,
dentists and accountants.
Article 15
Dependent personal services
1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, sala-
ries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting
109 16

State. If the employment is so exercised, such remuneration as is derived

therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration de-
rived by a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in the first-
mentioned State if:
a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period com-
mencing or ending in the fiscal year concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other State, and
c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remu-
neration derived by a resident of a Contracting State shall be taxable
only in that State if the remuneration is paid in respect of an employ-
ment exercised in the other Contracting State in connection with a buil-
ding site, a construction, assembly or installation project or supervisory
activities in connection therewith, for the period of nine months during
which such site, project or activities do not constitute a permanent esta-
blishment in that other State.
4. Notwithstanding the provision of paragraph 3 of this Article, remu-
neration derived by a resident of a Contracting State shall be taxable
only in that State if the remuneration is paid in respect of an employ-
ment exercised in the other Contracting State in connection with super-
visory activities unconnected with a building site, construction, assem-
bly or installation project for the period of nine months during which
such activities do not constitute a permanent establishment in that other
State.
5. Notwithstanding the preceding provisions of this Article, remu-
neration derived by a resident of a Contracting State in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic, may be taxed in the Contracting State in which the enterprise is
situated.
Article 16
Directors fees
Directors fees and other remuneration derived by a resident of a Con-
tracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed
in that other State.
 17 109
Article 17
Artistes and sportspersons
1. Notwithstanding the provisions of Articles 7, 14 and 15, income
derived by a resident of a Contracting State as an entertainer, such as a
theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an
entertainer or a sportsperson in his capacity as such accrues not to the
entertainer or sportsperson himself but to another person, that income
may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed
in the Contracting State in which the activities of the entertainer or
sportsperson are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to income
derived by a resident of a Contracting State from activities exercised in
the other Contracting State, if the visit to that other State is wholly or
mainly supported by public funds of one or both of the Contracting
States or political subdivisions or local authorities thereof, or takes place
within the framework of a cultural or sports exchange programme
between the Governments of the Contracting States. In such a case, the
income shall be taxable only in the Contracting State of which the enter-
tainer or sportsperson is a resident.
Article 18
Pensions, annuities and social security payments
1. Subject to the provisions of paragraph 2 of Article 19, pensions and
other similar remuneration paid to a resident of a Contracting State in
consideration of past employment, as well as annuities paid to a resident
of a Contracting State, shall be taxable only in that State. Any pension
and other payment paid out under the provisions of a social security sys-
tem of a Contracting State to a resident of the other Contracting State
shall be taxable only in that other State.
2. Notwithstanding the provisions of paragraph 1, a pension or other
similar remuneration, annuity, or any pension and other payment paid
out under the provisions of a social security system of a Contracting
State, may also be taxed in the Contracting State from which it is
derived, in accordance with the laws of that State:
a) insofar as the entitlement to this pension or other similar remunera-
tion or annuity in the Contracting State from which it is derived is
exempt from tax, or the contributions associated with the pension or
109 18

other similar remuneration or annuity made to the pension scheme or

insurance company were deducted in the past when calculating taxable
income in that State or qualified for other tax relief in that State; and
b) insofar as this pension or other similar remuneration or annuity or
this pension or other payment paid out under the provisions of a social
security system of a Contracting State is in the Contracting State of
which the recipient thereof is a resident not taxed at the generally appli-
cable rate for income derived from dependent personal services, or less
than 90 per cent of the gross amount of the pension or other similar
remuneration or annuity is taxed; and
c) if the total gross amount of the pensions and other similar remu-
neration and annuities, and any pension and other payment paid out
under the provisions of a social security system of a Contracting State,
in any calendar year exceeds the sum of twenty thousand (20,000) Euro.
3. Notwithstanding the provisions of paragraphs 1 and 2, if this pen-
sion or other similar remuneration is not periodic in nature, is paid in
respect of past employment in the other Contracting State and is paid
out before the date on which the pension commences, or if a lump sum
payment is made in lieu of the right to an annuity before the date on
which the annuity commences, the payment or this lump sum may also
be taxed in the Contracting State from which it is derived.
4. A pension or other similar remuneration or annuity is deemed to
be derived from a Contracting State insofar as the contributions or pay-
ments associated with the pension or other similar remuneration or annu-
ity, or the entitlements received from it qualified for tax relief in that
State. The transfer of a pension from a pension fund or an insurance
company in a Contracting State to a pension fund or an insurance com-
pany in another State shall not restrict in any way the taxing rights of
the first-mentioned State under this Article.
5. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraph 2. They shall
also decide what details the resident of a Contracting State must submit
for the purpose of the proper application of the Convention in the other
Contracting State, in particular so that it can be established whether the
conditions referred to in subparagraphs a), b) and c) of paragraph 2 have
been met.
6. The term annuity means a stated sum payable periodically at
stated times during life or during a specified or ascertainable period of
time under an obligation to make the payments in return for adequate
and full consideration in money or moneys worth.
7. Whether and to what extent a pension or similar remuneration falls
under this Article or under Article 19, is determined by the nature of the
 19 109
past employment, as private or governmental, during which the entitle-
ment to that part of the pension or similar remuneration was built up.
8. Contributions made by or on behalf of an individual who renders
services in a Contracting State to a pension scheme recognised for tax
purposes in the other Contracting State,
(i) in which the individual participated immediately before beginning
to provide services in the first-mentioned State,
(ii) in which the individual participated at a time when that individual
was providing services in, or was a resident of, the other State, and
(iii) that is accepted by the competent authority of the first-mentioned
State as corresponding to a pension scheme recognised as such for
tax purposes by that State,
shall, for the purposes of determining the individuals tax payable in
the first-mentioned State and the profits of an enterprise which may be
taxed in the first-mentioned State, be treated in that State in the same
way and subject to the same conditions and limitations as contributions
made to a pension scheme that is recognised for tax purposes in that
State.
For the purposes of this paragraph:
a) the term a pension scheme means an arrangement in which the
individual participates in order to secure retirement benefits payable in
respect of the services referred to in this paragraph; and
b) a pension scheme is recognised for tax purposes in a State if the
contributions to the scheme would qualify for tax relief in that State.

Article 19
Government service

1. a) Salaries, wages and other similar remuneration paid by a Con-

tracting State or a political subdivision or a local authority thereof to an
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b) However, such salaries, wages and other similar remuneration shall
be taxable only in the other Contracting State if the services are rendered
in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.

2. a) Notwithstanding the provisions of paragraph 1, pensions and

other similar remuneration paid by, or out of funds created by, a Con-
tracting State or a political subdivision or a local authority thereof to an
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
109 20

b) However, such pensions and other similar remuneration shall be

taxable only in the other Contracting State if the individual is a resident
of, and a national of, that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries,
wages, pensions, and other similar remuneration in respect of services
rendered paid in connection with a business carried on by a Contracting
State or a political subdivision or a local authority thereof.

Article 20
Professors, researchers and teachers
1. An individual who visits a Contracting State solely for the purpose
of teaching or carrying out research at a university, college, school or
any other officially recognised educational institution in that State and
who is or was immediately before that visit a resident of the other Con-
tracting State, shall be exempt from taxation in the first-mentioned Con-
tracting State on remuneration for such teaching or research for a period
not exceeding two years from the date of his first visit for that purpose,
provided that such remuneration arises from sources outside that State.
2. This Article shall not apply to income from research if such
research is undertaken not in the public interest but primarily for the pri-
vate benefit of a specific person or persons.

Article 21
Students
1. Payments which a student or business apprentice who is or was
immediately before visiting a Contracting State a resident of the other
Contracting State and who is present in the first-mentioned State solely
for the purpose of his education or training receives for the purpose of
his maintenance, education or training shall not be taxed in that State,
provided that such payments arise from sources outside that State.
2. In respect of grants, scholarships and remuneration from employ-
ment not covered by paragraph 1, a student or business apprentice refer-
red to in paragraph 1 shall, in addition, be entitled during such education
or training to the same exemptions, reliefs or reductions in respect of
taxes available to residents of the Contracting State which he is visiting.
 21 109
Article 22
Other income
1. Items of income of a resident of a Contracting State, wherever ari-
sing, not dealt with in the foregoing Articles of this Convention shall be
taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than
income from immovable property as defined in paragraph 2 of Article 6,
if the recipient of such income, being a resident of a Contracting State,
carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State indepen-
dent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively con-
nected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall apply.

Article 23
Remittances
1. Where under any provision of this Convention a Contracting State
reduces the rate of tax on, or exempts from tax, income or capital gains
and, under the law in force in the other Contracting State a person, in
respect of that income or capital gains, is subject to tax by reference to
the amount thereof which is remitted to or received in that other Con-
tracting State and not by reference to the full amount thereof, then the
reduction or exemption to be allowed under this convention in the first-
mentioned Contracting State shall apply only to so much of the income
or capital gains as is taxed in the other Contracting State.
2. However, the provision of paragraph 1 of this Article does not
apply to income or capital gains derived by the Government, a political
subdivision or local authority, or an agency of a Contracting State or the
Central Bank of a Contracting State.
109 22

CHAPTER IV
ELIMINATION OF DOUBLE TAXATION
Article 24
Elimination of double taxation
1. The Netherlands, when imposing tax on its residents, may include
in the basis upon which such taxes are imposed the items of income
which, according to the provisions of this Convention, may be taxed or
shall be taxable only in Ghana.
2. However, where a resident of the Netherlands derives items of
income which according to paragraphs 1, 3 and 4 of Article 6, paragraph
1 of Article 7, paragraph 6 of Article 10, paragraph 7 of Article 11, para-
graph 6 of Article 12, paragraphs 1, 2 and 4 of Article 13, paragraph 1
of Article 14, paragraphs 1 and 5 of Article 15, paragraph 2 of Article
18, paragraphs 1 (subparagraph a) and 2 (subparagraph a) of Article 19
and paragraph 2 of Article 22 of this Convention may be taxed in Ghana
and are included in the basis referred to in paragraph 1, the Netherlands
shall exempt such items of income by allowing a reduction of its tax.
This reduction shall be computed in conformity with the provisions of
the Netherlands law for the avoidance of double taxation. For that pur-
pose the said items of income shall be deemed to be included in the
amount of the items of income which are exempt from Netherlands tax
under those provisions.
3. Further, the Netherlands shall allow a reduction from the Nether-
lands tax so computed for the items of income which according to para-
graph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article
12, paragraph 7 of Article 13, Article 16, paragraphs 1 and 2 of Article
17 and paragraph 3 of Article 18 of this Convention may be taxed in
Ghana to the extent that these items are included in the basis referred to
in paragraph 1. The amount of this reduction shall be equal to the tax
paid in Ghana on these items of income, but shall, in case the provisions
of the Netherlands law for the avoidance of double taxation provide so,
not exceed the amount of the reduction which would be allowed if the
items of income so included were the sole items of income which are
exempt from Netherlands tax under the provisions of the Netherlands
law for the avoidance of double taxation.
This paragraph shall not restrict allowance now or hereafter accorded
by the provisions of the Netherlands law for the avoidance of double
taxation, but only as far as the calculation of the amount of the reduc-
tion of Netherlands tax is concerned with respect to the aggregate of
income from more than one country and the carry forward of the tax
paid in Ghana on the said items of income to subsequent years.
 23 109
4. Notwithstanding the provisions of paragraph 2, the Netherlands
shall allow a reduction from the Netherlands tax for the tax paid in
Ghana on items of income which according to paragraph 1 of Article 7,
paragraph 6 of Article 10, paragraph 7 of Article 11, paragraph 6 of Arti-
cle 12, paragraph 1 of Article 14 and paragraph 2 of Article 22 of this
Convention may be taxed in Ghana to the extent that these items are
included in the basis referred to in paragraph 1, insofar as the Nether-
lands under the provisions of the Netherlands law for the avoidance of
double taxation allows a reduction from the Netherlands tax of the tax
levied in another country on such items of income. For the computation
of this reduction the provisions of paragraph 3 of this Article shall apply
accordingly.
5. In Ghana, double taxation shall be eliminated as follows:
a) Netherlands tax payable under the laws of the Netherlands and in
accordance with the provisions of the Convention, whether directly (by
assessment) or by deduction (withholding), on profits, income or charge-
able gains from sources within the Netherlands (excluding in the case of
dividends, tax payable in respect of the profits out of which the divi-
dends are paid) shall be allowed as a credit against any Ghana tax com-
puted by reference to the same profits, income or chargeable gains by
reference to which Netherlands tax is computed;
b) In the case of dividends paid by a company which is a resident of
the Netherlands to a company which is resident in Ghana and which
controls directly at least 10 per cent of the capital of the company pay-
ing the dividends, the credit shall take into account (in addition to any
Netherlands tax for which credit may be allowed under the provisions
of subparagraph a) the Netherlands tax payable by the company in
respect of the profits out of which such dividends are paid;
c) In any case the amount of tax credit to be granted under this para-
graph shall not exceed the proportion of the Ghana tax which such pro-
fits, income or chargeable gains bear to the entire profits, income or
chargeable gains as the case may be chargeable to Ghana tax.
CHAPTER V
SPECIAL PROVISIONS
Article 25
Non-discrimination
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected there-
with, which is other or more burdensome than the taxation and con-
nected requirements to which nationals of that other State in the same
circumstances, in particular with respect to residence, are or may be sub-
109 24

jected. This provision shall, notwithstanding the provisions of Article 1,

also apply to persons who are not residents of one or both of the Con-
tracting States.
2. Stateless persons who are residents of a Contracting State shall not
be subjected in either Contracting State to any taxation or any require-
ment connected therewith, which is other or more burdensome than the
taxation and connected requirements to which nationals of the State con-
cerned in the same circumstances, in particular with respect to residence,
are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of
a Contracting State has in the other Contracting State shall not be less
favourably levied in that other State than the taxation levied on enter-
prises of that other State carrying on the same activities. This provision
shall not be construed as obliging a Contracting State to grant to resi-
dents of the other Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.
4. Except where the provisions of paragraph 1 of Article 9, paragraph
9 of Article 11, or paragraph 8 of Article 12, apply, interest, royalties and
other disbursements paid by an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of deter-
mining the taxable profits of such enterprise, be deductible under the
same conditions as if they had been paid to a resident of the first-
mentioned State.
5. Enterprises of a Contracting State, the capital of which is wholly
or partly owned or controlled, directly or indirectly, by one or more resi-
dents of the other Contracting State, shall not be subjected in the first-
mentioned State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned
State are or may be subjected.
6. The provisions of this Article shall, notwithstanding the provisions
of Article 2, apply to taxes of every kind and description.
Article 26
Mutual agreement procedure
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in accor-
dance with the provisions of this Convention, he may, irrespective of the
remedies provided by the domestic law of those States, present his case
 25 109
to the competent authority of the Contracting State of which he is a resi-
dent or, if his case comes under paragraph 1 of Article 25, to that of the
Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears
to it to be justified and if it is not itself able to arrive at a satisfactory
solution, to resolve the case by mutual agreement with the competent
authority of the other Contracting State, with a view to the avoidance of
taxation which is not in accordance with the Convention. Any agreement
reached shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endea-
vour to resolve by mutual agreement any difficulties or doubts arising as
to the interpretation or application of the Convention. They may also
consult together for the elimination of double taxation in cases not
provided for in the Convention.
4. The competent authorities of the Contracting States may by mutual
agreement settle the mode of application of the Convention and, espe-
cially, the requirements to which the residents of a Contracting State
shall be subjected in order to obtain, in the other Contracting State, the
tax reductions or exemptions and other advantages provided for by the
Convention.
5. The competent authorities of the Contracting States may commu-
nicate with each other directly, including through a joint commission
consisting of their representatives, for the purpose of reaching an agree-
ment in the sense of the preceding paragraphs.
6. If any difficulty or doubt arising as to the interpretation or appli-
cation of the Convention cannot be resolved by the competent au-
thorities of the Contracting States in a mutual agreement procedure pur-
suant to the previous paragraphs of this Article within a period of two
years after the question was raised, the case may, at the request of either
Contracting State, be submitted for arbitration, but only after fully
exhausting the procedures available under paragraphs 1 to 5 of this Arti-
cle and provided the taxpayer or taxpayers involved agree in writing to
be bound by the decision of the arbitration board.
The decision of the arbitration board in a particular case shall be bin-
ding on both Contracting States and the taxpayer or taxpayers involved
with respect to that case.
109 26

Article 27
Exchange of information
1. The competent authorities of the Contracting States shall exchange
such information as is foreseeably relevant for carrying out the provi-
sions of this Convention or to the administration or enforcement of the
domestic laws concerning taxes of every kind and description imposed
on behalf of the Contracting States, or of their political subdivisions or
local authorities, insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by Articles 1
and 2.
2. Any information received under paragraph 1 by a Contracting
State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed
only to persons or authorities (including courts and administrative bo-
dies) concerned with the assessment or collection of, the enforcement or
prosecution in respect of, the determination of appeals in relation to the
taxes referred to in paragraph 1, or the oversight of the above. Such per-
sons or authorities shall use the information only for such purposes.
They may disclose the information in public court proceedings or in
judicial decisions.
3. In no case shall the provisions of the previous paragraphs be con-
strued so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in
the normal course of the administration of that or of the other Contrac-
ting State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or infor-
mation the disclosure of which would be contrary to public policy (ordre
public).
4. If information is requested by a Contracting State in accordance
with this Article, the other Contracting State shall use its information
gathering measures to obtain the requested information, even though that
other State may not need such information for its own tax purposes. The
obligation contained in the preceding sentence is subject to the limita-
tions of paragraph 3 but in no case shall such limitations be construed
to permit a Contracting State to decline to supply information solely
because it has no domestic interest in such information.
5. In the case of the Netherlands, paragraph 3 of this Article shall in
no case be construed to permit the Netherlands to decline to supply
 27 109
information solely because the information is held by a bank, other
financial institution, nominee or person acting in an agency or a fiduci-
ary capacity or because it relates to ownership interests in a person.
6. In the case of Ghana, Ghana shall at the request of the Netherlands
supply information to the Netherlands if such information is obtained by
Ghana in the course of court proceedings in relation to a prosecution
involving acts of tax fraud in the Courts of Ghana.

Article 28
Assistance in the collection of taxes
The competent authorities of the Contracting States may by mutual
agreement prescribe rules and conditions in order to lend each other
assistance and support in the collection of the taxes to which this Con-
vention applies and of any interest, administrative penalties and costs of
collection related to such amount.

Article 29
Members of diplomatic missions and consular posts
1. Nothing in this Convention shall affect the fiscal privileges of
members of diplomatic missions or consular posts under the general
rules of international law or under the provisions of special agreements.
2. The Convention shall not apply to international organisations,
organs and officials thereof and to persons who are members of a diplo-
matic mission or consular post of a third State, being present in a Con-
tracting State and not treated in either Contracting State as residents in
respect of taxes on income and on capital gains.

Article 30
Territorial extension
1. This Convention may be extended, either in its entirety or with any
necessary modifications, to either or both of the countries of the Neth-
erlands Antilles and Aruba, if the country concerned imposes taxes sub-
stantially similar in character to those to which the Convention applies.
Any such extension shall take effect from such date and subject to such
modifications and conditions, including conditions as to termination, as
may be specified and agreed in notes to be exchanged through diploma-
tic channels.
109 28

2. Unless otherwise agreed the termination of the Convention shall

not also terminate any extension of the Convention to any country to
which it has been extended under this Article.
CHAPTER VI
FINAL PROVISIONS
Article 31
Entry into force
Each of the Contracting States shall notify to the other through diplo-
matic channels the completion of the procedures required by its law for
the bringing into force of this Convention. The provisions of the Con-
vention shall enter into force on the thirtieth day after the date of receipt
of the later of these notifications and shall have effect in both Contrac-
ting States:
a) in the case of taxes withheld at source, in respect of amounts paid
on or after the first day of January of the calendar year next following
that in which the Convention entered into force;
b) in the case of other taxes, in respect of taxes levied for periods
beginning on or after the first day of January of the calendar year next
following that in which the Convention entered into force.
Article 32
Termination
1. This Convention shall remain in force until terminated by a Con-
tracting State. Either Contracting State may terminate the Convention,
through diplomatic channels, by giving notice of termination at least six
months before the end of any calendar year after the fifth year from the
date of entry into force of the Convention.
2. In such event the Convention shall cease to apply in respect of
years of assessment beginning after the end of the calendar year in
which notice is given.

IN WITNESS whereof the undersigned, duly authorised thereto, have

signed this Convention.
 29 109
DONE at Accra this 10th day of March 2008, in duplicate, in the
English language.
For the Government of the Kingdom of the Netherlands
J.C. DE JAGER
For the Government of the Republic of Ghana
A. AKOTO OSEI

Protocol
At the moment of signing the Convention for the avoidance of dou-
ble taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains, this day concluded between the Kingdom of
the Netherlands and the Republic of Ghana, the undersigned have agreed
that the following provisions shall form an integral part of the Conven-
tion.
I.
General
1. The benefits of the Convention are not applicable to companies or
other persons which are wholly or partly exempted from tax by a spe-
cial regime under the laws of either one of the Contracting States. They
are also not applicable to income from such companies or other persons
derived by a resident of the other State, nor to shares, jouissance rights
or interests in such companies or other persons.
2. The provisions of paragraph 1 of this Protocol provision are also
applicable in case a company or other person is treated under the admi-
nistrative practice of that State in the same or similar way as a company
or person as meant in that paragraph.
3. The competent authorities of the States shall by mutual agreement
decide which special regime is meant in the provisions of paragraph 1
of this Protocol provision. The provisions of paragraph 1 are also appli-
cable to any identical or substantially similar legislation in addition to
or replacing such a special regime enacted after 1 January 2007 unless
the competent authorities of the States decide otherwise by mutual
agreement.
109 30

4. It is understood that either Contracting State may rely on the use

of generally accepted tax principles with a view to preventing abuse of
the Convention. In any case where a Contracting State intends to apply
this paragraph, its competent authority shall in advance consult with the
competent authority of the other Contracting State.
II.
Ad Article 3, paragraph 1, subparagraph e
In case an entity that is treated as a body corporate for tax purposes
is liable as such to tax in a Contracting State, but the income of that
entity is taxed in the other Contracting State as income of the partici-
pants in that entity, the competent authorities shall take such measures
that on the one hand no double taxation remains, but on the other hand
it is prevented that merely as a result of application of the Convention
income is partly or wholly not subject to tax.
III.
Ad Article 3, paragraph 2 and Article 26
It is understood that, if the competent authorities of the Contracting
States have, by mutual agreement, reached a solution within the context
of the Convention for cases in which
a) application of paragraph 2 of Article 3 with respect to the interpre-
tation of a term not defined in the Convention; or
b) differences in qualification (for example of an element of income
or of a person) would result in double taxation or double exemption, this
solution, after publication thereof by both competent authorities, shall
also be binding for the application of the provisions of the Convention
in other similar cases.
IV.
Ad Article 4
An individual living aboard a ship without any real domicile in either
of the Contracting States shall be deemed to be a resident of the Con-
tracting State in which the ship has its home harbour.
V.
Ad Articles 5, 6, 7 and 13
It is understood that rights to the exploration and exploitation of natu-
ral resources shall be regarded as immovable property located in the
 31 109
Contracting State to whose seabed and subsoil thereof these rights
apply, and that these rights are regarded as assets of a permanent estab-
lishment in that State. Furthermore, it is understood that the aforemen-
tioned rights include rights to interests in, or benefits from assets that
arise from, that exploration or exploitation.
VI.
Ad Article 7
In respect of paragraphs 1 and 2 of Article 7, where an enterprise of a
Contracting State sells goods or merchandise or carries on business in
the other Contracting State through a permanent establishment situated
therein, the profits of that permanent establishment shall not be deter-
mined on the basis of the total amount received by the enterprise, but
shall be determined only on the basis of that portion of the income of
the enterprise that is attributable to the actual activity of the permanent
establishment in respect of such sales or business.
Specifically, in the case of contracts for the survey, supply, installa-
tion or construction of industrial, commercial or scientific equipment or
premises, or of public works, when the enterprise has a permanent estab-
lishment, the profits attributable to such permanent establishment shall
not be determined on the basis of the total amount of the contract, but
shall be determined only on the basis of that part of the contract that is
effectively carried out by the permanent establishment in the Contrac-
ting State where the permanent establishment is situated. The profits
related to that part of the contract which is carried out by the head office
of the enterprise shall be taxable only in the Contracting State of which
the enterprise is a resident.
VII.
Ad Article 8
It is understood that the provisions of Article 8 shall also apply to
taxes levied on the basis of the gross receipts in respect of the carriage
of passengers and cargo in international traffic.
VIII.
Ad Article 9
It is understood that the fact that associated enterprises have con-
cluded arrangements, such as cost sharing arrangements or general ser-
vices agreements, for or based on the allocation of executive, general
administrative, technical and commercial expenses, research and deve-
109 32

lopment expenses and other similar expenses, shall not by itself consti-
tute a condition as stated in paragraph 1 of Article 9.
IX.
Ad Article 10
1. Notwithstanding paragraph 2 of Article 10, the Contracting State
of which the company is a resident shall not levy a tax on dividends paid
by that company, if the beneficial owner of the dividends is a pension
fund referred to in paragraph 2 of Article 4.
2. It is understood that, for the purposes of this Convention,
a) the term jouissance shares means securities that grant the right
to participate in the net profit of the company and do not represent capi-
tal of the company but represent a non financial contribution, such as a
contribution in know how;
b) the term jouissance rights means rights, whether or not docu-
mented by official papers, to participate in the net profit of the company,
that do not represent capital of the company but represent a non finan-
cial contribution, such as a contribution in know how;
c) the term mining shares means shares in a mining company sub-
ject to mining law and organised in a specific legal form;
d) the term founders shares means shares that are issued as remu-
neration for services rendered by founders during the constitution of a
company and do not represent capital of the company.
X.
Ad Articles 10, 11 and 12
Where tax has been levied at source in excess of the amount of tax
chargeable under the provisions of Articles 10, 11 or 12, applications for
the refund of the excess amount of tax have to be lodged with the com-
petent authority of the State having levied the tax, within a period of
three years after the expiration of the calendar year in which the tax has
been levied.
XI.
Ad Articles 10 and 13
It is understood that income received in connection with the (partial)
liquidation of a company or a purchase of own shares by a company is
treated as income from shares and not as capital gains.
 33 109
XII.
Ad Article 13, paragraph 4
It is understood that the provision of paragraph 4 of Article 13 shall
not apply if the gain is derived in the course of a corporate reorganisa-
tion, amalgamation, division or similar transaction.
Furthermore, it is understood that for the Netherlands paragraph 4 of
Article 13 shall apply to shares listed on any other stock exchange sub-
ject to regulation by the Authority for the Financial Markets (or its suc-
cessor) in the Netherlands.
XIII.
Ad Article 16
It is understood that a bestuurder or commissaris of a company
resident in the Netherlands shall be considered to be a member of the
board of directors as meant in article 16. Where a resident of the
Netherlands derives fees and other remuneration in his capacity as a
member of the board of directors of a company resident in Ghana, such
fees and other remuneration may be taxed in Ghana. It is further under-
stood that the provisions of this Article shall apply notwithstanding the
provisions of Article 15.
XIV.
Ad Article 26
The competent authorities of the States may also agree, with respect
to any agreement reached as a result of a mutual agreement procedure
as meant in Article 26 that the State in which there is an additional tax
charge as a result of the aforementioned agreement shall not impose any
administrative penalties, surcharges, interest and costs with respect to
this additional tax charge, if the other State in which there is a corres-
ponding reduction of tax as a result of the agreement refrains from the
payment of any interest due with respect to such a reduction of tax.
XV.
Ad Article 27
The Contracting States may release to the arbitration board, estab-
lished under the provisions of paragraph 6 of Article 26, such informa-
tion as is necessary for carrying out the arbitration procedure. The mem-
109 34

bers of the arbitration board shall be subject to the limitations on

disclosure described in paragraph 2 of this Article with respect to any
information so released.

IN WITNESS whereof the undersigned, duly authorised thereto, have

signed this Protocol.
DONE at Accra this 10th day of March 2008, in duplicate, in the
English language.
For the Government of the Kingdom of the Netherlands
J.C. DE JAGER
For the Government of the Republic of Ghana
A. AKOTO OSEI

C. VERTALING

Verdrag tussen het Koninkrijk der Nederlanden en de Republiek

Ghana tot het vermijden van dubbele belasting en het voorkomen
van het ontgaan van belasting met betrekking tot belastingen naar
het inkomen en naar vermogenswinsten
De Regering van het Koninkrijk der Nederlanden
en
de Regering van de Republiek Ghana,
Geleid door de wens dat door beide Staten een verdrag wordt geslo-
ten tot het vermijden van dubbele belasting en het voorkomen van het
ontgaan van belasting met betrekking tot belastingen naar het inkomen
en naar vermogenswinsten,

Zijn het volgende overeengekomen:

 35 109
HOOFDSTUK I
REIKWIJDTE VAN HET VERDRAG
Artikel 1
Personen op wie het Verdrag van toepassing is
Dit Verdrag is van toepassing op personen die inwoner zijn van een
of van beide Verdragsluitende Staten.
Artikel 2
Belastingen waarop het Verdrag van toepassing is
1. Dit Verdrag is van toepassing op belastingen naar het inkomen en
naar vermogenswinsten die, ongeacht de wijze van heffing, worden
geheven ten behoeve van een Verdragsluitende Staat of van de staatkun-
dige onderdelen of plaatselijke publiekrechtelijke lichamen daarvan.
2. Als belastingen naar het inkomen en naar vermogenswinsten wor-
den beschouwd alle belastingen die worden geheven naar het gehele
inkomen en naar het totaal aan vermogenswinsten of naar bestanddelen
van het inkomen, waaronder begrepen belastingen naar voordelen ver-
kregen uit de vervreemding van roerende goederen of onroerende zaken,
belastingen naar het totale bedrag van de door ondernemingen betaalde
lonen of salarissen.
3. De bestaande belastingen waarop het Verdrag van toepassing is,
zijn met name:
a. in Nederland:
de inkomstenbelasting;
de loonbelasting;
de vennootschapsbelasting, daaronder begrepen het aandeel van
de Regering in de nettowinsten behaald met de exploitatie van natuur-
lijke rijkdommen geheven krachtens de Mijnbouwwet;
de dividendbelasting;
(hierna te noemen: Nederlandse belasting);
b. in de Republiek Ghana:
de inkomstenbelasting; en
de belasting naar vermogenswinsten;
(hierna te noemen: Ghanese belasting).
4. Het Verdrag is ook van toepassing op alle gelijke of in wezen
gelijksoortige belastingen die na de datum van ondertekening van het
Verdrag naast of in de plaats van de bestaande belastingen worden gehe-
ven. De bevoegde autoriteiten van de Verdragsluitende Staten doen
109 36

elkaar mededeling van alle wezenlijke wijzigingen die in hun onder-

scheiden belastingwetgevingen zijn aangebracht.
HOOFDSTUK II
BEGRIPSBEPALINGEN
Artikel 3
Algemene begripsbepalingen
1. Voor de toepassing van dit Verdrag, tenzij de context anders ver-
eist:
a. betekenen de uitdrukkingen een Verdragsluitende Staat en de
andere Verdragsluitende Staat het Koninkrijk der Nederlanden (Neder-
land) of Ghana, naargelang de context vereist;
b. betekent de uitdrukking Nederland het deel van het Koninkrijk
der Nederlanden dat in Europa is gelegen, met inbegrip van zijn territo-
riale zee en elk gebied buiten de territoriale zee waarbinnen Nederland,
in overeenstemming met het internationale recht, rechtsbevoegdheid
heeft of soevereine rechten uitoefent;
c. betekent de uitdrukking Ghana het grondgebied van de Repu-
bliek Ghana, met inbegrip van haar territoriale zee en elk gebied buiten
de territoriale zee waarbinnen de Republiek Ghana, in overeenstemming
met het internationale recht soevereine rechten heeft ten behoeve van de
exploratie en exploitatie van de natuurlijke rijkdommen van de zeebo-
dem, de ondergrond daarvan en de bovengelegen wateren;
d. omvat de uitdrukking persoon een natuurlijke persoon, een
lichaam en elke andere vereniging van personen;
e. betekent de uitdrukking lichaam elke rechtspersoon of elke een-
heid die voor de belastingheffing als een rechtspersoon wordt behandeld;
f. betekenen de uitdrukkingen onderneming van een Verdrag-
sluitende Staat en onderneming van de andere Verdragsluitende Staat
onderscheidenlijk een onderneming gedreven door een inwoner van een
Verdragsluitende Staat en een onderneming gedreven door een inwoner
van de andere Verdragsluitende Staat;
g. betekent de uitdrukking internationaal verkeer alle vervoer met
een schip of luchtvaartuig, gexploiteerd door een onderneming van een
Verdragsluitende Staat, behalve wanneer het schip of luchtvaartuig uit-
sluitend wordt gexploiteerd tussen plaatsen die in de andere Verdrag-
sluitende Staat zijn gelegen;
h. betekent de uitdrukking bevoegde autoriteit:
i. in Nederland de minister van Financin of zijn bevoegde verte-
genwoordiger;
ii. wat Ghana betreft, de Commissioner of the Internal Revenue of
zijn bevoegde vertegenwoordiger.
i. betekent de uitdrukking onderdaan:
 37 109
elke natuurlijke persoon die de nationaliteit van een Verdrag-
sluitende Staat bezit;
elke rechtspersoon, vennootschap of vereniging die zijn of haar
rechtspositie als zodanig ontleent aan de wetgeving die in een Verdrag-
sluitende Staat van kracht is;
j. betekent de uitdrukking pensioenfonds elke persoon die:
i. is opgericht overeenkomstig de wetgeving van een van de
Verdragsluitende Staten;
ii. hoofdzakelijk wordt gexploiteerd voor het beheren of ver-
schaffen van pensioenen, pensioenuitkeringen of andere soort-
gelijke beloningen of het verwerven van inkomsten ten behoeve
van dergelijke personen; en
iii. zelf en wat betreft zijn inkomsten voortvloeiend uit de activi-
teiten omschreven in bepaling ii. in die Verdragsluitende Staat
is vrijgesteld van belastingen naar het inkomen.
2. Voor de toepassing van het Verdrag door een Verdragsluitende
Staat op enig moment heeft, tenzij de context anders vereist, elke daarin
niet omschreven uitdrukking de betekenis welke die uitdrukking op dat
moment heeft volgens de wetgeving van die Staat met betrekking tot de
belastingen waarop het Verdrag van toepassing is, waarbij elke beteke-
nis volgens de toepasselijke belastingwetgeving van die Staat prevaleert
boven een betekenis die volgens andere wetgeving van die Staat aan die
uitdrukking wordt gegeven.
Artikel 4
Inwoner
1. Voor de toepassing van dit Verdrag betekent de uitdrukking inwo-
ner van een Verdragsluitende Staat iedere persoon die, ingevolge de
wetgeving van die Staat, aldaar aan belasting is onderworpen op grond
van zijn woonplaats, verblijf, plaats van leiding of enige andere soort-
gelijke omstandigheid. Deze uitdrukking omvat echter niet een persoon
die in die Staat slechts aan belasting is onderworpen ter zake van inkom-
sten en vermogenswinsten uit bronnen in die Staat.
2. De uitdrukking inwoner van een Verdragsluitende Staat omvat
tevens de Staat zelf, elk staatkundig onderdeel of plaatselijk publiek-
rechtelijk lichaam daarvan en een pensioenfonds dat volgens de wetge-
ving van die Verdragsluitende Staat is opgericht en onder toezicht staat.
3. Indien een natuurlijke persoon ingevolge de bepalingen van het
eerste lid inwoner van beide Verdragsluitende Staten is, wordt zijn posi-
tie als volgt bepaald:
a. hij wordt geacht slechts inwoner te zijn van de Staat waarin hij een
duurzaam tehuis tot zijn beschikking heeft; indien hij in beide Staten een
109 38

duurzaam huis tot zijn beschikking heeft, wordt hij geacht slechts inwo-
ner te zijn van de Staat waarmede zijn persoonlijke en economische
betrekkingen het nauwst zijn (middelpunt van de levensbelangen);
b. indien niet kan worden bepaald in welke Staat hij het middelpunt
van zijn levensbelangen heeft, of indien hij in geen van de Staten een
duurzaam tehuis tot zijn beschikking heeft, wordt hij geacht slechts
inwoner te zijn van de Staat waarin hij gewoonlijk verblijft;
c. indien hij in beide Staten of in geen van beide gewoonlijk verblijft,
wordt hij geacht slechts inwoner te zijn van de Staat waarvan hij onder-
daan is;
d. indien hij onderdaan is van beide Staten of van geen van beide,
regelen de bevoegde autoriteiten van de Verdragsluitende Staten de aan-
gelegenheid in onderlinge overeenstemming.
4. Indien een andere dan een natuurlijke persoon ingevolge de bepa-
lingen van het eerste lid inwoner van beide Verdragsluitende Staten is,
wordt hij geacht inwoner te zijn van de Staat waarin de plaats van zijn
werkelijke leiding is gelegen.

Artikel 5
Vaste inrichting
1. Voor de toepassing van dit Verdrag betekent de uitdrukking vaste
inrichting een vaste bedrijfsinrichting door middel waarvan de werk-
zaamheden van een onderneming geheel of gedeeltelijk worden uitgeoe-
fend.
2. De uitdrukking vaste inrichting omvat in het bijzonder:
a. een plaats waar leiding wordt gegeven;
b. een filiaal;
c. een kantoor;
d. een fabriek;
e. een werkplaats; en
f. een mijn, een olie- of gasbron, een (steen)groeve of een andere
plaats waar natuurlijke rijkdommen worden gewonnen.
3. De uitdrukking vaste inrichting omvat bovendien:
a. een plaats van uitvoering van een bouwwerk of van constructie-,
montage- of installatiewerkzaamheden of toezichthoudende activiteiten
die daarmee verband houden, evenwel uitsluitend indien een dergelijke
plaats van uitvoering, of de werkzaamheden of dergelijke activiteiten
blijft voortbestaan respectievelijk voortduren voor een tijdvak van meer
dan negen maanden;
b. het verrichten van toezichthoudende activiteiten die geen verband
houden met een plaats van uitvoering van een bouwwerk of met
 39 109
constructie-, montage- of installatiewerkzaamheden bedoeld onder a van
dit lid, evenwel uitsluitend indien dergelijke activiteiten langer dan
negen maanden voortduren.
4. Niettegenstaande de voorgaande bepalingen van dit artikel wordt
de uitdrukking vaste inrichting niet geacht te omvatten:
a. het gebruik maken van inrichtingen, uitsluitend voor opslag, uit-
stalling of aflevering van aan de onderneming toebehorende goederen of
koopwaar;
b. het aanhouden van een voorraad van aan de onderneming toebeho-
rende goederen of koopwaar, uitsluitend voor de opslag, uitstalling of
aflevering;
c. het aanhouden van een voorraad van aan de onderneming toebeho-
rende goederen of koopwaar, uitsluitend voor bewerking of verwerking
door een andere onderneming;
d. het aanhouden van een vaste bedrijfsinrichting, uitsluitend om voor
de onderneming goederen of koopwaar aan te kopen of inlichtingen in
te winnen;
e. het aanhouden van een vaste bedrijfsinrichting, uitsluitend om voor
de onderneming enige andere werkzaamheid uit te oefenen die van voor-
bereidende aard is of het karakter van hulpwerkzaamheid heeft;
f. het aanhouden van een vaste bedrijfsinrichting, uitsluitend voor
een combinatie van de in de onderdelen a tot en met e genoemde werk-
zaamheden, mits het totaal van de werkzaamheden van de vaste bedrijfs-
inrichting dat uit deze combinatie voortvloeit van voorbereidende aard
is of het karakter van hulpwerkzaamheid heeft.
5. Indien een persoon niet zijnde een onafhankelijke vertegenwoor-
diger waarop het zesde lid van toepassing is voor een onderneming
werkzaam is, en een machtiging bezit om namens de onderneming over-
eenkomsten af te sluiten en dit recht in een Verdragsluitende Staat
gewoonlijk uitoefent, wordt die onderneming, niettegenstaande de bepa-
lingen van het eerste en tweede lid, geacht in die Staat een vaste inrich-
ting te hebben met betrekking tot de werkzaamheden die die persoon
voor de onderneming verricht, tenzij de werkzaamheden van die persoon
beperkt blijven tot die werkzaamheden genoemd in het vierde lid, die,
indien zij worden uitgeoefend door middel van een vaste bedrijfsin-
richting, deze vaste bedrijfsinrichting op grond van de bepalingen van
dat lid niet tot een vaste inrichting zouden maken.
6. Een onderneming wordt niet geacht een vaste inrichting in een
Verdragsluitende Staat te bezitten alleen op grond van de omstandigheid
dat zij in die Staat zaken doet door bemiddeling van een makelaar, com-
missionair of enige andere onafhankelijke vertegenwoordiger, mits deze
personen in de normale uitoefening van hun bedrijf handelen.
109 40

7. De omstandigheid dat een lichaam dat inwoner is van een Verdrag-

sluitende Staat, een lichaam beheerst of door een lichaam wordt beheerst
dat inwoner is van de andere Verdragsluitende Staat of dat in die andere
Staat zaken doet (hetzij door middel van een vaste inrichting, hetzij op
andere wijze), stempelt een van beide lichamen niet tot een vaste inrich-
ting van het andere.
HOOFDSTUK III
BELASTINGHEFFING NAAR HET INKOMEN
Artikel 6
Inkomsten uit onroerende zaken
1. Inkomsten verkregen door een inwoner van een Verdragsluitende
Staat uit onroerende zaken (waaronder begrepen voordelen uit landbouw
of bosbedrijven) die in de andere Verdragsluitende Staat zijn gelegen
mogen in die andere Staat worden belast.
2. De uitdrukking onroerende zaken heeft de betekenis welke die
uitdrukking heeft volgens de wetgeving van de Verdragsluitende Staat
waar de desbetreffende zaken zijn gelegen. De uitdrukking omvat in
ieder geval de zaken die bij de onroerende zaken behoren, levende en
dode have van landbouw- en bosbedrijven, rechten waarop de bepalin-
gen van het privaatrecht betreffende de grondeigendom van toepassing
zijn, vruchtgebruik van onroerende zaken en rechten op veranderlijke of
vaste vergoedingen ter zake van de exploitatie, of concessie tot exploi-
tatie, van minerale aardlagen, bronnen en andere natuurlijke rijkdom-
men; schepen en luchtvaartuigen worden niet als onroerende zaken
beschouwd.
3. De bepalingen van het eerste lid zijn van toepassing op inkomsten
verkregen uit de rechtstreekse exploitatie, uit het verhuren of verpach-
ten, of uit elke andere vorm van exploitatie van onroerende zaken.
4. De bepalingen van het eerste en derde lid zijn eveneens van toe-
passing op inkomsten uit onroerende zaken van een onderneming en op
inkomsten uit onroerende zaken die worden gebruikt voor het verrich-
ten van zelfstandige arbeid.
Artikel 7
Winst uit onderneming
1. De voordelen van een onderneming van een Verdragsluitende Staat
zijn slechts in die Staat belastbaar, tenzij de onderneming in de andere
 41 109
Verdragsluitende Staat haar bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting. Indien de onderneming aldus haar bedrijf
uitoefent, mogen de voordelen van de onderneming in de andere Staat
worden belast, maar slechts in zoverre als zij aan die vaste inrichting
kunnen worden toegerekend.
2. Onder voorbehoud van de bepalingen van het derde lid worden,
indien een onderneming van een Verdragsluitende Staat in de andere
Verdragsluitende Staat haar bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting, in elk van de Verdragsluitende Staten aan die
vaste inrichting de voordelen toegerekend die zij geacht zou kunnen
worden te behalen, indien zij een zelfstandige onderneming zou zijn die
dezelfde of soortgelijke werkzaamheden zou uitoefenen onder dezelfde
of soortgelijke omstandigheden en die geheel onafhankelijk transacties
zou aangaan met de onderneming waarvan zij een vaste inrichting is.
3. Bij het bepalen van de voordelen van een vaste inrichting worden
in aftrek toegelaten kosten, daaronder begrepen kosten van de leiding en
algemene beheerskosten, die redelijkerwijs ten behoeve van de vaste
inrichting zijn gemaakt, hetzij in de Staat waarin de vaste inrichting is
gevestigd, hetzij elders. Geen aftrek wordt echter toegestaan ter zake van
bedragen (met uitzondering van die wegens vergoeding van werkelijke
kosten) welke eventueel door de vaste inrichting aan het hoofdkantoor
van de onderneming of een van haar andere kantoren worden betaald als
royaltys, vergoedingen of andere soortgelijke betalingen voor het ge-
bruik van octrooien of andere rechten, of als commissieloon voor be-
paalde diensten of voor het geven van leiding dan wel, behalve in het
geval van een onderneming die het bankbedrijf uitoefent, als interest op
gelden die aan de vaste inrichting zijn geleend. Evenmin wordt bij het
bepalen van de voordelen van een vaste inrichting rekening gehouden
met bedragen (met uitzondering van die wegens vergoeding van werke-
lijke kosten) welke door de vaste inrichting aan het hoofdkantoor van de
onderneming of een van haar andere kantoren in rekening worden
gebracht als royaltys, vergoedingen of andere soortgelijke betalingen
voor het gebruik van octrooien of andere rechten, of als commissieloon
voor bepaalde diensten of voor het geven van leiding, dan wel, behalve
in het geval van een onderneming die het bankbedrijf uitoefent, als inte-
rest op gelden die aan het hoofdkantoor van de onderneming of een van
haar andere kantoren zijn geleend.
4. Voor zover het in een Verdragsluitende Staat gebruikelijk is de aan
een vaste inrichting toe te rekenen voordelen te bepalen op basis van een
verdeling van de totale winst van de onderneming over haar verschil-
lende delen, belet het tweede lid die Verdragsluitende Staat niet de te
belasten voordelen te bepalen volgens de gebruikelijke verdeling; de
gevolgde methode van verdeling moet echter zodanig zijn, dat het resul-
taat in overeenstemming is met de in dit artikel neergelegde beginselen.
109 42

5. Er worden geen voordelen aan een vaste inrichting toegerekend

enkel op grond van de aankoop door die vaste inrichting van goederen
of koopwaar voor de onderneming.
6. Voor de toepassing van de voorgaande leden worden de aan de
vaste inrichting toe te rekenen voordelen van jaar tot jaar volgens
dezelfde methode bepaald, tenzij er een goede en genoegzame reden
bestaat hiervan af te wijken.
7. Indien in de voordelen bestanddelen van het inkomen zijn begre-
pen die afzonderlijk in andere artikelen van dit Verdrag worden behan-
deld, worden de bepalingen van die artikelen niet aangetast door de
bepalingen van dit artikel.
Artikel 8
Zee- en luchtvervoer
1. Voordelen uit de exploitatie van schepen of luchtvaartuigen in
internationaal verkeer zijn slechts belastbaar in de Verdragsluitende Staat
waarin de onderneming is gevestigd. Deze voordelen omvatten voorde-
len verkregen door de onderneming uit het gebruik, het onderhoud of de
verhuur van containers gebezigd voor het vervoer van goederen of koop-
waar in het internationaal verkeer, indien dit gebruik, onderhoud of deze
verhuur, naargelang van het geval, voortvloeien uit de exploitatie van
schepen of luchtvaartuigen in internationaal verkeer.
2. De bepalingen van het eerste lid zijn ook van toepassing op voor-
delen uit de deelneming in een pool, een gemeenschappelijke onder-
neming of een internationaal opererend agentschap.
Artikel 9
Gelieerde ondernemingen
1. Indien
a. een onderneming van een Verdragsluitende Staat onmiddellijk of
middellijk deelneemt aan de leiding van, aan het toezicht op dan wel in
het kapitaal van een onderneming van de andere Verdragsluitende Staat,
of
b. dezelfde personen onmiddellijk of middellijk deelnemen aan de
leiding van, aan het toezicht op dan wel in het kapitaal van een onder-
neming van een Verdragsluitende Staat en een onderneming van de
andere Verdragsluitende Staat,
en in het ene of in het andere geval tussen de beide ondernemingen
in hun handelsbetrekkingen of financile betrekkingen voorwaarden wor-
den overeengekomen of opgelegd, die afwijken van die welke zouden
 43 109
worden overeengekomen tussen onafhankelijke ondernemingen, mogen
alle voordelen die een van de ondernemingen zonder deze voorwaarden
zou hebben behaald, maar ten gevolge van die voorwaarden niet heeft
behaald, worden begrepen in de voordelen van die onderneming en dien-
overeenkomstig worden belast.
2. Indien een Verdragsluitende Staat in de voordelen van een onder-
neming van die Staat voordelen begrijpt en dienovereenkomstig belast
ter zake waarvan een onderneming van de andere Verdragsluitende
Staat in die andere Staat in de belastingheffing is betrokken en deze
voordelen bestaan uit voordelen welke de onderneming van de eerstge-
noemde Staat zou hebben behaald indien tussen de beide ondernemin-
gen zodanige voorwaarden zouden zijn overeengekomen als die welke
tussen onafhankelijke ondernemingen zouden zijn overeengekomen, past
die andere Staat het bedrag aan belasting dat in die Staat over die voor-
delen is geheven, dienovereenkomstig aan. Bij de vaststelling van deze
aanpassing wordt rekening gehouden met de overige bepalingen van dit
Verdrag en plegen de bevoegde autoriteiten van de Verdragsluitende Sta-
ten zo nodig met elkaar overleg.

Artikel 10
Dividenden
1. Dividenden betaald door een lichaam dat inwoner is van een
Verdragsluitende Staat aan een inwoner van de andere Verdragsluitende
Staat, mogen in die andere Staat worden belast.
2. Deze dividenden mogen echter ook in de Verdragsluitende Staat
waarvan het lichaam dat de dividenden betaalt inwoner is, overeenkom-
stig de wetgeving van die Staat worden belast, maar indien de uiteinde-
lijk gerechtigde tot de dividenden een inwoner van de andere Verdrag-
sluitende Staat is, mag de aldus geheven belasting:
a. 5 percent van het brutobedrag van de dividenden niet overschrij-
den, indien de uiteindelijk gerechtigde een lichaam is (niet zijnde een
transparante entiteit) dat onmiddellijk ten minste 10 percent bezit van
het kapitaal van het lichaam dat de dividenden betaalt;
b. in alle overige gevallen 10 percent van het brutobedrag van de
dividenden niet overschrijden.
3. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
4. De bepalingen van het tweede lid laten onverlet de belastinghef-
fing van het lichaam ter zake van de winst waaruit de dividenden wor-
den betaald.
109 44

5. De uitdrukking dividenden, zoals gebezigd in dit artikel, bete-

kent inkomsten uit aandelen, winstaandelen of winstbewijzen, mijn-
aandelen, oprichtersaandelen of andere rechten, niet zijnde schuldvorde-
ringen, die aanspraak geven op een aandeel in de winst alsmede
inkomsten uit andere vennootschappelijke rechten die door de wetgeving
van de Staat waarvan het lichaam dat de uitdeling doet inwoner is, op
dezelfde wijze aan de belastingheffing worden onderworpen als inkom-
sten uit aandelen en omvat tevens alle andere bestanddelen die uit
hoofde van de wetgeving van de Verdragsluitende Staat waarvan het
lichaam dat de dividenden betaalt inwoner is, worden behandeld als divi-
dend of een uitdeling van dividend van een lichaam.
6. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de dividenden, die inwoner is van
een Verdragsluitende Staat, in de andere Verdragsluitende Staat waarvan
het lichaam dat de dividenden betaalt inwoner is, een bedrijf uitoefent
door middel van een aldaar gevestigde vaste inrichting of in die andere
Staat zelfstandige arbeid verricht vanuit een aldaar gevestigd vast mid-
delpunt en het aandelenbezit uit hoofde waarvan de dividenden worden
betaald, tot het bedrijfsvermogen van die vaste inrichting of tot het
beroepsvermogen van dat vaste middelpunt behoort. In dat geval zijn de
bepalingen van artikel 7 of van artikel 14 naargelang van het geval, van
toepassing.
7. Indien een lichaam dat inwoner is van een Verdragsluitende Staat,
voordelen of inkomsten verkrijgt uit de andere Verdragsluitende Staat,
mag die andere Staat geen belasting heffen op de dividenden die door
het lichaam worden betaald, behalve voor zover deze dividenden wor-
den betaald aan een inwoner van die andere Staat of voor zover het
aandelenbezit uit hoofde waarvan de dividenden worden betaald, tot het
bedrijfsvermogen van een in die andere Staat gevestigde vaste inrichting
of tot het beroepsvermogen van een aldaar gevestigd vast middelpunt
behoort, noch de niet-uitgedeelde winst van het lichaam onderwerpen
aan een belasting op niet-uitgedeelde winst van het lichaam, zelfs indien
de betaalde dividenden of de niet-uitgedeelde winst geheel of gedeelte-
lijk bestaan uit voordelen of inkomsten die uit die andere Staat afkom-
stig zijn.

Artikel 11
Interest
1. Interest afkomstig uit een Verdragsluitende Staat en betaald aan
een inwoner van de andere Verdragsluitende Staat mag in die andere
Staat worden belast.
 45 109
2. Deze interest mag echter ook in de Verdragsluitende Staat waaruit
hij afkomstig is overeenkomstig de wetgeving van die Staat worden
belast, maar indien de uiteindelijk gerechtigde tot de interest een inwo-
ner van de andere Verdragsluitende Staat is, mag de aldus geheven belas-
ting 8 percent van het brutobedrag van de interest niet overschrijden.
3. Niettegenstaande de bepalingen van het tweede lid is de interest
bedoeld in het eerste lid vrijgesteld van belasting in de Verdragsluitende
Staat waaruit de interest afkomstig is indien de genieter de uiteindelijk
gerechtigde tot de interest is en indien:
a. de schuldenaar of de genieter van de interest de Regering van een
Verdragsluitende Staat zelf is, een overheidslichaam, een staatkundig
onderdeel of plaatselijk publiekrechtelijk lichaam daarvan of de Centrale
Bank van een Verdragsluitende Staat; of
b. de interest wordt betaald in verband met een lening verstrekt,
goedgekeurd, gegarandeerd of verzekerd door de Regering van een
Verdragsluitende Staat, de Centrale Bank van een Verdragsluitende Staat
of door enig agentschap of enige instantie (waaronder begrepen een
financile instelling) dat of die eigendom is van of wordt beheerst door
de Regering van een Verdragsluitende Staat.
4. Niettegenstaande de bepalingen van het tweede lid, is interest als
bedoeld in het eerste lid, uitsluitend belastbaar in de Verdragsluitende
Staat waarvan de genieter inwoner is, indien de genieter de uiteindelijk
gerechtigde tot de interest is en de interest wordt betaald in verband met:
a. een lening verstrekt door een bank of een andere financile instel-
ling (met inbegrip van een verzekeringsmaatschappij) of een pensioen-
fonds;
b. de verkoop op krediet van nijverheids- en handelsuitrusting of
wetenschappelijke uitrusting;
c. de verkoop op krediet van goederen door een onderneming aan een
andere onderneming.
5. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede,
derde en vierde lid.
6. De uitdrukking interest, zoals gebezigd in dit artikel, betekent
inkomsten uit schuldvorderingen van welke aard ook, al dan niet verze-
kerd door hypotheek en al dan niet aanspraak gevend op een aandeel in
de winst van de schuldenaar, en in het bijzonder inkomsten uit overheids-
leningen en inkomsten uit obligaties of schuldbewijzen, waaronder be-
grepen de aan zodanige leningen, obligaties of schuldbewijzen verbon-
den premies en prijzen. In rekening gebrachte boetes voor te late betaling
worden voor de toepassing van dit artikel niet als interest aangemerkt.
109 46

7. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de interest, die inwoner is van een
Verdragsluitende Staat, in de andere Verdragsluitende Staat waaruit de
interest afkomstig is, een bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting of in die andere Staat zelfstandige arbeid ver-
richt vanuit een aldaar gevestigd vast middelpunt, en de schuldvordering
uit hoofde waarvan de interest wordt betaald, tot het bedrijfsvermogen
van die vaste inrichting of tot het beroepsvermogen van dat vaste mid-
delpunt behoort. In dat geval zijn de bepalingen van artikel 7 of van arti-
kel 14 naargelang van het geval, van toepassing.
8. Interest wordt geacht afkomstig te zijn uit een Verdragsluitende
Staat indien zij wordt betaald door die Staat zelf, een staatkundig onder-
deel of een plaatselijk publiekrechtelijk lichaam daarvan of door een
inwoner van die Staat. Indien evenwel de persoon die de interest betaalt,
of hij inwoner van een Verdragsluitende Staat is of niet, in een Verdrag-
sluitende Staat een vaste inrichting of een vast middelpunt heeft waar-
voor de schuld ter zake waarvan de interest wordt betaald was aange-
gaan en deze interest ten laste komt van die vaste inrichting of van dat
vaste middelpunt, wordt deze interest geacht afkomstig te zijn uit de
Staat waar de vaste inrichting of het vaste middelpunt is gevestigd.
9. Indien, wegens een bijzondere verhouding tussen de schuldenaar
en de uiteindelijk gerechtigde of tussen hen beiden en een derde, het
bedrag van de interest, gelet op de schuldvordering ter zake waarvan
deze wordt betaald, hoger is dan het bedrag dat zonder zulk een verhou-
ding door de schuldenaar en de uiteindelijk gerechtigde zou zijn over-
eengekomen, zijn de bepalingen van dit artikel slechts op het laatst-
bedoelde bedrag van toepassing. In dat geval blijft het daarboven
uitgaande deel van het betaalde bedrag belastbaar overeenkomstig de
wetgeving van elk van de Verdragsluitende Staten, zulks met inachtne-
ming van de overige bepalingen van dit Verdrag.

Artikel 12
Royaltys en vergoedingen voor technische diensten
1. Royaltys en vergoedingen voor technische diensten afkomstig uit
een Verdragsluitende Staat die worden betaald aan een inwoner van de
andere Verdragsluitende Staat mogen in die andere Staat worden belast.
2. Deze royaltys of vergoedingen voor technische diensten mogen
echter ook in de Verdragsluitende Staat waaruit zij afkomstig zijn over-
eenkomstig de wetgeving van die Staat worden belast, maar indien de
uiteindelijk gerechtigde tot de royaltys of vergoedingen voor technische
diensten een inwoner van de andere Verdragsluitende Staat is, mag de
 47 109
aldus geheven belasting 8 percent van het brutobedrag van de royaltys
of vergoedingen voor technische diensten niet overschrijden.
3. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
4. De uitdrukking royaltys, zoals gebezigd in dit artikel, betekent
vergoedingen van welke aard ook voor het gebruik van, of voor het recht
van gebruik van, een auteursrecht op een werk op het gebied van letter-
kunde, kunst of wetenschap, waaronder begrepen bioscoopfilms of films
of banden voor radio- of televisieuitzendingen, een octrooi, een fabrieks-
of handelsmerk, een tekening of model, een plan, een geheim recept of
een geheime werkwijze, of voor het gebruik van of het recht van gebruik
van inlichtingen omtrent ervaringen op het gebied van nijverheid, han-
del of wetenschap.
5. De uitdrukking vergoedingen voor technische diensten zoals
gebezigd in dit artikel betekent vergoedingen van welke aard ook aan
personen, niet zijnde werknemers van de persoon die de vergoedingen
betaalt, ter zake van diensten van leidinggevende, technische of advise-
rende aard. Het is wel te verstaan dat de uitdrukking vergoedingen voor
technische diensten niet mede omvat vergoedingen ter zake van toe-
zichthoudende activiteiten die verband houden met een plaats van uit-
voering van een bouwwerk of van constructie-, montage- of installatie-
werkzaamheden of terzake van toezichthoudende activiteiten die
voortvloeien uit installatiewerkzaamheden in verband met de verkoop
van machinerie of onderdelen daarvan en inkomsten bedoeld in artikel
14, eerste lid.
6. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de royaltys of vergoedingen voor
technische diensten, die inwoner is van een Verdragsluitende Staat, in de
andere Verdragsluitende Staat waaruit de royaltys of vergoedingen voor
technische diensten afkomstig zijn, een bedrijf uitoefent door middel van
een aldaar gevestigde vaste inrichting of in die andere Staat zelfstandige
arbeid verricht vanuit een aldaar gevestigd vast middelpunt, en het recht
of de zaak uit hoofde waarvan de royaltys of vergoedingen voor tech-
nische diensten worden betaald, tot het bedrijfsvermogen van die vaste
inrichting of tot het beroepsvermogen van dat vaste middelpunt behoort.
In dat geval zijn de bepalingen van artikel 7 of van artikel 14 naarge-
lang van het geval, van toepassing.
7. Royaltys of vergoedingen voor technische diensten worden geacht
afkomstig te zijn uit een Verdragsluitende Staat indien zij worden be-
taald door die Staat zelf, een staatkundig onderdeel of een plaatselijk
publiekrechtelijk lichaam daarvan of door een inwoner van die Staat.
Indien evenwel de persoon die de royaltys of vergoedingen voor tech-
109 48

nische diensten betaalt, ongeacht of hij inwoner van een Verdragsluitende

Staat is of niet, in een Verdragsluitende Staat een vaste inrichting of een
vast middelpunt heeft waarvoor de verplichting tot het betalen van
royaltys of vergoedingen voor technische diensten was aangegaan en
deze royaltys of vergoedingen voor technische diensten ten laste komen
van die vaste inrichting of dat vaste middelpunt, worden deze royaltys
of vergoedingen voor technische diensten geacht afkomstig te zijn uit de
Staat waar de vaste inrichting of het vaste middelpunt is gevestigd.
8. Indien, wegens een bijzondere verhouding tussen de schuldenaar
en de uiteindelijk gerechtigde of tussen hen beiden en een derde, het
bedrag van de royaltys of vergoedingen voor technische diensten, gelet
op het gebruik, het recht of de inlichtingen waarvoor zij worden betaald,
hoger is dan het bedrag dat zonder zulk een verhouding door de schul-
denaar en de uiteindelijk gerechtigde zou zijn overeengekomen, zijn de
bepalingen van dit artikel slechts op het laatstbedoelde bedrag van toe-
passing. In dat geval blijft het daarboven uitgaande deel van het betaalde
bedrag belastbaar overeenkomstig de wetgeving van elk van de Verdrag-
sluitende Staten, zulks met inachtneming van de overige bepalingen van
dit Verdrag.

Artikel 13
Vermogenswinsten
1. Voordelen verkregen door een inwoner van een Verdragsluitende
Staat uit de vervreemding van onroerende zaken als bedoeld in artikel 6
en die zijn gelegen in de andere Verdragsluitende Staat, mogen in die
andere Staat worden belast.
2. Voordelen verkregen uit de vervreemding van roerende goederen
die deel uitmaken van het bedrijfsvermogen van een vaste inrichting die
een onderneming van een Verdragsluitende Staat in de andere Verdrag-
sluitende Staat heeft of van roerende goederen die behoren tot een vast
middelpunt waarover een inwoner van een Verdragsluitende Staat in de
andere Verdragsluitende Staat beschikt voor het verrichten van zelfstan-
dige arbeid, waaronder begrepen voordelen verkregen uit de vervreem-
ding van de vaste inrichting (afzonderlijk of met de gehele onderne-
ming) of van dat vaste middelpunt, mogen in die andere Staat worden
belast.
3. Voordelen verkregen door een onderneming van een Verdrag-
sluitende Staat uit de vervreemding van schepen of luchtvaartuigen die
in internationaal verkeer worden gexploiteerd of van roerende goede-
ren die worden gebruikt bij de exploitatie van deze schepen of luchtvaar-
tuigen zijn slechts belastbaar in die Staat.
 49 109
4. Voordelen verkregen door een inwoner van een Verdragsluitende
Staat uit de vervreemding van aandelen in een lichaam waarvan meer
dan 90 per cent van de waarde onmiddellijk of middellijk ontleend wordt
aan onroerende zaken gelegen in de andere Verdragsluitende Staat (niet
zijnde aandelen genoteerd op een aandelenbeurs van een van beide
Verdragsluitende Staten) mogen in die andere Staat worden belast, mits
de inwoner onmiddellijk of middellijk ten minste 5 percent van de
geplaatste aandelen bezit.
5. Voordelen verkregen uit de vervreemding van alle andere goederen
dan die bedoeld in het eerste, tweede, derde en vierde lid, zijn slechts
belastbaar in de Verdragsluitende Staat waarvan de vervreemder inwo-
ner is.
6. Niettegenstaande de bepalingen van het vijfde lid, mag Nederland,
overeenkomstig zijn eigen wetgeving, de betekenis van de uitdrukking
vervreemding daaronder begrepen, belasting heffen over voordelen
verkregen door een natuurlijke persoon die inwoner is van Ghana ver-
kregen uit de vervreemding van aandelen in, winstbewijzen van of
schuldvorderingen op een lichaam met een in aandelen verdeeld kapi-
taal, dat volgens de wetgeving van Nederland inwoner is van Nederland,
alsmede uit de vervreemding van een gedeelte van de in die aandelen,
winstbewijzen of schuldvorderingen besloten liggende rechten, indien
die natuurlijke persoon al dan niet tezamen met zijn of haar echtge-
noot dan wel een van hun bloed- of aanverwanten in de rechte lijn
onmiddellijk of middellijk ten minste vijf percent bezit van het ge-
plaatste kapitaal van een bepaalde soort van aandelen van dat lichaam.
Deze bepaling vindt alleen toepassing wanneer de natuurlijke persoon
die de voordelen verkrijgt in de loop van de laatste tien jaar vooraf-
gaande aan het jaar waarin die voordelen worden verkregen inwoner van
Nederland is geweest en mits op het tijdstip waarop hij inwoner werd
van Ghana werd voldaan aan de eerdergenoemde voorwaarden ten aan-
zien van het aandelenbezit in eerdergenoemd lichaam.
In de gevallen waarin, ingevolge de nationale wetgeving van Neder-
land, aan de natuurlijke persoon een aanslag is opgelegd ter zake van de
vorenbedoelde aandelen die geacht worden bij diens emigratie uit Ne-
derland te zijn vervreemd, geldt het vorenstaande alleen voor zover er
van deze aanslag nog een bedrag openstaat.
7. Niettegenstaande de bepalingen van het vijfde lid, mogen de voor-
delen uit de vervreemding van goederen in de zin van het vijfde lid die
zich in Ghana bevinden en zijn verworven door een natuurlijke persoon
die inwoner is geweest van Ghana en inwoner is geworden van Neder-
land in Ghana worden belast indien de vervreemding van de goederen
plaatsvindt binnen vijf jaar na de datum waarop de natuurlijke persoon
is opgehouden inwoner van Ghana te zijn.
109 50

Artikel 14
Zelfstandige arbeid
1. Inkomsten verkregen door een inwoner van een Verdragsluitende
Staat in de uitoefening van een vrij beroep of ter zake van andere werk-
zaamheden van zelfstandige aard zijn slechts in die Staat belastbaar, ten-
zij:
a. hij in de andere Verdragsluitende Staat voor het verrichten van zijn
werkzaamheden geregeld over een vast middelpunt beschikt; in dat
geval mogen de inkomsten slechts in zoverre zij zijn toe te rekenen aan
dat vaste middelpunt in die andere Verdragsluitende Staat worden belast;
of
b. hij in de andere Verdragsluitende Staat verblijft gedurende een tijd-
vak dat of tijdvakken die tezamen in een tijdvak van twaalf maanden
beginnend of eindigend in het desbetreffende belastingjaar in totaal 9
maanden of meer beslaat of beslaan; in dat geval mogen de inkomsten
slechts in die andere Verdragsluitende Staat worden belast voor zover zij
verkregen zijn met de werkzaamheden die hij in die Staat verricht.
2. De uitdrukking vrij beroep omvat in het bijzonder zelfstandige
werkzaamheden op het gebied van wetenschap, letterkunde, kunst, op-
voeding of onderwijs, alsmede de zelfstandige werkzaamheden van art-
sen, advocaten, ingenieurs, architecten, tandartsen en accountants.
Artikel 15
Niet-zelfstandige arbeid
1. Onder voorbehoud van de bepalingen van de artikelen 16, 18, 19,
20 en 21, zijn salarissen, lonen en andere soortgelijke beloningen ver-
kregen door een inwoner van een Verdragsluitende Staat ter zake van
een dienstbetrekking slechts in die Staat belastbaar, tenzij de dienstbe-
trekking in de andere Verdragsluitende Staat wordt uitgeoefend. Indien
de dienstbetrekking aldaar wordt uitgeoefend, mag de ter zake daarvan
verkregen beloning in die andere Staat worden belast.
2. Niettegenstaande de bepalingen van het eerste lid is de beloning
verkregen door een inwoner van een Verdragsluitende Staat ter zake van
een in de andere Verdragsluitende Staat uitgeoefende dienstbetrekking
slechts in de eerstbedoelde Staat belastbaar, indien:
a. de genieter in de andere Staat verblijft gedurende een tijdvak dat
of tijdvakken die in een tijdvak van twaalf maanden beginnend of ein-
digend in het desbetreffende belastingjaar een totaal van 183 dagen niet
te boven gaat of gaan, en
b. de beloning wordt betaald door of namens een werkgever die geen
inwoner van de andere Staat is, en
 51 109
c. de beloning niet ten laste komt van een vaste inrichting die of een
vast middelpunt dat de werkgever in de andere Staat heeft.
3. Niettegenstaande de voorgaande bepalingen van dit artikel, is de
beloning verkregen door een inwoner van een Verdragsluitende Staat
slechts in die Staat belastbaar indien de beloning is betaald ter zake van
een dienstbetrekking uitgeoefend in de andere Verdragsluitende Staat in
verband met een plaats van uitvoering van een bouwwerk of van
constructie-, montage- of installatiewerkzaamheden of toezichthoudende
activiteiten die daarmee verband houden gedurende het tijdvak van
negen maanden gedurende welke deze plaats, die werkzaamheden of die
activiteiten geen vaste inrichting in die andere Staat vormen.
4. Niettegenstaande de bepalingen van het derde lid van dit artikel, is
de beloning verkregen door een inwoner van een Verdragsluitende Staat
slechts in die Staat belastbaar indien de beloning is betaald ter zake van
een dienstbetrekking uitgeoefend in de andere Verdragsluitende Staat in
verband met toezichthoudende activiteiten die geen verband houden met
een plaats van uitvoering van een bouwwerk, of van constructie-, mon-
tage of installatiewerkzaamheden gedurende het tijdvak van negen maan-
den gedurende welke deze activiteiten geen vaste inrichting in die
andere Staat vormen.
5. Niettegenstaande de voorgaande bepalingen van dit artikel mag de
beloning verkregen door een inwoner van een Verdragsluitende Staat ter
zake van een dienstbetrekking uitgeoefend aan boord van een schip of
luchtvaartuig dat in internationaal verkeer wordt gexploiteerd, in de
Verdragsluitende Staat worden belast waarin de onderneming is geves-
tigd.
Artikel 16
Directeursbeloningen
Directeursbeloningen en andere beloningen verkregen door een inwo-
ner van een Verdragsluitende Staat in zijn hoedanigheid van lid van de
raad van beheer van een lichaam dat inwoner is van de andere Verdrag-
sluitende Staat, mogen in die andere Staat worden belast.
Artikel 17
Artiesten en sportbeoefenaars
1. Niettegenstaande de bepalingen van de artikelen 7, 14 en 15
mogen voordelen of inkomsten verkregen door een inwoner van een
Verdragsluitende Staat als artiest, zoals een toneelspeler, een film-,
radio- of televisie-artiest of een musicus, of als sportbeoefenaar, uit zijn
109 52

persoonlijke werkzaamheden als zodanig die worden verricht in de

andere Verdragsluitende Staat, worden belast in die andere Staat.
2. Indien voordelen of inkomsten ter zake van persoonlijke werk-
zaamheden die door een artiest of een sportbeoefenaar in die hoedanig-
heid worden verricht, niet aan de artiest of sportbeoefenaar zelf toeko-
men, maar aan een andere persoon, mogen die voordelen of inkomsten,
niettegenstaande de bepalingen van de artikelen 7, 14 en 15, worden
belast in de Verdragsluitende Staat waarin de werkzaamheden van de
artiest of sportbeoefenaar worden verricht.
3. De bepalingen van het eerste en tweede lid zijn niet van toepassing
op voordelen of inkomsten die worden verkregen door een inwoner van
een Verdragsluitende Staat uit werkzaamheden die worden verricht in de
andere Verdragsluitende Staat, indien het bezoek aan die andere Staat
geheel of grotendeels wordt bekostigd uit de openbare middelen van een
of beide Verdragsluitende Staten, een staatkundig onderdeel of een plaat-
selijk publiekrechtelijk lichaam daarvan, of plaatsvindt in het kader van
een uitwisselingsprogramma op het gebied van cultuur of sport tussen
de Regeringen van de Verdragsluitende Staten. In een zodanig geval zijn
de voordelen of inkomsten slechts belastbaar in de Verdragsluitende
Staat waarvan de artiest of sportbeoefenaar inwoner is.
Artikel 18
Pensioenen, lijfrenten en socialezekerheidsuitkeringen
1. Onder voorbehoud van de bepalingen van artikel 19, tweede lid,
zijn pensioenen en andere soortgelijke beloningen betaald aan een inwo-
ner van een Verdragsluitende Staat ter zake van een vroegere dienstbe-
trekking alsmede lijfrenten betaald aan een inwoner van een Verdrag-
sluitende Staat slechts in die Staat belastbaar. Pensioenen en andere
uitkeringen betaald krachtens de bepalingen van een socialezekerheids-
stelsel van een Verdragsluitende Staat aan een inwoner van de andere
Verdragsluitende Staat zijn slechts in die andere Staat belastbaar.
2. Niettegenstaande het bepaalde in het eerste lid, mag een pensioen
of andere soortgelijke beloning, een lijfrente of ieder pensioen en andere
uitkering betaald krachtens de bepalingen van een socialezekerheids-
stelsel van een Verdragsluitende Staat ook worden belast in de Verdrag-
sluitende Staat waaruit deze afkomstig is, overeenkomstig de wetgeving
van die Staat:
a. voor zover de aanspraak op dit pensioen of andere soortgelijke
beloning of lijfrente in de Verdragsluitende Staat, waaruit het pensioen
of de andere soortgelijke beloning of lijfrente afkomstig is, van belas-
ting is vrijgesteld, dan wel de met het pensioen of andere soortgelijke
beloning of lijfrente samenhangende bijdragen aan de pensioenregeling
 53 109
of verzekeringsmaatschappij, in het verleden bij het bepalen van het in
die Staat belastbare inkomen in aftrek zijn gebracht, dan wel anderszins
in die Staat in aanmerking zijn gekomen voor een fiscale faciliring; en
b. voorzover dit pensioen of andere soortgelijke beloning of lijfrente
of dit pensioen of andere uitkering betaald krachtens de bepalingen van
een socialezekerheidsstelsel van een Verdragsluitende Staat in de
Verdragsluitende Staat waarvan de genieter inwoner is, niet tegen het
algemeen van toepassing zijnde belastingtarief voor inkomsten verkre-
gen uit niet-zelfstandige arbeid dan wel het brutobedrag van dat pen-
sioen of andere soortgelijke beloning of lijfrente voor minder dan 90
percent, in de belastingheffing wordt betrokken; en
c. indien het totale brutobedrag van de pensioenen en andere soort-
gelijke beloning of lijfrenten en ieder pensioen en andere uitkering
betaald krachtens de bepalingen van een socialezekerheidsstelsel van
een Verdragsluitende Staat, in enig kalenderjaar een bedrag van twintig-
duizend (20.000) euro te boven gaat.
3. Niettegenstaande de bepalingen van het eerste en tweede lid, mag,
indien dit pensioen of andere soortgelijke beloning geen periodiek ka-
rakter draagt, wordt betaald ter zake van een vroegere dienstbetrekking
in de andere Verdragsluitende Staat en uitbetaling plaatsvindt vr de
datum waarop het pensioen ingaat, of indien in plaats van het recht op
lijfrente vr de datum waarop de lijfrente ingaat een afkoopsom wordt
betaald, de betaling of deze afkoopsom ook in de Verdragsluitende Staat
waaruit zij afkomstig is worden belast.
4. Een pensioen of andere soortelijke beloning of lijfrente wordt
geacht afkomstig te zijn uit een Verdragsluitende Staat voorzover de met
dit pensioen of andere soortgelijke beloning of lijfrente samenhangende
bijdragen of betalingen, dan wel de aanspraken op dit pensioen of andere
soortgelijke beloning of lijfrente in die Staat in aanmerking zijn geko-
men voor een fiscale faciliring. De ingevolge dit artikel aan een Verdrag-
sluitende Staat toegekende heffingsrechten worden op geen enkele wijze
beperkt door de overdracht van een pensioen van een in een Verdrag-
sluitende Staat gevestigd pensioenfonds of aldaar gevestigde verzeke-
ringsmaatschappij naar een in een andere Staat gevestigd pensioenfonds
of aldaar gevestigde verzekeringsmaatschappij.
5. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
Zij beslissen tevens welke gegevens de inwoner van een Verdrag-
sluitende Staat ten behoeve van de juiste toepassing van het Verdrag in
de andere Verdragsluitende Staat moet overleggen, met name om te kun-
nen vaststellen of al dan niet voldaan is aan de voorwaarden als bedoeld
in de onderdelen a, b en c van het tweede lid.
109 54

6. De uitdrukking lijfrente betekent een vaste som, periodiek be-

taalbaar op vaste tijdstippen, hetzij gedurende het leven, hetzij gedu-
rende een vastgesteld of voor vaststelling vatbaar tijdvak, ingevolge een
verbintenis tot het doen van betalingen, welke tegenover een voldoende
en volledige tegenprestatie in geld of geldswaarde staat.
7. Of en in hoeverre een pensioen of soortgelijke beloning onder dit
artikel of onder artikel 19 valt, wordt bepaald door het karakter van de
vroegere dienstbetrekking, zijnde particulier of overheid, gedurende
welke de aanspraak op dat gedeelte van het pensioen of soortgelijke
beloning werd opgebouwd.
8. Bijdragen die door of namens een natuurlijke persoon die in een
Verdragsluitende Staat diensten verleent zijn betaald aan een voor de
belastingheffing in de andere Verdragsluitende Staat erkende pensioen-
regeling,
i. waaraan de natuurlijke persoon onmiddellijk voordat hij begon met
de dienstverlening in de eerstbedoelde Staat deelnam,
ii. waaraan de natuurlijke persoon deelnam op het tijdstip waarop hij
diensten verleende in of inwoner was van de andere Staat, en
iii. die de bevoegde autoriteit van de eerstbedoelde Staat heeft aan-
vaard als zijnde gelijkwaardig aan een door die Staat voor de
belastingheffing erkende pensioenregeling,
dienen voor het vaststellen van de belasting die de natuurlijke persoon
verschuldigd is in de eerstbedoelde Staat en van de voordelen van een
onderneming die in de eerstbedoelde Staat mogen worden belast, in die
Staat op dezelfde wijze en onder dezelfde voorwaarden en beperkingen
te worden behandeld als bijdragen die zijn betaald aan een pensioen-
regeling die in die Staat voor de belastingheffing is erkend.
Voor de toepassing van dit lid:
a. betekent de uitdrukking pensioenregeling een regeling waaraan
de natuurlijke persoon deelneemt teneinde pensioenuitkeringen veilig te
stellen die hem verschuldigd zijn ter zake van de diensten bedoeld in dit
lid; en
b. wordt een pensioenregeling voor de belastingheffing in een Staat
erkend indien de bijdragen aan de regeling in die Staat in aanmerking
komen voor een fiscale faciliring.
Artikel 19
Overheidsfuncties

1. a. Salarissen, lonen en andere soortgelijke beloningen, betaald

door een Verdragsluitende Staat of een staatkundig onderdeel of een
plaatselijk publiekrechtelijk lichaam daarvan, aan een natuurlijke per-
soon ter zake van diensten verleend aan die Staat of dat onderdeel of dat
publiekrechtelijke lichaam, zijn slechts in die Staat belastbaar.
 55 109
b. Deze salarissen, lonen en andere soortgelijke beloningen zijn ech-
ter slechts in de andere Verdragsluitende Staat belastbaar, indien de dien-
sten in die Staat worden verleend en de natuurlijke persoon een inwoner
is van die Staat die:
i. onderdaan is van die Staat; of
ii. niet uitsluitend voor het verlenen van de diensten inwoner van
die Staat werd.

2. a. Niettegenstaande de bepalingen van het eerste lid, zijn pensioe-

nen en andere soortgelijke beloningen betaald door, of uit fondsen in het
leven geroepen door, een Verdragsluitende Staat of een staatkundig
onderdeel of een plaatselijk publiekrechtelijk lichaam daarvan aan een
natuurlijke persoon ter zake van diensten verleend aan die Staat of dat
onderdeel of dat lichaam, slechts in die Staat belastbaar.
b. Deze pensioenen en andere soortgelijke beloningen zijn echter
slechts in de andere Verdragsluitende Staat belastbaar, indien de natuur-
lijke persoon inwoner en onderdaan is van die Staat.
3. De bepalingen van de artikelen 15, 16, 17 en 18 zijn van toepas-
sing op salarissen, lonen, pensioenen en andere soortgelijke beloningen
betaald ter zake van diensten verleend in het kader van een op winst
gericht bedrijf, uitgeoefend door een Verdragsluitende Staat of een staat-
kundig onderdeel of een plaatselijk publiekrechtelijk lichaam daarvan.

Artikel 20
Hoogleraren, onderzoekers en docenten
1. Een natuurlijke persoon die een Verdragsluitende Staat bezoekt uit-
sluitend met het doel onderwijs te geven of onderzoek te verrichten aan
een universiteit, hogeschool, school of andere officieel erkende inrich-
ting voor onderwijs in die Staat en die onmiddellijk voorafgaand aan dat
bezoek inwoner is of was van de andere Verdragsluitende Staat, is in de
eerstbedoelde Verdragsluitende Staat vrijgesteld van belasting over de
beloning voor het geven van onderwijs of het verrichten van onderzoek
gedurende een tijdvak van ten hoogste twee jaar vanaf de datum van zijn
eerste bezoek met dat doel, mits deze beloning afkomstig is uit bronnen
buiten die Staat.
2. Dit artikel is niet van toepassing op inkomsten uit het verrichten
van wetenschappelijk onderzoek, indien dit onderzoek niet wordt ver-
richt in het algemeen belang, maar in de eerste plaats voor het persoon-
lijk nut van een bepaalde persoon of bepaalde personen.
109 56

Artikel 21
Studenten
1. Vergoedingen die een student of een voor een beroep of bedrijf in
opleiding zijnde persoon die inwoner is of onmiddellijk voorafgaande
aan zijn bezoek aan een Verdragsluitende Staat inwoner was van de
andere Verdragsluitende Staat en die uitsluitend voor zijn studie of oplei-
ding in de eerstbedoelde Staat verblijft, ontvangt ten behoeve van zijn
onderhoud, studie of opleiding, zijn in die Staat niet belastbaar, mits
deze betalingen aan hem worden gedaan uit bronnen buiten die Staat.
2. Daarnaast is een student of een voor een beroep of bedrijf in oplei-
ding zijnde persoon zoals beschreven in het eerste lid, met betrekking
tot toelagen, beurzen en beloningen uit een dienstbetrekking waarin het
eerste lid niet voorziet gedurende zijn opleiding of training gerechtigd
tot dezelfde vrijstellingen, tegemoetkomingen of verminderingen met
betrekking tot belastingen die beschikbaar zijn voor de inwoners van de
Verdragsluitende Staat die hij bezoekt.
Artikel 22
Overige inkomsten
1. Bestanddelen van het inkomen van een inwoner van een Verdrag-
sluitende Staat, van waaruit ook afkomstig, die niet in de voorgaande
artikelen van dit Verdrag zijn behandeld, zijn slechts in die Staat belast-
baar.
2. De bepalingen van het eerste lid zijn niet van toepassing op inkom-
sten, niet zijnde inkomsten uit onroerende zaken zoals omschreven in
artikel 6, tweede lid, indien de genieter van die inkomsten, die inwoner
is van een Verdragsluitende Staat, in de andere Verdragsluitende Staat
een bedrijf uitoefent door middel van een aldaar gevestigde vaste inrich-
ting of in die andere Staat zelfstandige arbeid verricht vanuit een vast
middelpunt aldaar, en het recht of de zaak ter zake waarvan de inkom-
sten worden betaald tot het bedrijfsvermogen van die vaste inrichting of
tot het beroepsvermogen van dat vaste middelpunt behoort. In dat geval
zijn de bepalingen van artikel 7 of van artikel 14 naargelang van het
geval, van toepassing.
Artikel 23
Overmakingen
1. Indien ingevolge een bepaling van dit Verdrag een Verdragsluitende
Staat het belastingtarief op inkomsten of vermogenswinsten verlaagt of
 57 109
inkomsten of vermogenswinsten van belasting vrijstelt en een persoon,
ingevolge de in de andere Verdragsluitende Staat geldende wetgeving,
ter zake van die inkomsten of vermogenswinsten niet voor het volle
bedrag aan belasting is onderworpen maar slechts voor zover het bedrag
daarvan naar de andere Verdragsluitende Staat is overgemaakt of aldaar
is ontvangen, vindt de vermindering of vrijstelling die de eerstbedoelde
Verdragsluitende Staat ingevolge dit Verdrag moet verlenen slechts toe-
passing op het gedeelte van de inkomsten dat of de vermogenswinsten
die in de andere Verdragsluitende Staat belast wordt of worden.
2. Het bepaalde in het eerste lid van dit artikel is echter niet van toe-
passing op inkomsten of vermogenswinsten verkregen door de Regering,
een staatkundig onderdeel of een plaatselijk publiekrechtelijk lichaam of
een agentschap van een Verdragsluitende Staat of de Centrale Bank van
een Verdragsluitende Staat.

HOOFDSTUK IV
VERMIJDING VAN DUBBELE BELASTING

Artikel 24
Vermijding van dubbele belasting
1. Nederland is bevoegd bij het heffen van belasting van zijn inwo-
ners in de grondslag waarnaar de belasting wordt geheven, de bestand-
delen van het inkomen te begrijpen die overeenkomstig de bepalingen
van dit Verdrag in Ghana mogen worden belast of slechts in Ghana
belastbaar zijn.
2. Indien echter een inwoner van Nederland bestanddelen van het
inkomen verkrijgt die volgens artikel 6, eerste, derde en vierde lid, arti-
kel 7, eerste lid, artikel 10, zesde lid, artikel 11, zevende lid, artikel 12,
zesde lid, artikel 13, eerste, tweede en vierde lid, artikel 14, eerste lid,
artikel 15, eerste en vijfde lid, artikel 18, tweede lid, artikel 19, eerste
lid (onderdeel a) en tweede lid (onderdeel a) en artikel 22, tweede lid,
van dit Verdrag in Ghana mogen worden belast en die in de in het eer-
ste lid bedoelde grondslag zijn begrepen, stelt Nederland deze bestand-
delen van het inkomen vrij door een vermindering op zijn belasting te
verlenen. Deze vermindering wordt berekend overeenkomstig de bepa-
lingen in de Nederlandse wetgeving tot het vermijden van dubbele belas-
ting. Te dien einde worden bedoelde bestanddelen van het inkomen
geacht te zijn begrepen in het bedrag van de bestanddelen van het inko-
men die ingevolge die bepalingen van Nederlandse belasting zijn vrijge-
steld.
109 58

3. Nederland verleent voorts een vermindering op de aldus berekende

Nederlandse belasting voor de bestanddelen van het inkomen die vol-
gens artikel 10, tweede lid, artikel 11, tweede lid, artikel 12, tweede lid,
artikel 13, zevende lid, artikel 16, artikel 17, eerste en tweede lid, en
artikel 18, derde lid, van dit Verdrag in Ghana mogen worden belast, in
zoverre deze bestanddelen in de in het eerste lid bedoelde grondslag zijn
begrepen.
Het bedrag van deze vermindering is gelijk aan de in Ghana over deze
bestanddelen van het inkomen betaalde belasting, maar bedraagt, indien
de bepalingen in de Nederlandse wetgeving tot het vermijden van dub-
bele belasting daarin voorzien, niet meer dan het bedrag van de vermin-
dering die zou zijn verleend indien de aldus in het inkomen begrepen
bestanddelen van het inkomen de enige bestanddelen van het inkomen
zouden zijn geweest die uit hoofde van de bepalingen in de Nederlandse
wetgeving tot het vermijden van dubbele belasting van Nederlandse
belasting zijn vrijgesteld.
Dit lid zal een tegemoetkoming nu of in de toekomst verleend uit
hoofde van de bepalingen in de Nederlandse wetgeving tot het vermij-
den van dubbele belasting niet beperken, echter uitsluitend voor zover
het de berekening van het bedrag van de vermindering op de Neder-
landse belasting betreft die betrekking heeft op de som van inkomsten
afkomstig uit meer dan een land en de voortwenteling van de belasting
betaald in Ghana op bedoelde bestanddelen van het inkomen naar de
volgende jaren.
4. Niettegenstaande de bepalingen van het tweede lid, verleent Neder-
land een vermindering op de Nederlandse belasting voor de in Ghana
betaalde belasting op bestanddelen van het inkomen die volgens artikel
7, eerste lid, artikel 10, zesde lid, artikel 11, zevende lid, artikel 12,
zesde lid, artikel 14, eerste lid, en artikel 22, tweede lid, van dit Verdrag
in Ghana mogen worden belast, voor zover deze bestanddelen in de in
het eerste lid bedoelde grondslag zijn begrepen, indien en voor zover
Nederland uit hoofde van de bepalingen in de Nederlandse wetgeving tot
het vermijden van dubbele belasting een vermindering verleent op de
Nederlandse belasting voor de in een ander land over die bestanddelen
van het inkomen geheven belasting. Voor de berekening van deze ver-
mindering zijn de bepalingen van het derde lid van dit artikel van over-
eenkomstige toepassing.
5. Dubbele belasting wordt in Ghana als volgt vermeden:
a. Nederlandse belasting over voordelen, inkomsten of belastbare
vermogenswinsten afkomstig uit bronnen in Nederland die hetzij recht-
streeks (door middel van een aanslag) hetzij door middel van aftrek
(inhouding) verschuldigd is krachtens de wetgeving van Nederland en in
overeenstemming met de bepalingen van het Verdrag (met uitzondering
van, in het geval van dividenden, belasting verschuldigd ter zake van de
voordelen waaruit de dividenden worden betaald), wordt in aftrek toe-
 59 109
gestaan op elke Ghanese belasting berekend met betrekking tot dezelfde
voordelen, inkomsten of belastbare vermogenswinsten als die met be-
trekking tot welke de Nederlandse belasting is berekend;
b. In het geval van dividenden betaald door een lichaam dat inwoner
is van Nederland aan een lichaam dat inwoner is van Ghana en dat recht-
streeks ten minste tien percent van het kapitaal beheerst van het lichaam
dat de dividenden betaalt, wordt bij de aftrek (naast de ingevolge de
bepalingen van onderdeel a eventueel aftrekbare Nederlandse belasting)
mede in aanmerking genomen de door het lichaam in Nederland ver-
schuldigde belasting ter zake van de voordelen waaruit die dividenden
worden betaald.
c. Het uit hoofde van dit lid in aftrek toegestane bedrag mag niet
hoger zijn dan de Ghanese belasting die drukt op deze voordelen,
inkomsten of belastbare vermogenswinsten die tot de Ghanese belasting
berekend over de volledige in Ghana belastbare voordelen, inkomsten of
vermogenswinsten in dezelfde verhouding staat als deze voordelen,
inkomsten of belastbare vermogenswinsten staan tot de volledige voor-
delen, inkomsten of belastbare vermogenswinsten die, al naargelang van
het geval, aan de Ghanese belasting mogen worden onderworpen.

HOOFDSTUK V
BIJZONDERE BEPALINGEN

Artikel 25
Non-discriminatie
1. Onderdanen van een Verdragsluitende Staat worden in de andere
Verdragsluitende Staat niet aan enige belastingheffing of daarmede ver-
band houdende verplichting onderworpen, die anders of zwaarder is dan
de belastingheffing en daarmede verband houdende verplichtingen waar-
aan onderdanen van die andere Staat onder dezelfde omstandigheden, in
het bijzonder met betrekking tot woonplaats, zijn of kunnen worden
onderworpen. Deze bepaling is, niettegenstaande het bepaalde in artikel
1, ook van toepassing op personen die geen inwoner zijn van een of van
beide Verdragsluitende Staten.
2. Staatlozen die inwoner zijn van een Verdragsluitende Staat worden
in geen van de Verdragsluitende Staten aan enige belastingheffing of
daarmede verband houdende verplichting onderworpen, die anders of
zwaarder is dan de belastingheffing en daarmede verband houdende ver-
plichtingen waaraan onderdanen van de betreffende Staat onder dezelfde
omstandigheden, in het bijzonder met betrekking tot de woonplaats, zijn
of kunnen worden onderworpen.
109 60

3. De belastingheffing van een vaste inrichting die een onderneming

van een Verdragsluitende Staat in de andere Verdragsluitende Staat heeft,
is in die andere Staat niet ongunstiger dan de belastingheffing van onder-
nemingen van die andere Staat die dezelfde werkzaamheden uitoefenen.
Deze bepaling mag niet aldus worden uitgelegd, dat zij een Verdrag-
sluitende Staat verplicht aan inwoners van de andere Verdragsluitende
Staat bij de belastingheffing de persoonlijke aftrekken, tegemoetkomin-
gen en verminderingen uit hoofde van de samenstelling van het gezin of
gezinslasten te verlenen, die eerstbedoelde Staat aan zijn eigen inwoners
verleent.
4. Behalve indien de bepalingen van artikel 9, eerste lid, artikel 11,
negende lid, of artikel 12, achtste lid, van toepassing zijn, zijn interest,
royaltys en andere uitgaven betaald door een onderneming van een
Verdragsluitende Staat aan een inwoner van de andere Verdragsluitende
Staat, bij de vaststelling van de belastbare winst van die onderneming
onder dezelfde voorwaarden aftrekbaar als wanneer zij betaald waren
aan een inwoner van de eerstbedoelde Staat.
5. Ondernemingen van een Verdragsluitende Staat, waarvan het kapi-
taal geheel of gedeeltelijk, onmiddellijk of middellijk, in het bezit is van
of wordt beheerst door een of meer inwoners van de andere Verdrag-
sluitende Staat, worden in de eerstbedoelde Staat niet aan enige belas-
tingheffing of daarmede verband houdende verplichting onderworpen,
die anders of zwaarder is dan de belastingheffing en daarmede verband
houdende verplichtingen waaraan andere soortgelijke ondernemingen
van de eerstbedoelde Staat zijn of kunnen worden onderworpen.
6. Niettegenstaande de bepalingen van artikel 2, zijn de bepalingen
van dit artikel van toepassing op belastingen van elke soort en bena-
ming.
Artikel 26
Regeling voor onderling overleg
1. Indien een persoon van oordeel is dat de maatregelen van een of
van beide Verdragsluitende Staten voor hem leiden of zullen leiden tot
een belastingheffing die niet in overeenstemming is met de bepalingen
van dit Verdrag, kan hij, ongeacht de rechtsmiddelen waarin de natio-
nale wetgeving van die Staten voorziet, zijn geval voorleggen aan de
bevoegde autoriteit van de Verdragsluitende Staat waarvan hij inwoner
is, of, indien zijn geval valt onder artikel 25, eerste lid, aan die van de
Verdragsluitende Staat waarvan hij onderdaan is. Het geval moet wor-
den voorgelegd binnen drie jaar nadat de maatregel die leidt tot een
belastingheffing die niet in overeenstemming is met de bepalingen van
het Verdrag, voor het eerst te zijner kennis is gebracht.
 61 109
2. De bevoegde autoriteit tracht, indien het bezwaar haar gegrond
voorkomt en indien zij niet zelf in staat is tot een bevredigende oplos-
sing te komen, de aangelegenheid in onderlinge overeenstemming met
de bevoegde autoriteit van de andere Verdragsluitende Staat te regelen
teneinde een belastingheffing die niet in overeenstemming is met het
Verdrag te vermijden. De overeengekomen regeling wordt uitgevoerd
niettegenstaande de verjaringstermijnen in de nationale wetgeving van
de Verdragsluitende Staten.
3. De bevoegde autoriteiten van de Verdragsluitende Staten trachten
moeilijkheden of twijfelpunten die mochten rijzen met betrekking tot de
uitlegging of de toepassing van het Verdrag in onderlinge overeenstem-
ming op te lossen. Zij kunnen ook met elkaar overleg plegen teneinde
dubbele belasting ongedaan te maken in gevallen die niet in het Verdrag
zijn geregeld.
4. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het Verdrag en
in het bijzonder de vereisten waaraan de inwoners van een Verdrag-
sluitende Staat dienen te voldoen teneinde in de andere Verdragsluitende
Staat belastingverminderingen, vrijstellingen en andere voordelen te ver-
werven zoals voorzien in het Verdrag.
5. De bevoegde autoriteiten van de Verdragsluitende Staten kunnen
zich rechtstreeks, waaronder via een gezamenlijke commissie bestaande
uit hun vertegenwoordigers, met elkaar in verbinding stellen teneinde
een overeenstemming als bedoeld in de voorgaande leden te bereiken.
6. Wanneer moeilijkheden of twijfelpunten die zijn gerezen met be-
trekking tot de uitlegging of toepassing van het Verdrag niet binnen een
periode van twee jaar nadat de vraag is gerezen opgelost kunnen wor-
den door de bevoegde autoriteiten van de Verdragsluitende Staten in een
procedure voor onderling overleg ingevolge de voorgaande leden van dit
artikel, kan het geval op verzoek van een van de Verdragsluitende Sta-
ten, worden voorgelegd voor arbitrage, echter slechts nadat de procedu-
res die beschikbaar zijn op grond van het eerste tot en met het vijfde lid
van dit artikel volledig zijn uitgeput en mits de betrokken belastingplich-
tige of belastingplichtigen er schriftelijk mee instemt of instemmen te
zijn gebonden door de beslissing van de arbitragecommissie.
De beslissing van de arbitragecommissie in een bepaald geval is voor
dat geval bindend voor beide Verdragsluitende Staten en de betrokken
belastingplichtige of belastingplichtigen.
109 62

Artikel 27
Uitwisseling van inlichtingen
1. De bevoegde autoriteiten van de Verdragsluitende Staten wisselen
de inlichtingen uit die naar verwachting essentieel zijn voor het uitvoe-
ren van de bepalingen van dit Verdrag of voor de administratie of de
tenuitvoerlegging van de nationale wetgeving met betrekking tot belas-
tingen van elke soort en benaming die worden geheven ten behoeve van
de Verdragsluitende Staten, of van de staatkundige onderdelen of plaat-
selijke publiekrechtelijke lichamen daarvan, voor zover de heffing van
die belastingen niet in strijd is met het Verdrag. De uitwisseling van
inlichtingen wordt niet beperkt door de artikelen 1 en 2.
2. Alle uit hoofde van het eerste lid door een Verdragsluitende Staat
ontvangen inlichtingen worden op dezelfde wijze geheim gehouden als
inlichtingen die volgens de nationale wetgeving van die Staat zijn ver-
kregen en worden alleen ter kennis gebracht van personen of autoritei-
ten (daaronder begrepen rechterlijke instanties en administratief-
rechtelijke lichamen) die betrokken zijn bij de vaststelling of invordering
van, de tenuitvoerlegging of vervolging ter zake van, of de beslissing in
beroepszaken betrekking hebbende op de in het eerste lid bedoelde
belastingen, of het toezicht daarop. Deze personen of autoriteiten mogen
van de inlichtingen alleen voor deze doeleinden gebruik maken. Zij
mogen de inlichtingen bekendmaken in openbare rechtszittingen of in
rechterlijke beslissingen.
3. In geen geval worden de bepalingen van de voorgaande leden zo
uitgelegd dat zij een Verdragsluitende Staat de verplichting opleggen:
a. bestuurlijke maatregelen te nemen die in strijd zijn met de wetge-
ving of bestuurlijke praktijk van die of van de andere Verdragsluitende
Staat;
b. inlichtingen te verstrekken die niet verkrijgbaar zijn volgens de
wetgeving of in de normale gang van zaken in het bestuur van die of
van de andere Verdragsluitende Staat;
c. inlichtingen te verstrekken die een handels-, bedrijfs-, nijverheids-,
commercieel of beroepsgeheim of een fabrieks- of handelswerkwijze
zouden onthullen, dan wel inlichtingen waarvan het verstrekken in strijd
zou zijn met de openbare orde (ordre public).
4. Indien inlichtingen worden verzocht door een Verdragsluitende
Staat in overeenstemming met dit artikel, wendt de andere Verdrag-
sluitende Staat zijn maatregelen inzake het verzamelen van inlichtingen
aan om de verlangde inlichtingen te verkrijgen, ongeacht het feit dat de
andere Staat ten behoeve van zijn eigen belastingheffing niet over der-
gelijke inlichtingen behoeft te beschikken. Op de in de vorige zin ver-
vatte verplichting zijn de beperkingen van het derde lid van toepassing,
 63 109
maar deze beperkingen mogen in geen geval zodanig worden uitgelegd
dat het een Verdragsluitende Staat toegestaan is uitsluitend op grond van
het feit dat hij geen nationaal belang heeft bij dergelijke inlichtingen te
weigeren inlichtingen te verstrekken.
5. Wat Nederland betreft mogen de bepalingen van het derde lid van
dit artikel in geen geval zodanig worden uitgelegd dat het Nederland toe-
gestaan is het verschaffen van inlichtingen te weigeren uitsluitend op
grond van het feit dat de betreffende gegevens berusten bij een bank, een
andere financile instelling, een gevolmachtigde, of een persoon die bij
wijze van vertegenwoordiging of als vertrouwenspersoon optreedt, dan
wel omdat deze betrekking hebben op eigendomsbelangen in een per-
soon.
6. Wat Ghana betreft, verschaft Ghana Nederland op verzoek inlich-
tingen indien deze door Ghana worden verkregen tijdens gerechtelijke
procedures ter zake van een gerechtelijke vervolging die betrekking
heeft op belastingfraude aanhangig bij de rechterlijke instanties in Ghana.

Artikel 28
Bijstand bij de invordering van belastingen
De bevoegde autoriteiten van de Verdragsluitende Staten kunnen in
onderlinge overeenstemming regels en voorwaarden voorschrijven ten-
einde elkaar bijstand en ondersteuning te verlenen bij de invordering van
de belastingen waarop dit Verdrag van toepassing is en van de eventuele
interest, administratieve boetes en de kosten van invordering die verband
houden met dat bedrag.

Artikel 29
Leden van diplomatieke vertegenwoordigingen en consulaire posten
1. De bepalingen in dit Verdrag tasten in geen enkel opzicht de fis-
cale voorrechten aan die leden van diplomatieke vertegenwoordigingen
of consulaire posten ontlenen aan de algemene regels van het volken-
recht of aan de bepalingen van bijzondere overeenkomsten.
2. Het Verdrag is niet van toepassing op internationale organisaties,
op hun organen of functionarissen, noch op personen die lid zijn van een
diplomatieke vertegenwoordiging of consulaire post van een derde Staat,
die in een van de Verdragsluitende Staten verblijven en die in geen van
de Verdragsluitende Staten als inwoner worden behandeld met betrek-
king tot belastingen naar het inkomen en naar vermogenswinsten.
109 64

Artikel 30
Uitbreiding tot andere gebieden
1. Dit Verdrag kan, hetzij in zijn geheel, hetzij met de noodzakelijke
wijzigingen, worden uitgebreid tot de Nederlandse Antillen en Aruba, of
tot de Nederlandse Antillen of Aruba afzonderlijk, indien het desbetref-
fende land belastingen heft die in wezen gelijksoortig zijn aan de belas-
tingen waarop het Verdrag van toepassing is. Een dergelijke uitbreiding
wordt van kracht met ingang van een datum en met inachtneming van
wijzigingen en voorwaarden, daaronder begrepen voorwaarden ten aan-
zien van de beindiging, nader vast te stellen en overeen te komen bij
diplomatieke notawisseling.
2. Tenzij anders is overeengekomen, brengt de beindiging van het
Verdrag niet met zich mede, dat tevens de uitbreiding van het Verdrag
tot enig land waartoe het ingevolge dit artikel is uitgebreid, wordt bein-
digd.
HOOFDSTUK VI
SLOTBEPALINGEN
Artikel 31
Inwerkingtreding
De Verdragsluitende Staten stellen elkaar er langs diplomatieke weg
van in kennis dat de wettelijk vereiste procedures voor het in werking
doen treden van dit Verdrag zijn voltooid. De bepalingen van het Ver-
drag treden in werking dertig dagen na de datum van ontvangst van de
laatste van deze kennisgevingen en vinden in beide Verdragsluitende
Staten toepassing:
a. in het geval van belastingen geheven aan de bron, ter zake van
bedragen betaald op of na 1 januari van het kalenderjaar volgend op het
jaar waarin het Verdrag in werking is getreden;
b. in het geval van overige belastingen, ter zake van belastingen
geheven over tijdvakken beginnend op of na 1 januari van het kalender-
jaar volgend op het jaar waarin het Verdrag in werking is getreden.
Artikel 32
Beindiging
1. Dit Verdrag blijft van kracht totdat het door een Verdragsluitende
Staat wordt beindigd. Elk van de Verdragsluitende Staten kan het Ver-
drag langs diplomatieke weg beindigen door ten minste zes maanden
 65 109
voor het einde van enig kalenderjaar na het verstrijken van het vijfde
jaar na de datum van inwerkingtreding van het Verdrag kennis te geven
van de beindiging.
2. In dat geval houdt het Verdrag op van toepassing te zijn ter zake
van belastingjaren die beginnen na het eind van het kalenderjaar waarin
de kennisgeving van beindiging is gedaan.

TEN BLIJKE WAARVAN de ondergetekenden, daartoe naar behoren

gemachtigd, dit Verdrag hebben ondertekend.
GEDAAN in tweevoud te Accra op 10 maart 2008, in de Engelse taal.
Voor de Regering van het Koninkrijk der Nederlanden
J.C. DE JAGER
Voor de Regering van de Republiek Ghana
A. AKOTO OSEI

Protocol
Bij de ondertekening van het Verdrag tot het vermijden van dubbele
belasting en het voorkomen van het ontgaan van belasting met betrek-
king tot belastingen naar het inkomen en naar vermogenswinsten, heden
gesloten tussen het Koninkrijk der Nederlanden en de Republiek Ghana,
zijn de ondergetekenden overeengekomen dat de volgende bepalingen
een integrerend deel van het Verdrag vormen.
I.
Algemeen
1. De voordelen uit het Verdrag zijn niet van toepassing op lichamen
of andere personen die geheel of gedeeltelijk van belasting zijn vrijge-
steld uit hoofde van een bijzondere regeling krachtens de wetten van een
van de Verdragsluitende Staten. Zij zijn evenmin van toepassing op door
een inwoner van de andere Verdragsluitende Staat van dergelijke licha-
men of andere personen verkregen inkomsten, noch op aandelen, winst-
bewijzen of belangen in dergelijke lichamen of andere personen.
2. De bepalingen van het eerste lid van deze protocolbepaling zijn
ook van toepassing ingeval een lichaam of andere persoon krachtens de
109 66

bestuurlijke praktijk van die Staat op dezelfde of op soortgelijke wijze

wordt behandeld als een lichaam of persoon zoals bedoeld in dat lid.
3. De bevoegde autoriteiten van de Staten bepalen in onderlinge over-
eenstemming welke bijzondere regeling wordt bedoeld in het eerste lid
van deze protocolbepaling. De bepalingen van het eerste lid zijn tevens
van toepassing op identieke of in wezen gelijksoortige wettelijke voor-
schriften naast of in de plaats van een dergelijke bijzondere regeling die
worden uitgevaardigd na 1 januari 2007, tenzij de bevoegde autoriteiten
van de Staten in onderlinge overeenstemming anders beslissen.
4. Het is wel te verstaan dat beide Verdragsluitende Staten erop kun-
nen vertrouwen dat algemeen aanvaarde fiscale grondbeginselen worden
toegepast teneinde misbruik van het Verdrag te voorkomen. In elk geval
waarin een Verdragsluitende Staat beoogt dit lid toe te passen, dient zijn
bevoegde autoriteit vooraf te overleggen met de bevoegde autoriteit van
de andere Verdragsluitende Staat.
II.
Ad artikel 3, eerste lid, onderdeel e
Ingeval een entiteit die voor de belastingheffing als een rechtspersoon
wordt behandeld als zodanig in een Verdragsluitende Staat aan belasting
is onderworpen, maar het inkomen van die eenheid in de andere Verdrag-
sluitende Staat als inkomen van de participanten van die eenheid wordt
belast, nemen de bevoegde autoriteiten dusdanige maatregelen dat er
enerzijds geen dubbele belasting blijft bestaan, maar anderzijds wordt
voorkomen dat louter als gevolg van de toepassing van het Verdrag inko-
men geheel of gedeeltelijk niet aan belastingheffing wordt onderworpen.

III.
Ad artikel 3, tweede lid, en artikel 26
Het is wel te verstaan dat indien de bevoegde autoriteiten van de
Verdragsluitende Staten in onderlinge overeenstemming een oplossing
binnen de context van het Verdrag hebben bereikt voor gevallen waar-
in
a. artikel 3, tweede lid, wordt toegepast met betrekking tot de uitleg-
ging van een in het Verdrag niet omschreven uitdrukking; of
b. verschillen in kwalificatie (bijvoorbeeld van een bestanddeel van
het inkomen of van een persoon)
zou of zouden leiden tot dubbele belasting of dubbele vrijstelling,
deze oplossing, na bekendmaking ervan door beide bevoegde autoritei-
 67 109
ten, ook bindend zal zijn bij de toepassing van de bepalingen van het
Verdrag in andere, gelijksoortige gevallen.
IV.
Ad artikel 4
Een natuurlijke persoon die aan boord van een schip woont zonder
een werkelijke woonplaats in een van de Verdragsluitende Staten te heb-
ben, wordt geacht inwoner te zijn van de Verdragsluitende Staat waarin
het schip zijn thuishaven heeft.
V.
Ad artikelen 5, 6, 7 en 13
Het is wel te verstaan dat rechten tot exploratie en exploitatie van
natuurlijke rijkdommen worden beschouwd als onroerende zaken die
zijn gelegen in de Verdragsluitende Staat op wiens zeebodem en de
ondergrond daarvan deze rechten betrekking hebben, alsmede dat deze
rechten geacht worden te behoren tot de activa van een vaste inrichting
in die Staat. Voorts is het wel te verstaan dat de hiervoor genoemde rech-
ten ook omvatten rechten op belangen bij of voordelen uit vermogens-
bestanddelen die voortvloeien uit die exploratie of exploitatie.
VI.
Ad artikel 7
Met betrekking tot artikel 7, eerste en tweede lid, geldt dat, indien een
onderneming van een Verdragsluitende Staat in de andere Verdrag-
sluitende Staat goederen of koopwaar verkoopt of een bedrijf uitoefent
door middel van een aldaar gevestigde vaste inrichting, de voordelen van
die vaste inrichting niet worden bepaald op basis van het totale door de
onderneming ontvangen bedrag, doch slechts op basis van dat deel van
de inkomsten van de onderneming dat aan de werkelijke werkzaamhe-
den van de vaste inrichting voor die verkopen of die bedrijfsuitoefening
is toe te rekenen.
Met name bij overeenkomsten betreffende het toezicht op, de levering,
installatie of constructie van nijverheids- en handelsuitrusting of weten-
schappelijke uitrusting of gebouwen alsmede bij openbare werken, wor-
den, indien de onderneming een vaste inrichting heeft, de voordelen van
die vaste inrichting niet bepaald op basis van het totale bedrag van de
overeenkomst, doch slechts op basis van dat deel van de overeenkomst
dat werkelijk wordt uitgevoerd door de vaste inrichting in de Verdrag-
sluitende Staat waar de vaste inrichting is gevestigd. De voordelen die
betrekking hebben op het deel van de overeenkomst, dat wordt uitge-
109 68

voerd door het hoofdkantoor van de onderneming, zijn slechts belastbaar

in de Verdragsluitende Staat waarvan de onderneming inwoner is.
VII.
Ad artikel 8
Het is wel te verstaan dat de bepalingen van artikel 8 tevens van toe-
passing zijn op belastingen geheven op basis van bruto ontvangsten uit
het vervoer van passagiers en vracht in internationaal verkeer.
VIII.
Ad artikel 9
Het is wel te verstaan dat de omstandigheid dat gelieerde ondernemin-
gen overeenkomsten hebben afgesloten, zoals costsharing-overeen-
komsten of algemene dienstverleningsovereenkomsten, voor of geba-
seerd op de toerekening van kosten van de leiding, de algemene beheers-
kosten, de technische en zakelijke kosten, kosten voor onderzoek en ont-
wikkeling en andere soortgelijke kosten, op zichzelf geen voorwaarde is
als bedoeld in artikel 9, eerste lid.
IX.
Ad artikel 10
1. Niettegenstaande artikel 10, tweede lid, heft de Verdragsluitende
Staat waarvan het lichaam inwoner is geen belasting over door dat
lichaam betaalde dividenden, indien de uiteindelijk gerechtigde tot de
dividenden een pensioenfonds is als bedoeld in artikel 4, tweede lid.
2. Het is wel te verstaan dat voor de toepassing van dit Verdrag
a. onder de uitdrukking winstaandelen worden verstaan waardepa-
pieren die recht geven op een aandeel in de nettowinst van het lichaam
en die geen kapitaal van het lichaam vertegenwoordigen, maar een niet-
financile bijdrage, zoals een bijdrage aan de knowhow;
b. onder de uitdrukking winstbewijzen worden verstaan rechten, al
dan niet vastgelegd in officile documenten, op een aandeel in de netto-
winst van het lichaam die geen kapitaal van het lichaam vertegenwoor-
digen, maar een niet-financile bijdrage, zoals een bijdrage aan de
knowhow;
c. onder de uitdrukking mijnaandelen worden verstaan aandelen in
een mijnlichaam waarop de mijnbouwwetgeving van toepassing is en dat
georganiseerd is volgens een specifieke rechtsvorm;
 69 109
d. onder de uitdrukking oprichtersaandelen worden verstaan aande-
len die worden geplaatst als beloning voor diensten verricht door de
oprichters tijdens de oprichting van een lichaam en die geen kapitaal van
het lichaam vertegenwoordigen.
X.
Ad artikelen 10, 11 en 12
Indien aan de bron belasting is geheven die het belastingbedrag dat
ingevolge de bepalingen van de artikelen 10, 11 of 12 mag worden gehe-
ven te boven gaat, moeten verzoeken om teruggaaf van het daarboven
uitgaande belastingbedrag worden ingediend bij de bevoegde autoriteit
van de Staat die de belasting heeft geheven, binnen een tijdvak van drie
jaar na afloop van het kalenderjaar waarin de belasting is geheven.
XI.
Ad artikelen 10 en 13
Het is wel te verstaan dat inkomsten die worden ontvangen in verband
met de (gedeeltelijke) liquidatie van een lichaam of een inkoop van
eigen aandelen door een lichaam worden behandeld als inkomsten uit
aandelen en niet als vermogenswinsten.
XII.
Ad artikel 13, vierde lid
Het is wel te verstaan dat het bepaalde in artikel 13, vierde lid, niet
van toepassing is indien de voordelen voortvloeien uit een reorganisatie,
fusie, splitsing of soortgelijke transactie.
Het is voorts wel te verstaan dat artikel 13, vierde lid, voor Nederland
van toepassing is op aandelen genoteerd aan elke andere aandelenbeurs
die onderworpen is aan de voorschriften van de Autoriteit Financile
Markten (of haar rechtsopvolger) in Nederland.
XIII.
Ad artikel 16
Het is wel te verstaan dat een bestuurder of commissaris van een
in Nederland gevestigd lichaam beschouwd wordt als een lid van de raad
van beheer zoals bedoeld in artikel 16. Indien een inwoner van Neder-
land in zijn hoedanigheid van lid van de raad van beheer van een
lichaam gevestigd in Ghana beloningen ontvangt, mogen deze belonin-
109 70

gen in Ghana worden belast. Het is voorts wel te verstaan dat het
bepaalde in dit artikel van toepassing is niettegenstaande het bepaalde in
artikel 15.
XIV.
Ad artikel 26
De bevoegde autoriteiten van de Staten kunnen ter zake van een over-
eengekomen regeling in het kader van een procedure voor onderling
overleg als bedoeld in artikel 26, tevens overeenkomen dat de Staat,
waar ingevolge eerdergenoemde regeling sprake is van een additionele
belastingheffing, met betrekking tot deze additionele belastingheffing
geen bestuursrechtelijke boetes, verhogingen, interest en kosten zal op-
leggen, indien de andere Staat, waarin ingevolge de regeling sprake is
van een overeenkomstige vermindering van belasting, afziet van de beta-
ling van interest verschuldigd met betrekking tot een dergelijke vermin-
dering van belasting.
XV.
Ad artikel 27
De Verdragsluitende Staten kunnen aan de arbitragecommissie, inge-
steld volgens de bepalingen van artikel 26, zesde lid, de inlichtingen ver-
strekken die nodig zijn om de arbitrageprocedure uit te voeren. De leden
van de arbitragecommissie zijn met betrekking tot de aldus verstrekte
inlichtingen onderworpen aan de beperkingen van openbaarmaking als
omschreven in het tweede lid van dit artikel.

TEN BLIJKE WAARVAN de ondergetekenden, daartoe naar behoren

gemachtigd, dit Protocol hebben ondertekend.
GEDAAN in tweevoud te Accra op 10 maart 2008, in de Engelse taal.
Voor de Regering van het Koninkrijk der Nederlanden
J.C. DE JAGER
Voor de Regering van de Republiek Ghana
A. AKOTO OSEI
 71 109
D. PARLEMENT

Het Verdrag, met Protocol, behoeft ingevolge artikel 91 van de Grond-

wet de goedkeuring van de Staten-Generaal, alvorens het Koninkrijk aan
het Verdrag, met Protocol, kan worden gebonden.

G. INWERKINGTREDING

De bepalingen van het Verdrag, met Protocol, zullen ingevolge artikel

31 van het Verdrag juncto de preambule tot het Protocol in werking tre-
den dertig dagen na de ontvangst van de laatste van de kennisgevingen
langs diplomatieke weg van de voltooiing van de wettelijk vereiste pro-
cedures voor de inwerkingtreding van het Verdrag.

Uitgegeven de drientwintigste mei 2008.

De Minister van Buitenlandse Zaken,
M. J. M. VERHAGEN

TRB4697
ISSN 0920 - 2218
Sdu Uitgevers
s-Gravenhage 2008
13 (2008) Nr. 1

T R A C TAT E N B L A D
VAN HET

KONINKRIJK DER NEDERLANDEN

JAARGANG 2008 Nr. 109

A. TITEL

Verdrag tussen het Koninkrijk der Nederlanden en de Republiek

Ghana tot het vermijden van dubbele belasting en het voorkomen van
het ontgaan van belastingen met betrekking tot belastingen naar het
inkomen en naar vermogenswinsten;
(met Protocol)
Accra, 10 maart 2008

B. TEKST

Convention between the Kingdom of the Netherlands and the

Republic of Ghana for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on
capital gains
The Government of the Kingdom of the Netherlands
and
The Government of the Republic of Ghana,
Desiring that a convention for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and on
capital gains be concluded by both States,

Have agreed as follows:

109 2

CHAPTER I
SCOPE OF THE CONVENTION

Article 1
Persons covered
This Convention shall apply to persons who are residents of one or
both of the Contracting States.

Article 2
Taxes covered
1. This Convention shall apply to taxes on income and on capital
gains imposed on behalf of a Contracting State or of its political subdi-
visions or local authorities, irrespective of the manner in which they are
levied.
2. There shall be regarded as taxes on income and on capital gains all
taxes imposed on total income, and on total capital gains or on elements
of income, including taxes on gains from the alienation of movable or
immovable property, taxes on the total amounts of wages or salaries paid
by enterprises.
3. The existing taxes to which the Convention shall apply are in par-
ticular:
a) in the Netherlands:
de inkomstenbelasting (income tax);
de loonbelasting (wages tax);
de vennootschapsbelasting (company tax) including the Go-
vernment share in the net profits of the exploitation of natural re-
sources levied pursuant to the Mijnbouwwet (the Mining Act);
de dividendbelasting (dividend tax);
(hereinafter referred to as Netherlands tax);
b) in the Republic of Ghana:
the income tax; and
the capital gains tax;
(hereinafter referred to as Ghana tax).
4. The Convention shall apply also to any identical or substantially
similar taxes that are imposed after the date of signature of the Conven-
tion in addition to, or in place of, the existing taxes. The competent au-
thorities of the Contracting States shall notify each other of any signifi-
cant changes that have been made in their respective taxation laws.
 3 109
CHAPTER II
DEFINITIONS

Article 3
General definitions
1. For the purposes of this Convention, unless the context otherwise
requires:
a) the terms a Contracting State and the other Contracting State
mean the Kingdom of the Netherlands (the Netherlands) or Ghana, as
the context requires;
b) the term the Netherlands means the part of the Kingdom of the
Netherlands that is situated in Europe, including its territorial sea, and
any area beyond the territorial sea within which the Netherlands, in
accordance with international law, exercises jurisdiction or sovereign
rights;
c) the term Ghana means the territory of the Republic of Ghana
including the territorial sea and any area outside the territorial sea within
which, in accordance with international law, the Republic of Ghana has
sovereign rights for the purpose of exploring and exploiting the natural
resources of the seabed and its subsoil and the superjacent waters;
d) the term person includes an individual, a company and any other
body of persons;
e) the term company means any body corporate or any entity that
is treated as a body corporate for tax purposes;
f) the terms enterprise of a Contracting State and enterprise of the
other Contracting State mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
g) the term international traffic means any transport by a ship or air-
craft operated by an enterprise of a Contracting State, except when the
ship or aircraft is operated solely between places in the other Contrac-
ting State;
h) the term competent authority means:
(i) in the Netherlands, the Minister of Finance or his authorised
representative;
(ii) in the case of Ghana, the Commissioner of the Internal Revenue
or his authorised representative.
i) the term national means:
any individual possessing the nationality of a Contracting State;
any legal person, partnership or association deriving its status
as such from the laws in force in a Contracting State;
j) the term pension fund means any person that:
(i) is established under the laws of a Contracting State;
109 4

(ii) is operated primarily to administer or provide pensions, retire-

ment benefits or other similar remuneration or earn income for
the benefit of such persons; and
(iii) is exempt from taxes on income in that Contracting State with
respect to itself and its income derived from activities described
in clause ii).
2. As regards the application of the Convention at any time by a Con-
tracting State, any term not defined therein shall, unless the context other-
wise requires, have the meaning that it has at that time under the law of
that State for the purposes of the taxes to which the Convention applies,
any meaning under the applicable tax laws of that State prevai-
ling over a meaning given to the term under other laws of that State.
Article 4
Resident
1. For the purposes of this Convention, the term resident of a Con-
tracting State means any person who, under the laws of that State, is
liable to tax therein by reason of his domicile, residence, place of ma-
nagement or any other criterion of a similar nature. This term, however,
does not include any person who is liable to tax in that State in respect
only of income and capital gains from sources in that State.
2. The term resident of a Contracting State also includes that State,
any political subdivision or local authority thereof and a pension fund
established and regulated under the laws of that Contracting State.
3. Where by reason of the provisions of paragraph 1 an individual is
a resident of both Contracting States, then his status shall be determined
as follows:
a) he shall be deemed to be a resident only of the State in which he
has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a resident only
of the State with which his personal and economic relations are closer
(centre of vital interests);
b) if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident only of the State in which he
has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he
shall be deemed to be a resident only of the State of which he is a
national;
d) if he is a national of both States or of neither of them, the compe-
tent authorities of the Contracting States shall settle the question by
mutual agreement.
 5 109
4. Where by reason of the provisions of paragraph 1 a person other
than an individual is a resident of both Contracting States, then it shall
be deemed to be a resident only of the State in which its place of effec-
tive management is situated.
Article 5
Permanent establishment
1. For the purposes of this Convention, the term permanent esta-
blishment means a fixed place of business through which the business
of an enterprise is wholly or partly carried on.
2. The term permanent establishment includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop, and
f) a mine, an oil or gas well, a quarry or any other place of extrac-
tion of natural resources.
3. The term permanent establishment likewise encompasses:
a) a building site, a construction, assembly or installation project or
supervisory activities in connection therewith, but only where such site,
project or activities continue for a period of more than nine months;
b) the provision of supervisory activities unconnected with a building
site, a construction, assembly or installation project referred to in sub-
paragraph a) of this paragraph, but only where such activities continue
for more than nine months.
4. Notwithstanding the preceding provisions of this Article, the term
permanent establishment shall be deemed not to include:
a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise or of collecting information, for the
enterprise;
e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
f) the maintenance of a fixed place of business solely for any combi-
nation of activities mentioned in subparagraphs a) to e), provided that
109 6

the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a per-
son other than an agent of an independent status to whom paragraph 6
applies is acting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude contracts in the
name of the enterprise, that enterprise shall be deemed to have a perma-
nent establishment in that State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 4 which, if exercised
through a fixed place of business, would not make this fixed place of
business a permanent establishment under the provisions of that para-
graph.
6. An enterprise shall not be deemed to have a permanent establish-
ment in a Contracting State merely because it carries on business in that
State through a broker, general commission agent or any other agent of
an independent status, provided that such persons are acting in the ordi-
nary course of their business.
7. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State
(whether through a permanent establishment or otherwise), shall not of
itself constitute either company a permanent establishment of the other.

CHAPTER III
TAXATION OF INCOME

Article 6
Income from immovable property
1. Income derived by a resident of a Contracting State from immo-
vable property (including income from agriculture or forestry) situated
in the other Contracting State may be taxed in that other State.
2. The term immovable property shall have the meaning which it
has under the law of the Contracting State in which the property in ques-
tion is situated. The term shall in any case include property accessory to
immovable property, livestock and equipment used in agriculture and
forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or
fixed payments as consideration for the working of, or the right to work,
 7 109
mineral deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from
the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income from
immovable property used for the performance of independent personal
services.
Article 7
Business profits
1. The profits of an enterprise of a Contracting State shall be taxable
only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If
the enterprise carries on business as aforesaid, the profits of the enter-
prise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in each
Contracting State be attributed to that permanent establishment the pro-
fits which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise
of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall
be allowed as deductions expenses which are reasonably incurred for the
purposes of the permanent establishment, including executive and ge-
neral administrative expenses so incurred, whether in the State in which
the permanent establishment is situated or elsewhere.
However, no such deduction shall be allowed in respect of amounts,
if any, paid (otherwise than towards reimbursement of actual expenses)
by the permanent establishment to the head office of the enterprise or
any of its other offices, by way of royalties, fees or other similar pay-
ments in return for the use of patents or other rights, or by way of com-
mission, for specific services performed or for management, or except in
the case of a banking enterprise, by way of interest on moneys lent to
the permanent establishment.
Likewise, no account shall be taken, in the determination of the pro-
fits of a permanent establishment, for amounts charged (otherwise than
towards reimbursement of actual expenses) by the permanent establish-
109 8

ment to the head office of the enterprise or any of its other offices, by
way of royalties, fees or other similar payments in return for the use of
patents or other rights, or by way of commission for specific services
performed or for management, or except in the case of a banking enter-
prise, by way of interest on moneys lent to the head office of the enter-
prise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to deter-
mine the profits to be attributed to a permanent establishment on the
basis of an apportionment of the total profits of the enterprise to its vari-
ous parts, nothing in paragraph 2 shall preclude that Contracting State
from determining the profits to be taxed by such an apportionment as
may be customary; the method of apportionment adopted shall, however,
be such that the result shall be in accordance with the principles con-
tained in this Article.
5. No profits shall be attributed to a permanent establishment by rea-
son of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be
attributed to the permanent establishment shall be determined by the
same method year by year unless there is good and sufficient reason to
the contrary.
7. Where profits include items of income which are dealt with sepa-
rately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.

Article 8
Shipping and air transport
1. Profits from the operation of ships or aircraft in international traf-
fic shall be taxable only in the Contracting State in which the enterprise
is situated. Those profits shall include profits derived by the enterprise
from the use, maintenance or rental of containers used for the transport
of goods or merchandise in international traffic where such use, mainte-
nance or rental as the case may be, are incidental to the operation of
ships or aircraft in international traffic.
2. The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating
agency.
 9 109
Article 9
Associated enterprises
1. Where
a) an enterprise of a Contracting State participates directly or indi-
rectly in the management, control or capital of an enterprise of the other
Contracting State, or
b) the same persons participate directly or indirectly in the manage-
ment, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ from
those which would be made between independent enterprises, then any
profits which would, but for those conditions, have accrued to one of the
enterprises, but, by reason of those conditions, have not so accrued, may
be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise
of that State and taxes accordingly profits on which an enterprise of
the other Contracting State has been charged to tax in that other State
and the profits so included are profits which would have accrued to the
enterprise of the first mentioned State if the conditions made between
the two enterprises had been those which would have been made be-
tween independent enterprises, then that other State shall make an appro-
priate adjustment to the amount of the tax charged therein on those pro-
fits. In determining such adjustment, due regard shall be had to the other
provisions of this Convention and the competent authorities of the Con-
tracting States shall if necessary consult each other.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting
State to a resident of the other Contracting State may be taxed in that
other State.
2. However, such dividends may also be taxed in the Contracting
State of which the company paying the dividends is a resident and
according to the laws of that State, but if the beneficial owner of the
dividends is a resident of the other Contracting State, the tax so charged
shall not exceed:
a) 5 per cent of the gross amount of the dividends if the beneficial
owner is a company (other than a partnership) which holds directly at
least 10 per cent of the capital of the company paying the dividends;
b) 10 per cent of the gross amount of the dividends in all other cases.
109 10

3. The competent authorities of the Contracting States shall by mu-

tual agreement settle the mode of application of paragraph 2.
4. The provisions of paragraph 2 shall not affect the taxation of the
company in respect of the profits out of which the dividends are paid.
5. The term dividends as used in this Article means income from
shares, jouissance shares or jouissance rights, mining shares, foun-
ders shares or other rights, not being debt-claims, participating in pro-
fits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the
State of which the company making the distribution is a resident and
also includes any other item which, under the laws of the Contracting
State of which the company paying the dividend is a resident, is treated
as a dividend or distribution of dividends of a company.
6. The provisions of paragraphs 1 and 2 shall not apply if the benefi-
cial owner of the dividends, being a resident of a Contracting State, car-
ries on business in the other Contracting State, of which the company
paying the dividends is a resident, through a permanent establishment
situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the holding in respect of
which the dividends are paid is effectively connected with such perma-
nent establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
7. Where a company which is a resident of a Contracting State
derives profits or income from the other Contracting State, that other
State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State
or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base
situated in that other State, nor subject the companys undistributed pro-
fits to a tax on the companys undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or
income arising in such other State.

Article 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State
in which it arises and according to the laws of that State, but if the be-
 11 109
neficial owner of the interest is a resident of the other Contracting State,
the tax so charged shall not exceed 8 per cent of the gross amount of the
interest.
3. Notwithstanding the provisions of paragraph 2, interest referred to
in paragraph 1 shall be exempt from tax in the Contracting State where
the interest arises if the recipient is the beneficial owner of the interest
and if:
a) the payer or the recipient of the interest is the Government of a
Contracting State itself, a public body, a political subdivision or local
authority thereof or the central bank of a Contracting State; or
b) the interest is paid in connection with a loan granted, approved,
guaranteed or insured by the Government of a Contracting State, the
central bank of a Contracting State, or any agency or instrumentality
(including a financial institution) owned or controlled by the Govern-
ment of a Contracting State.
4. Notwithstanding the provisions of paragraph 2, interest as referred
to in paragraph 1 may be taxed only in the Contracting State of which
the recipient is a resident if the recipient is the beneficial owner of the
interest and the interest is paid in connection with:
a) a loan granted by a bank or any other financial institution (inclu-
ding an insurance company) or a pension fund;
b) the sale on credit of any industrial, commercial or scientific equip-
ment;
c) the sale on credit of any goods by one enterprise to another enter-
prise.
5. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraphs 2, 3 and 4.
6. The term interest as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and
whether or not carrying a right to participate in the debtors profits, and
in particular, income from government securities and income from bonds
or debentures, including premiums and prizes attaching to such securi-
ties, bonds or debentures. Penalty charges for late payment shall not be
regarded as interest for the purpose of this Article.
7. The provisions of paragraphs 1 and 2 shall not apply if the be-
neficial owner of the interest, being a resident of a Contracting State,
carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed base situ-
ated therein, and the debt-claim in respect of which the interest is paid
109 12

is effectively connected with such permanent establishment or fixed

base. In such case the provisions of Article 7 or Article 14 as the case
may be, shall apply.
8. Interest shall be deemed to arise in a Contracting State when the
payer is that State itself, a political subdivision, a local authority or a
resident of that State. Where, however, the person paying the interest,
whether he is a resident of a Contracting State or not, has in a Contrac-
ting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and
such interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which the per-
manent establishment or fixed base is situated.
9. Where, by reason of a special relationship between the payer and
the beneficial owner or between both of them and some other person,
the amount of the interest, having regard to the debt-claim for which it
is paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to
the other provisions of this Convention.

Article 12
Royalties and technical service fees
1. Royalties or technical service fees arising in a Contracting State
and paid to a resident of the other Contracting Statemay be taxed in that
other State.
2. However, such royalties or technical service fees may also be taxed
in the Contracting State in which they arise and according to the laws
of that State, but if the beneficial owner of the royalties or technical
service fees is a resident of the other Contracting State, the tax so
charged shall not exceed 8 per cent of the gross amount of the royalties
or technical service fees.
3. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraph 2.
4. The term royalties as used in this Article means payments of any
kind received as a consideration for the use of, or the right to use, any
copyright of literary, artistic or scientific work including cinematograph
films or films or tapes used for radio or television broadcasting, any pa-
 13 109
tent, trade mark, design or model, plan, secret formula or process, or for
the use of, or the right to use information concerning industrial, com-
mercial or scientific experience.
5. The term technical service fees as used in this Article means
payments of any kind to any person, other than to an employee of the
person making the payments, in consideration for any services of a
managerial, technical or consultancy nature. Provided that the term
technical service fees shall not include any payments in consideration
for supervisory activities in connection with a building site or construc-
tion, assembly or installation project or for supervisory activities in con-
nection with installation incidental to the sale of machinery or parts
thereof and income referred to in paragraph 1 of Article 14.
6. The provisions of paragraphs 1 and 2 shall not apply if the be-
neficial owner of the royalties or technical service fees, being a resident
of a Contracting State, carries on business in the other Contracting State
in which the royalties or technical service fees arise, through a perma-
nent establishment situated therein, or performs in that other State inde-
pendent personal services from a fixed base situated therein, and the
right or property in respect of which the royalties or technical service
fees are paid is effectively connected with such permanent establishment
or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
7. Royalties or technical service fees shall be deemed to arise in a
Contracting State when the payer is that State itself, a political subdivi-
sion, a local authority or a resident of that State. Where, however, the
person paying the royalties or technical service fees, whether he is a resi-
dent of a Contracting State or not, has in a Contracting State a perma-
nent establishment or a fixed base in connection with which the liability
to pay the royalties or technical service fees was incurred, and such roy-
alties or technical service fees are borne by such permanent establish-
ment or fixed base, then such royalties or technical service fees shall be
deemed to arise in the State in which the permanent establishment or
fixed base is situated.
8. Where, by reason of a special relationship between the payer and
the beneficial owner or between both of them and some other person,
the amount of the royalties or technical service fees, having regard to
the use, right or information for which they are paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention.
109 14

Article 13
Capital gains
1. Gains derived by a resident of a Contracting State from the aliena-
tion of immovable property referred to in Article 6 and situated in the
other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the
business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or of movable pro-
perty pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing inde-
pendent personal services, including such gains from the alienation of
such a permanent establishment (alone or with the whole enterprise) or
of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft, shall be
taxable only in that State.
4. Gains derived by a resident of a Contracting State from the aliena-
tion of shares in a company deriving more than 90 per cent of their
value, directly or indirectly, from immovable property situated in the
other Contracting State (other than shares listed on a stock exchange of
either Contracting State) may be taxed in that other State provided that
the resident owns, directly or indirectly, a minimum of 5 per cent of the
issued shares.
5. Gains from the alienation of any property other than that referred
to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting
State of which the alienator is a resident.
6. Notwithstanding the provisions of paragraph 5, the Netherlands
may, in accordance with its own laws, including the interpretation of the
term alienation, levy tax on gains derived by an individual who is a
resident of Ghana from the alienation of shares in, jouissance rights or
debt-claims on a company whose capital is divided into shares and
which, under the laws of the Netherlands, is a resident of the Nether-
lands, and from the alienation of part of the rights attached to the said
shares, jouissance rights or debt-claims, if that individual either
alone or with his or her spouse or one of their relations by blood or
marriage in the direct line directly or indirectly holds at least 5 per cent
of the issued capital of a particular class of shares in that company. This
provision shall apply only if the individual who derives the gains has
been a resident of the Netherlands in the course of the last ten years pre-
 15 109
ceding the year in which the gains are derived and provided that, at the
time he became a resident of Ghana, the above-mentioned conditions
regarding share ownership in the said company were satisfied.
In cases where, under the domestic laws of the Netherlands, an assess-
ment has been issued to the individual in respect of the alienation of the
aforesaid shares deemed to have taken place at the time of his emigra-
tion from the Netherlands, the above shall apply only insofar as part of
the assessment is still outstanding.
7. Notwithstanding the provisions of paragraph 5, gains from the
alienation of any property within the meaning of paragraph 5 situated in
Ghana derived by an individual who has been a resident of Ghana and
who has become a resident of the Netherlands, may be taxed in Ghana
if the alienation of the property occurs within any period of five years
next following the date on which the individual ceased to be a resident
of Ghana.
Article 14
Independent personal services
1. Income derived by a resident of a Contracting State in respect of
professional services or other activities of an independent character shall
be taxable only in that State, unless:
a) he has a fixed base regularly available to him in the other Contrac-
ting State for the purpose of performing his activities; in that case, only
so much of the income as is attributable to that fixed base may be taxed
in that other Contracting State; or
b) his stay in the other Contracting State is for a period or periods
amounting to or exceeding in the aggregate of nine months in any twelve
month period commencing or ending in the fiscal year concerned; in that
case, only so much of the income as is derived from his activities per-
formed in that other Contracting State may be taxed in that other State.
2. The term professional services includes especially independent
scientific, literary, artistic, educational or teaching activities as well as
the independent activities of physicians, lawyers, engineers, architects,
dentists and accountants.
Article 15
Dependent personal services
1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, sala-
ries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting
109 16

State. If the employment is so exercised, such remuneration as is derived

therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration de-
rived by a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in the first-
mentioned State if:
a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period com-
mencing or ending in the fiscal year concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other State, and
c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remu-
neration derived by a resident of a Contracting State shall be taxable
only in that State if the remuneration is paid in respect of an employ-
ment exercised in the other Contracting State in connection with a buil-
ding site, a construction, assembly or installation project or supervisory
activities in connection therewith, for the period of nine months during
which such site, project or activities do not constitute a permanent esta-
blishment in that other State.
4. Notwithstanding the provision of paragraph 3 of this Article, remu-
neration derived by a resident of a Contracting State shall be taxable
only in that State if the remuneration is paid in respect of an employ-
ment exercised in the other Contracting State in connection with super-
visory activities unconnected with a building site, construction, assem-
bly or installation project for the period of nine months during which
such activities do not constitute a permanent establishment in that other
State.
5. Notwithstanding the preceding provisions of this Article, remu-
neration derived by a resident of a Contracting State in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic, may be taxed in the Contracting State in which the enterprise is
situated.
Article 16
Directors fees
Directors fees and other remuneration derived by a resident of a Con-
tracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed
in that other State.
 17 109
Article 17
Artistes and sportspersons
1. Notwithstanding the provisions of Articles 7, 14 and 15, income
derived by a resident of a Contracting State as an entertainer, such as a
theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an
entertainer or a sportsperson in his capacity as such accrues not to the
entertainer or sportsperson himself but to another person, that income
may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed
in the Contracting State in which the activities of the entertainer or
sportsperson are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to income
derived by a resident of a Contracting State from activities exercised in
the other Contracting State, if the visit to that other State is wholly or
mainly supported by public funds of one or both of the Contracting
States or political subdivisions or local authorities thereof, or takes place
within the framework of a cultural or sports exchange programme
between the Governments of the Contracting States. In such a case, the
income shall be taxable only in the Contracting State of which the enter-
tainer or sportsperson is a resident.
Article 18
Pensions, annuities and social security payments
1. Subject to the provisions of paragraph 2 of Article 19, pensions and
other similar remuneration paid to a resident of a Contracting State in
consideration of past employment, as well as annuities paid to a resident
of a Contracting State, shall be taxable only in that State. Any pension
and other payment paid out under the provisions of a social security sys-
tem of a Contracting State to a resident of the other Contracting State
shall be taxable only in that other State.
2. Notwithstanding the provisions of paragraph 1, a pension or other
similar remuneration, annuity, or any pension and other payment paid
out under the provisions of a social security system of a Contracting
State, may also be taxed in the Contracting State from which it is
derived, in accordance with the laws of that State:
a) insofar as the entitlement to this pension or other similar remunera-
tion or annuity in the Contracting State from which it is derived is
exempt from tax, or the contributions associated with the pension or
109 18

other similar remuneration or annuity made to the pension scheme or

insurance company were deducted in the past when calculating taxable
income in that State or qualified for other tax relief in that State; and
b) insofar as this pension or other similar remuneration or annuity or
this pension or other payment paid out under the provisions of a social
security system of a Contracting State is in the Contracting State of
which the recipient thereof is a resident not taxed at the generally appli-
cable rate for income derived from dependent personal services, or less
than 90 per cent of the gross amount of the pension or other similar
remuneration or annuity is taxed; and
c) if the total gross amount of the pensions and other similar remu-
neration and annuities, and any pension and other payment paid out
under the provisions of a social security system of a Contracting State,
in any calendar year exceeds the sum of twenty thousand (20,000) Euro.
3. Notwithstanding the provisions of paragraphs 1 and 2, if this pen-
sion or other similar remuneration is not periodic in nature, is paid in
respect of past employment in the other Contracting State and is paid
out before the date on which the pension commences, or if a lump sum
payment is made in lieu of the right to an annuity before the date on
which the annuity commences, the payment or this lump sum may also
be taxed in the Contracting State from which it is derived.
4. A pension or other similar remuneration or annuity is deemed to
be derived from a Contracting State insofar as the contributions or pay-
ments associated with the pension or other similar remuneration or annu-
ity, or the entitlements received from it qualified for tax relief in that
State. The transfer of a pension from a pension fund or an insurance
company in a Contracting State to a pension fund or an insurance com-
pany in another State shall not restrict in any way the taxing rights of
the first-mentioned State under this Article.
5. The competent authorities of the Contracting States shall by mu-
tual agreement settle the mode of application of paragraph 2. They shall
also decide what details the resident of a Contracting State must submit
for the purpose of the proper application of the Convention in the other
Contracting State, in particular so that it can be established whether the
conditions referred to in subparagraphs a), b) and c) of paragraph 2 have
been met.
6. The term annuity means a stated sum payable periodically at
stated times during life or during a specified or ascertainable period of
time under an obligation to make the payments in return for adequate
and full consideration in money or moneys worth.
7. Whether and to what extent a pension or similar remuneration falls
under this Article or under Article 19, is determined by the nature of the
 19 109
past employment, as private or governmental, during which the entitle-
ment to that part of the pension or similar remuneration was built up.
8. Contributions made by or on behalf of an individual who renders
services in a Contracting State to a pension scheme recognised for tax
purposes in the other Contracting State,
(i) in which the individual participated immediately before beginning
to provide services in the first-mentioned State,
(ii) in which the individual participated at a time when that individual
was providing services in, or was a resident of, the other State, and
(iii) that is accepted by the competent authority of the first-mentioned
State as corresponding to a pension scheme recognised as such for
tax purposes by that State,
shall, for the purposes of determining the individuals tax payable in
the first-mentioned State and the profits of an enterprise which may be
taxed in the first-mentioned State, be treated in that State in the same
way and subject to the same conditions and limitations as contributions
made to a pension scheme that is recognised for tax purposes in that
State.
For the purposes of this paragraph:
a) the term a pension scheme means an arrangement in which the
individual participates in order to secure retirement benefits payable in
respect of the services referred to in this paragraph; and
b) a pension scheme is recognised for tax purposes in a State if the
contributions to the scheme would qualify for tax relief in that State.

Article 19
Government service

1. a) Salaries, wages and other similar remuneration paid by a Con-

tracting State or a political subdivision or a local authority thereof to an
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b) However, such salaries, wages and other similar remuneration shall
be taxable only in the other Contracting State if the services are rendered
in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.

2. a) Notwithstanding the provisions of paragraph 1, pensions and

other similar remuneration paid by, or out of funds created by, a Con-
tracting State or a political subdivision or a local authority thereof to an
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
109 20

b) However, such pensions and other similar remuneration shall be

taxable only in the other Contracting State if the individual is a resident
of, and a national of, that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries,
wages, pensions, and other similar remuneration in respect of services
rendered paid in connection with a business carried on by a Contracting
State or a political subdivision or a local authority thereof.

Article 20
Professors, researchers and teachers
1. An individual who visits a Contracting State solely for the purpose
of teaching or carrying out research at a university, college, school or
any other officially recognised educational institution in that State and
who is or was immediately before that visit a resident of the other Con-
tracting State, shall be exempt from taxation in the first-mentioned Con-
tracting State on remuneration for such teaching or research for a period
not exceeding two years from the date of his first visit for that purpose,
provided that such remuneration arises from sources outside that State.
2. This Article shall not apply to income from research if such
research is undertaken not in the public interest but primarily for the pri-
vate benefit of a specific person or persons.

Article 21
Students
1. Payments which a student or business apprentice who is or was
immediately before visiting a Contracting State a resident of the other
Contracting State and who is present in the first-mentioned State solely
for the purpose of his education or training receives for the purpose of
his maintenance, education or training shall not be taxed in that State,
provided that such payments arise from sources outside that State.
2. In respect of grants, scholarships and remuneration from employ-
ment not covered by paragraph 1, a student or business apprentice refer-
red to in paragraph 1 shall, in addition, be entitled during such education
or training to the same exemptions, reliefs or reductions in respect of
taxes available to residents of the Contracting State which he is visiting.
 21 109
Article 22
Other income
1. Items of income of a resident of a Contracting State, wherever ari-
sing, not dealt with in the foregoing Articles of this Convention shall be
taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than
income from immovable property as defined in paragraph 2 of Article 6,
if the recipient of such income, being a resident of a Contracting State,
carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State indepen-
dent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively con-
nected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall apply.

Article 23
Remittances
1. Where under any provision of this Convention a Contracting State
reduces the rate of tax on, or exempts from tax, income or capital gains
and, under the law in force in the other Contracting State a person, in
respect of that income or capital gains, is subject to tax by reference to
the amount thereof which is remitted to or received in that other Con-
tracting State and not by reference to the full amount thereof, then the
reduction or exemption to be allowed under this convention in the first-
mentioned Contracting State shall apply only to so much of the income
or capital gains as is taxed in the other Contracting State.
2. However, the provision of paragraph 1 of this Article does not
apply to income or capital gains derived by the Government, a political
subdivision or local authority, or an agency of a Contracting State or the
Central Bank of a Contracting State.
109 22

CHAPTER IV
ELIMINATION OF DOUBLE TAXATION
Article 24
Elimination of double taxation
1. The Netherlands, when imposing tax on its residents, may include
in the basis upon which such taxes are imposed the items of income
which, according to the provisions of this Convention, may be taxed or
shall be taxable only in Ghana.
2. However, where a resident of the Netherlands derives items of
income which according to paragraphs 1, 3 and 4 of Article 6, paragraph
1 of Article 7, paragraph 6 of Article 10, paragraph 7 of Article 11, para-
graph 6 of Article 12, paragraphs 1, 2 and 4 of Article 13, paragraph 1
of Article 14, paragraphs 1 and 5 of Article 15, paragraph 2 of Article
18, paragraphs 1 (subparagraph a) and 2 (subparagraph a) of Article 19
and paragraph 2 of Article 22 of this Convention may be taxed in Ghana
and are included in the basis referred to in paragraph 1, the Netherlands
shall exempt such items of income by allowing a reduction of its tax.
This reduction shall be computed in conformity with the provisions of
the Netherlands law for the avoidance of double taxation. For that pur-
pose the said items of income shall be deemed to be included in the
amount of the items of income which are exempt from Netherlands tax
under those provisions.
3. Further, the Netherlands shall allow a reduction from the Nether-
lands tax so computed for the items of income which according to para-
graph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article
12, paragraph 7 of Article 13, Article 16, paragraphs 1 and 2 of Article
17 and paragraph 3 of Article 18 of this Convention may be taxed in
Ghana to the extent that these items are included in the basis referred to
in paragraph 1. The amount of this reduction shall be equal to the tax
paid in Ghana on these items of income, but shall, in case the provisions
of the Netherlands law for the avoidance of double taxation provide so,
not exceed the amount of the reduction which would be allowed if the
items of income so included were the sole items of income which are
exempt from Netherlands tax under the provisions of the Netherlands
law for the avoidance of double taxation.
This paragraph shall not restrict allowance now or hereafter accorded
by the provisions of the Netherlands law for the avoidance of double
taxation, but only as far as the calculation of the amount of the reduc-
tion of Netherlands tax is concerned with respect to the aggregate of
income from more than one country and the carry forward of the tax
paid in Ghana on the said items of income to subsequent years.
 23 109
4. Notwithstanding the provisions of paragraph 2, the Netherlands
shall allow a reduction from the Netherlands tax for the tax paid in
Ghana on items of income which according to paragraph 1 of Article 7,
paragraph 6 of Article 10, paragraph 7 of Article 11, paragraph 6 of Arti-
cle 12, paragraph 1 of Article 14 and paragraph 2 of Article 22 of this
Convention may be taxed in Ghana to the extent that these items are
included in the basis referred to in paragraph 1, insofar as the Nether-
lands under the provisions of the Netherlands law for the avoidance of
double taxation allows a reduction from the Netherlands tax of the tax
levied in another country on such items of income. For the computation
of this reduction the provisions of paragraph 3 of this Article shall apply
accordingly.
5. In Ghana, double taxation shall be eliminated as follows:
a) Netherlands tax payable under the laws of the Netherlands and in
accordance with the provisions of the Convention, whether directly (by
assessment) or by deduction (withholding), on profits, income or charge-
able gains from sources within the Netherlands (excluding in the case of
dividends, tax payable in respect of the profits out of which the divi-
dends are paid) shall be allowed as a credit against any Ghana tax com-
puted by reference to the same profits, income or chargeable gains by
reference to which Netherlands tax is computed;
b) In the case of dividends paid by a company which is a resident of
the Netherlands to a company which is resident in Ghana and which
controls directly at least 10 per cent of the capital of the company pay-
ing the dividends, the credit shall take into account (in addition to any
Netherlands tax for which credit may be allowed under the provisions
of subparagraph a) the Netherlands tax payable by the company in
respect of the profits out of which such dividends are paid;
c) In any case the amount of tax credit to be granted under this para-
graph shall not exceed the proportion of the Ghana tax which such pro-
fits, income or chargeable gains bear to the entire profits, income or
chargeable gains as the case may be chargeable to Ghana tax.
CHAPTER V
SPECIAL PROVISIONS
Article 25
Non-discrimination
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected there-
with, which is other or more burdensome than the taxation and con-
nected requirements to which nationals of that other State in the same
circumstances, in particular with respect to residence, are or may be sub-
109 24

jected. This provision shall, notwithstanding the provisions of Article 1,

also apply to persons who are not residents of one or both of the Con-
tracting States.
2. Stateless persons who are residents of a Contracting State shall not
be subjected in either Contracting State to any taxation or any require-
ment connected therewith, which is other or more burdensome than the
taxation and connected requirements to which nationals of the State con-
cerned in the same circumstances, in particular with respect to residence,
are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of
a Contracting State has in the other Contracting State shall not be less
favourably levied in that other State than the taxation levied on enter-
prises of that other State carrying on the same activities. This provision
shall not be construed as obliging a Contracting State to grant to resi-
dents of the other Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.
4. Except where the provisions of paragraph 1 of Article 9, paragraph
9 of Article 11, or paragraph 8 of Article 12, apply, interest, royalties and
other disbursements paid by an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of deter-
mining the taxable profits of such enterprise, be deductible under the
same conditions as if they had been paid to a resident of the first-
mentioned State.
5. Enterprises of a Contracting State, the capital of which is wholly
or partly owned or controlled, directly or indirectly, by one or more resi-
dents of the other Contracting State, shall not be subjected in the first-
mentioned State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned
State are or may be subjected.
6. The provisions of this Article shall, notwithstanding the provisions
of Article 2, apply to taxes of every kind and description.
Article 26
Mutual agreement procedure
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in accor-
dance with the provisions of this Convention, he may, irrespective of the
remedies provided by the domestic law of those States, present his case
 25 109
to the competent authority of the Contracting State of which he is a resi-
dent or, if his case comes under paragraph 1 of Article 25, to that of the
Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears
to it to be justified and if it is not itself able to arrive at a satisfactory
solution, to resolve the case by mutual agreement with the competent
authority of the other Contracting State, with a view to the avoidance of
taxation which is not in accordance with the Convention. Any agreement
reached shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endea-
vour to resolve by mutual agreement any difficulties or doubts arising as
to the interpretation or application of the Convention. They may also
consult together for the elimination of double taxation in cases not
provided for in the Convention.
4. The competent authorities of the Contracting States may by mutual
agreement settle the mode of application of the Convention and, espe-
cially, the requirements to which the residents of a Contracting State
shall be subjected in order to obtain, in the other Contracting State, the
tax reductions or exemptions and other advantages provided for by the
Convention.
5. The competent authorities of the Contracting States may commu-
nicate with each other directly, including through a joint commission
consisting of their representatives, for the purpose of reaching an agree-
ment in the sense of the preceding paragraphs.
6. If any difficulty or doubt arising as to the interpretation or appli-
cation of the Convention cannot be resolved by the competent au-
thorities of the Contracting States in a mutual agreement procedure pur-
suant to the previous paragraphs of this Article within a period of two
years after the question was raised, the case may, at the request of either
Contracting State, be submitted for arbitration, but only after fully
exhausting the procedures available under paragraphs 1 to 5 of this Arti-
cle and provided the taxpayer or taxpayers involved agree in writing to
be bound by the decision of the arbitration board.
The decision of the arbitration board in a particular case shall be bin-
ding on both Contracting States and the taxpayer or taxpayers involved
with respect to that case.
109 26

Article 27
Exchange of information
1. The competent authorities of the Contracting States shall exchange
such information as is foreseeably relevant for carrying out the provi-
sions of this Convention or to the administration or enforcement of the
domestic laws concerning taxes of every kind and description imposed
on behalf of the Contracting States, or of their political subdivisions or
local authorities, insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by Articles 1
and 2.
2. Any information received under paragraph 1 by a Contracting
State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed
only to persons or authorities (including courts and administrative bo-
dies) concerned with the assessment or collection of, the enforcement or
prosecution in respect of, the determination of appeals in relation to the
taxes referred to in paragraph 1, or the oversight of the above. Such per-
sons or authorities shall use the information only for such purposes.
They may disclose the information in public court proceedings or in
judicial decisions.
3. In no case shall the provisions of the previous paragraphs be con-
strued so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in
the normal course of the administration of that or of the other Contrac-
ting State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or infor-
mation the disclosure of which would be contrary to public policy (ordre
public).
4. If information is requested by a Contracting State in accordance
with this Article, the other Contracting State shall use its information
gathering measures to obtain the requested information, even though that
other State may not need such information for its own tax purposes. The
obligation contained in the preceding sentence is subject to the limita-
tions of paragraph 3 but in no case shall such limitations be construed
to permit a Contracting State to decline to supply information solely
because it has no domestic interest in such information.
5. In the case of the Netherlands, paragraph 3 of this Article shall in
no case be construed to permit the Netherlands to decline to supply
 27 109
information solely because the information is held by a bank, other
financial institution, nominee or person acting in an agency or a fiduci-
ary capacity or because it relates to ownership interests in a person.
6. In the case of Ghana, Ghana shall at the request of the Netherlands
supply information to the Netherlands if such information is obtained by
Ghana in the course of court proceedings in relation to a prosecution
involving acts of tax fraud in the Courts of Ghana.

Article 28
Assistance in the collection of taxes
The competent authorities of the Contracting States may by mutual
agreement prescribe rules and conditions in order to lend each other
assistance and support in the collection of the taxes to which this Con-
vention applies and of any interest, administrative penalties and costs of
collection related to such amount.

Article 29
Members of diplomatic missions and consular posts
1. Nothing in this Convention shall affect the fiscal privileges of
members of diplomatic missions or consular posts under the general
rules of international law or under the provisions of special agreements.
2. The Convention shall not apply to international organisations,
organs and officials thereof and to persons who are members of a diplo-
matic mission or consular post of a third State, being present in a Con-
tracting State and not treated in either Contracting State as residents in
respect of taxes on income and on capital gains.

Article 30
Territorial extension
1. This Convention may be extended, either in its entirety or with any
necessary modifications, to either or both of the countries of the Neth-
erlands Antilles and Aruba, if the country concerned imposes taxes sub-
stantially similar in character to those to which the Convention applies.
Any such extension shall take effect from such date and subject to such
modifications and conditions, including conditions as to termination, as
may be specified and agreed in notes to be exchanged through diploma-
tic channels.
109 28

2. Unless otherwise agreed the termination of the Convention shall

not also terminate any extension of the Convention to any country to
which it has been extended under this Article.
CHAPTER VI
FINAL PROVISIONS
Article 31
Entry into force
Each of the Contracting States shall notify to the other through diplo-
matic channels the completion of the procedures required by its law for
the bringing into force of this Convention. The provisions of the Con-
vention shall enter into force on the thirtieth day after the date of receipt
of the later of these notifications and shall have effect in both Contrac-
ting States:
a) in the case of taxes withheld at source, in respect of amounts paid
on or after the first day of January of the calendar year next following
that in which the Convention entered into force;
b) in the case of other taxes, in respect of taxes levied for periods
beginning on or after the first day of January of the calendar year next
following that in which the Convention entered into force.
Article 32
Termination
1. This Convention shall remain in force until terminated by a Con-
tracting State. Either Contracting State may terminate the Convention,
through diplomatic channels, by giving notice of termination at least six
months before the end of any calendar year after the fifth year from the
date of entry into force of the Convention.
2. In such event the Convention shall cease to apply in respect of
years of assessment beginning after the end of the calendar year in
which notice is given.

IN WITNESS whereof the undersigned, duly authorised thereto, have

signed this Convention.
 29 109
DONE at Accra this 10th day of March 2008, in duplicate, in the
English language.
For the Government of the Kingdom of the Netherlands
J.C. DE JAGER
For the Government of the Republic of Ghana
A. AKOTO OSEI

Protocol
At the moment of signing the Convention for the avoidance of dou-
ble taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains, this day concluded between the Kingdom of
the Netherlands and the Republic of Ghana, the undersigned have agreed
that the following provisions shall form an integral part of the Conven-
tion.
I.
General
1. The benefits of the Convention are not applicable to companies or
other persons which are wholly or partly exempted from tax by a spe-
cial regime under the laws of either one of the Contracting States. They
are also not applicable to income from such companies or other persons
derived by a resident of the other State, nor to shares, jouissance rights
or interests in such companies or other persons.
2. The provisions of paragraph 1 of this Protocol provision are also
applicable in case a company or other person is treated under the admi-
nistrative practice of that State in the same or similar way as a company
or person as meant in that paragraph.
3. The competent authorities of the States shall by mutual agreement
decide which special regime is meant in the provisions of paragraph 1
of this Protocol provision. The provisions of paragraph 1 are also appli-
cable to any identical or substantially similar legislation in addition to
or replacing such a special regime enacted after 1 January 2007 unless
the competent authorities of the States decide otherwise by mutual
agreement.
109 30

4. It is understood that either Contracting State may rely on the use

of generally accepted tax principles with a view to preventing abuse of
the Convention. In any case where a Contracting State intends to apply
this paragraph, its competent authority shall in advance consult with the
competent authority of the other Contracting State.
II.
Ad Article 3, paragraph 1, subparagraph e
In case an entity that is treated as a body corporate for tax purposes
is liable as such to tax in a Contracting State, but the income of that
entity is taxed in the other Contracting State as income of the partici-
pants in that entity, the competent authorities shall take such measures
that on the one hand no double taxation remains, but on the other hand
it is prevented that merely as a result of application of the Convention
income is partly or wholly not subject to tax.
III.
Ad Article 3, paragraph 2 and Article 26
It is understood that, if the competent authorities of the Contracting
States have, by mutual agreement, reached a solution within the context
of the Convention for cases in which
a) application of paragraph 2 of Article 3 with respect to the interpre-
tation of a term not defined in the Convention; or
b) differences in qualification (for example of an element of income
or of a person) would result in double taxation or double exemption, this
solution, after publication thereof by both competent authorities, shall
also be binding for the application of the provisions of the Convention
in other similar cases.
IV.
Ad Article 4
An individual living aboard a ship without any real domicile in either
of the Contracting States shall be deemed to be a resident of the Con-
tracting State in which the ship has its home harbour.
V.
Ad Articles 5, 6, 7 and 13
It is understood that rights to the exploration and exploitation of natu-
ral resources shall be regarded as immovable property located in the
 31 109
Contracting State to whose seabed and subsoil thereof these rights
apply, and that these rights are regarded as assets of a permanent estab-
lishment in that State. Furthermore, it is understood that the aforemen-
tioned rights include rights to interests in, or benefits from assets that
arise from, that exploration or exploitation.
VI.
Ad Article 7
In respect of paragraphs 1 and 2 of Article 7, where an enterprise of a
Contracting State sells goods or merchandise or carries on business in
the other Contracting State through a permanent establishment situated
therein, the profits of that permanent establishment shall not be deter-
mined on the basis of the total amount received by the enterprise, but
shall be determined only on the basis of that portion of the income of
the enterprise that is attributable to the actual activity of the permanent
establishment in respect of such sales or business.
Specifically, in the case of contracts for the survey, supply, installa-
tion or construction of industrial, commercial or scientific equipment or
premises, or of public works, when the enterprise has a permanent estab-
lishment, the profits attributable to such permanent establishment shall
not be determined on the basis of the total amount of the contract, but
shall be determined only on the basis of that part of the contract that is
effectively carried out by the permanent establishment in the Contrac-
ting State where the permanent establishment is situated. The profits
related to that part of the contract which is carried out by the head office
of the enterprise shall be taxable only in the Contracting State of which
the enterprise is a resident.
VII.
Ad Article 8
It is understood that the provisions of Article 8 shall also apply to
taxes levied on the basis of the gross receipts in respect of the carriage
of passengers and cargo in international traffic.
VIII.
Ad Article 9
It is understood that the fact that associated enterprises have con-
cluded arrangements, such as cost sharing arrangements or general ser-
vices agreements, for or based on the allocation of executive, general
administrative, technical and commercial expenses, research and deve-
109 32

lopment expenses and other similar expenses, shall not by itself consti-
tute a condition as stated in paragraph 1 of Article 9.
IX.
Ad Article 10
1. Notwithstanding paragraph 2 of Article 10, the Contracting State
of which the company is a resident shall not levy a tax on dividends paid
by that company, if the beneficial owner of the dividends is a pension
fund referred to in paragraph 2 of Article 4.
2. It is understood that, for the purposes of this Convention,
a) the term jouissance shares means securities that grant the right
to participate in the net profit of the company and do not represent capi-
tal of the company but represent a non financial contribution, such as a
contribution in know how;
b) the term jouissance rights means rights, whether or not docu-
mented by official papers, to participate in the net profit of the company,
that do not represent capital of the company but represent a non finan-
cial contribution, such as a contribution in know how;
c) the term mining shares means shares in a mining company sub-
ject to mining law and organised in a specific legal form;
d) the term founders shares means shares that are issued as remu-
neration for services rendered by founders during the constitution of a
company and do not represent capital of the company.
X.
Ad Articles 10, 11 and 12
Where tax has been levied at source in excess of the amount of tax
chargeable under the provisions of Articles 10, 11 or 12, applications for
the refund of the excess amount of tax have to be lodged with the com-
petent authority of the State having levied the tax, within a period of
three years after the expiration of the calendar year in which the tax has
been levied.
XI.
Ad Articles 10 and 13
It is understood that income received in connection with the (partial)
liquidation of a company or a purchase of own shares by a company is
treated as income from shares and not as capital gains.
 33 109
XII.
Ad Article 13, paragraph 4
It is understood that the provision of paragraph 4 of Article 13 shall
not apply if the gain is derived in the course of a corporate reorganisa-
tion, amalgamation, division or similar transaction.
Furthermore, it is understood that for the Netherlands paragraph 4 of
Article 13 shall apply to shares listed on any other stock exchange sub-
ject to regulation by the Authority for the Financial Markets (or its suc-
cessor) in the Netherlands.
XIII.
Ad Article 16
It is understood that a bestuurder or commissaris of a company
resident in the Netherlands shall be considered to be a member of the
board of directors as meant in article 16. Where a resident of the
Netherlands derives fees and other remuneration in his capacity as a
member of the board of directors of a company resident in Ghana, such
fees and other remuneration may be taxed in Ghana. It is further under-
stood that the provisions of this Article shall apply notwithstanding the
provisions of Article 15.
XIV.
Ad Article 26
The competent authorities of the States may also agree, with respect
to any agreement reached as a result of a mutual agreement procedure
as meant in Article 26 that the State in which there is an additional tax
charge as a result of the aforementioned agreement shall not impose any
administrative penalties, surcharges, interest and costs with respect to
this additional tax charge, if the other State in which there is a corres-
ponding reduction of tax as a result of the agreement refrains from the
payment of any interest due with respect to such a reduction of tax.
XV.
Ad Article 27
The Contracting States may release to the arbitration board, estab-
lished under the provisions of paragraph 6 of Article 26, such informa-
tion as is necessary for carrying out the arbitration procedure. The mem-
109 34

bers of the arbitration board shall be subject to the limitations on

disclosure described in paragraph 2 of this Article with respect to any
information so released.

IN WITNESS whereof the undersigned, duly authorised thereto, have

signed this Protocol.
DONE at Accra this 10th day of March 2008, in duplicate, in the
English language.
For the Government of the Kingdom of the Netherlands
J.C. DE JAGER
For the Government of the Republic of Ghana
A. AKOTO OSEI

C. VERTALING

Verdrag tussen het Koninkrijk der Nederlanden en de Republiek

Ghana tot het vermijden van dubbele belasting en het voorkomen
van het ontgaan van belasting met betrekking tot belastingen naar
het inkomen en naar vermogenswinsten
De Regering van het Koninkrijk der Nederlanden
en
de Regering van de Republiek Ghana,
Geleid door de wens dat door beide Staten een verdrag wordt geslo-
ten tot het vermijden van dubbele belasting en het voorkomen van het
ontgaan van belasting met betrekking tot belastingen naar het inkomen
en naar vermogenswinsten,

Zijn het volgende overeengekomen:

 35 109
HOOFDSTUK I
REIKWIJDTE VAN HET VERDRAG
Artikel 1
Personen op wie het Verdrag van toepassing is
Dit Verdrag is van toepassing op personen die inwoner zijn van een
of van beide Verdragsluitende Staten.
Artikel 2
Belastingen waarop het Verdrag van toepassing is
1. Dit Verdrag is van toepassing op belastingen naar het inkomen en
naar vermogenswinsten die, ongeacht de wijze van heffing, worden
geheven ten behoeve van een Verdragsluitende Staat of van de staatkun-
dige onderdelen of plaatselijke publiekrechtelijke lichamen daarvan.
2. Als belastingen naar het inkomen en naar vermogenswinsten wor-
den beschouwd alle belastingen die worden geheven naar het gehele
inkomen en naar het totaal aan vermogenswinsten of naar bestanddelen
van het inkomen, waaronder begrepen belastingen naar voordelen ver-
kregen uit de vervreemding van roerende goederen of onroerende zaken,
belastingen naar het totale bedrag van de door ondernemingen betaalde
lonen of salarissen.
3. De bestaande belastingen waarop het Verdrag van toepassing is,
zijn met name:
a. in Nederland:
de inkomstenbelasting;
de loonbelasting;
de vennootschapsbelasting, daaronder begrepen het aandeel van
de Regering in de nettowinsten behaald met de exploitatie van natuur-
lijke rijkdommen geheven krachtens de Mijnbouwwet;
de dividendbelasting;
(hierna te noemen: Nederlandse belasting);
b. in de Republiek Ghana:
de inkomstenbelasting; en
de belasting naar vermogenswinsten;
(hierna te noemen: Ghanese belasting).
4. Het Verdrag is ook van toepassing op alle gelijke of in wezen
gelijksoortige belastingen die na de datum van ondertekening van het
Verdrag naast of in de plaats van de bestaande belastingen worden gehe-
ven. De bevoegde autoriteiten van de Verdragsluitende Staten doen
109 36

elkaar mededeling van alle wezenlijke wijzigingen die in hun onder-

scheiden belastingwetgevingen zijn aangebracht.
HOOFDSTUK II
BEGRIPSBEPALINGEN
Artikel 3
Algemene begripsbepalingen
1. Voor de toepassing van dit Verdrag, tenzij de context anders ver-
eist:
a. betekenen de uitdrukkingen een Verdragsluitende Staat en de
andere Verdragsluitende Staat het Koninkrijk der Nederlanden (Neder-
land) of Ghana, naargelang de context vereist;
b. betekent de uitdrukking Nederland het deel van het Koninkrijk
der Nederlanden dat in Europa is gelegen, met inbegrip van zijn territo-
riale zee en elk gebied buiten de territoriale zee waarbinnen Nederland,
in overeenstemming met het internationale recht, rechtsbevoegdheid
heeft of soevereine rechten uitoefent;
c. betekent de uitdrukking Ghana het grondgebied van de Repu-
bliek Ghana, met inbegrip van haar territoriale zee en elk gebied buiten
de territoriale zee waarbinnen de Republiek Ghana, in overeenstemming
met het internationale recht soevereine rechten heeft ten behoeve van de
exploratie en exploitatie van de natuurlijke rijkdommen van de zeebo-
dem, de ondergrond daarvan en de bovengelegen wateren;
d. omvat de uitdrukking persoon een natuurlijke persoon, een
lichaam en elke andere vereniging van personen;
e. betekent de uitdrukking lichaam elke rechtspersoon of elke een-
heid die voor de belastingheffing als een rechtspersoon wordt behandeld;
f. betekenen de uitdrukkingen onderneming van een Verdrag-
sluitende Staat en onderneming van de andere Verdragsluitende Staat
onderscheidenlijk een onderneming gedreven door een inwoner van een
Verdragsluitende Staat en een onderneming gedreven door een inwoner
van de andere Verdragsluitende Staat;
g. betekent de uitdrukking internationaal verkeer alle vervoer met
een schip of luchtvaartuig, gexploiteerd door een onderneming van een
Verdragsluitende Staat, behalve wanneer het schip of luchtvaartuig uit-
sluitend wordt gexploiteerd tussen plaatsen die in de andere Verdrag-
sluitende Staat zijn gelegen;
h. betekent de uitdrukking bevoegde autoriteit:
i. in Nederland de minister van Financin of zijn bevoegde verte-
genwoordiger;
ii. wat Ghana betreft, de Commissioner of the Internal Revenue of
zijn bevoegde vertegenwoordiger.
i. betekent de uitdrukking onderdaan:
 37 109
elke natuurlijke persoon die de nationaliteit van een Verdrag-
sluitende Staat bezit;
elke rechtspersoon, vennootschap of vereniging die zijn of haar
rechtspositie als zodanig ontleent aan de wetgeving die in een Verdrag-
sluitende Staat van kracht is;
j. betekent de uitdrukking pensioenfonds elke persoon die:
i. is opgericht overeenkomstig de wetgeving van een van de
Verdragsluitende Staten;
ii. hoofdzakelijk wordt gexploiteerd voor het beheren of ver-
schaffen van pensioenen, pensioenuitkeringen of andere soort-
gelijke beloningen of het verwerven van inkomsten ten behoeve
van dergelijke personen; en
iii. zelf en wat betreft zijn inkomsten voortvloeiend uit de activi-
teiten omschreven in bepaling ii. in die Verdragsluitende Staat
is vrijgesteld van belastingen naar het inkomen.
2. Voor de toepassing van het Verdrag door een Verdragsluitende
Staat op enig moment heeft, tenzij de context anders vereist, elke daarin
niet omschreven uitdrukking de betekenis welke die uitdrukking op dat
moment heeft volgens de wetgeving van die Staat met betrekking tot de
belastingen waarop het Verdrag van toepassing is, waarbij elke beteke-
nis volgens de toepasselijke belastingwetgeving van die Staat prevaleert
boven een betekenis die volgens andere wetgeving van die Staat aan die
uitdrukking wordt gegeven.
Artikel 4
Inwoner
1. Voor de toepassing van dit Verdrag betekent de uitdrukking inwo-
ner van een Verdragsluitende Staat iedere persoon die, ingevolge de
wetgeving van die Staat, aldaar aan belasting is onderworpen op grond
van zijn woonplaats, verblijf, plaats van leiding of enige andere soort-
gelijke omstandigheid. Deze uitdrukking omvat echter niet een persoon
die in die Staat slechts aan belasting is onderworpen ter zake van inkom-
sten en vermogenswinsten uit bronnen in die Staat.
2. De uitdrukking inwoner van een Verdragsluitende Staat omvat
tevens de Staat zelf, elk staatkundig onderdeel of plaatselijk publiek-
rechtelijk lichaam daarvan en een pensioenfonds dat volgens de wetge-
ving van die Verdragsluitende Staat is opgericht en onder toezicht staat.
3. Indien een natuurlijke persoon ingevolge de bepalingen van het
eerste lid inwoner van beide Verdragsluitende Staten is, wordt zijn posi-
tie als volgt bepaald:
a. hij wordt geacht slechts inwoner te zijn van de Staat waarin hij een
duurzaam tehuis tot zijn beschikking heeft; indien hij in beide Staten een
109 38

duurzaam huis tot zijn beschikking heeft, wordt hij geacht slechts inwo-
ner te zijn van de Staat waarmede zijn persoonlijke en economische
betrekkingen het nauwst zijn (middelpunt van de levensbelangen);
b. indien niet kan worden bepaald in welke Staat hij het middelpunt
van zijn levensbelangen heeft, of indien hij in geen van de Staten een
duurzaam tehuis tot zijn beschikking heeft, wordt hij geacht slechts
inwoner te zijn van de Staat waarin hij gewoonlijk verblijft;
c. indien hij in beide Staten of in geen van beide gewoonlijk verblijft,
wordt hij geacht slechts inwoner te zijn van de Staat waarvan hij onder-
daan is;
d. indien hij onderdaan is van beide Staten of van geen van beide,
regelen de bevoegde autoriteiten van de Verdragsluitende Staten de aan-
gelegenheid in onderlinge overeenstemming.
4. Indien een andere dan een natuurlijke persoon ingevolge de bepa-
lingen van het eerste lid inwoner van beide Verdragsluitende Staten is,
wordt hij geacht inwoner te zijn van de Staat waarin de plaats van zijn
werkelijke leiding is gelegen.

Artikel 5
Vaste inrichting
1. Voor de toepassing van dit Verdrag betekent de uitdrukking vaste
inrichting een vaste bedrijfsinrichting door middel waarvan de werk-
zaamheden van een onderneming geheel of gedeeltelijk worden uitgeoe-
fend.
2. De uitdrukking vaste inrichting omvat in het bijzonder:
a. een plaats waar leiding wordt gegeven;
b. een filiaal;
c. een kantoor;
d. een fabriek;
e. een werkplaats; en
f. een mijn, een olie- of gasbron, een (steen)groeve of een andere
plaats waar natuurlijke rijkdommen worden gewonnen.
3. De uitdrukking vaste inrichting omvat bovendien:
a. een plaats van uitvoering van een bouwwerk of van constructie-,
montage- of installatiewerkzaamheden of toezichthoudende activiteiten
die daarmee verband houden, evenwel uitsluitend indien een dergelijke
plaats van uitvoering, of de werkzaamheden of dergelijke activiteiten
blijft voortbestaan respectievelijk voortduren voor een tijdvak van meer
dan negen maanden;
b. het verrichten van toezichthoudende activiteiten die geen verband
houden met een plaats van uitvoering van een bouwwerk of met
 39 109
constructie-, montage- of installatiewerkzaamheden bedoeld onder a van
dit lid, evenwel uitsluitend indien dergelijke activiteiten langer dan
negen maanden voortduren.
4. Niettegenstaande de voorgaande bepalingen van dit artikel wordt
de uitdrukking vaste inrichting niet geacht te omvatten:
a. het gebruik maken van inrichtingen, uitsluitend voor opslag, uit-
stalling of aflevering van aan de onderneming toebehorende goederen of
koopwaar;
b. het aanhouden van een voorraad van aan de onderneming toebeho-
rende goederen of koopwaar, uitsluitend voor de opslag, uitstalling of
aflevering;
c. het aanhouden van een voorraad van aan de onderneming toebeho-
rende goederen of koopwaar, uitsluitend voor bewerking of verwerking
door een andere onderneming;
d. het aanhouden van een vaste bedrijfsinrichting, uitsluitend om voor
de onderneming goederen of koopwaar aan te kopen of inlichtingen in
te winnen;
e. het aanhouden van een vaste bedrijfsinrichting, uitsluitend om voor
de onderneming enige andere werkzaamheid uit te oefenen die van voor-
bereidende aard is of het karakter van hulpwerkzaamheid heeft;
f. het aanhouden van een vaste bedrijfsinrichting, uitsluitend voor
een combinatie van de in de onderdelen a tot en met e genoemde werk-
zaamheden, mits het totaal van de werkzaamheden van de vaste bedrijfs-
inrichting dat uit deze combinatie voortvloeit van voorbereidende aard
is of het karakter van hulpwerkzaamheid heeft.
5. Indien een persoon niet zijnde een onafhankelijke vertegenwoor-
diger waarop het zesde lid van toepassing is voor een onderneming
werkzaam is, en een machtiging bezit om namens de onderneming over-
eenkomsten af te sluiten en dit recht in een Verdragsluitende Staat
gewoonlijk uitoefent, wordt die onderneming, niettegenstaande de bepa-
lingen van het eerste en tweede lid, geacht in die Staat een vaste inrich-
ting te hebben met betrekking tot de werkzaamheden die die persoon
voor de onderneming verricht, tenzij de werkzaamheden van die persoon
beperkt blijven tot die werkzaamheden genoemd in het vierde lid, die,
indien zij worden uitgeoefend door middel van een vaste bedrijfsin-
richting, deze vaste bedrijfsinrichting op grond van de bepalingen van
dat lid niet tot een vaste inrichting zouden maken.
6. Een onderneming wordt niet geacht een vaste inrichting in een
Verdragsluitende Staat te bezitten alleen op grond van de omstandigheid
dat zij in die Staat zaken doet door bemiddeling van een makelaar, com-
missionair of enige andere onafhankelijke vertegenwoordiger, mits deze
personen in de normale uitoefening van hun bedrijf handelen.
109 40

7. De omstandigheid dat een lichaam dat inwoner is van een Verdrag-

sluitende Staat, een lichaam beheerst of door een lichaam wordt beheerst
dat inwoner is van de andere Verdragsluitende Staat of dat in die andere
Staat zaken doet (hetzij door middel van een vaste inrichting, hetzij op
andere wijze), stempelt een van beide lichamen niet tot een vaste inrich-
ting van het andere.
HOOFDSTUK III
BELASTINGHEFFING NAAR HET INKOMEN
Artikel 6
Inkomsten uit onroerende zaken
1. Inkomsten verkregen door een inwoner van een Verdragsluitende
Staat uit onroerende zaken (waaronder begrepen voordelen uit landbouw
of bosbedrijven) die in de andere Verdragsluitende Staat zijn gelegen
mogen in die andere Staat worden belast.
2. De uitdrukking onroerende zaken heeft de betekenis welke die
uitdrukking heeft volgens de wetgeving van de Verdragsluitende Staat
waar de desbetreffende zaken zijn gelegen. De uitdrukking omvat in
ieder geval de zaken die bij de onroerende zaken behoren, levende en
dode have van landbouw- en bosbedrijven, rechten waarop de bepalin-
gen van het privaatrecht betreffende de grondeigendom van toepassing
zijn, vruchtgebruik van onroerende zaken en rechten op veranderlijke of
vaste vergoedingen ter zake van de exploitatie, of concessie tot exploi-
tatie, van minerale aardlagen, bronnen en andere natuurlijke rijkdom-
men; schepen en luchtvaartuigen worden niet als onroerende zaken
beschouwd.
3. De bepalingen van het eerste lid zijn van toepassing op inkomsten
verkregen uit de rechtstreekse exploitatie, uit het verhuren of verpach-
ten, of uit elke andere vorm van exploitatie van onroerende zaken.
4. De bepalingen van het eerste en derde lid zijn eveneens van toe-
passing op inkomsten uit onroerende zaken van een onderneming en op
inkomsten uit onroerende zaken die worden gebruikt voor het verrich-
ten van zelfstandige arbeid.
Artikel 7
Winst uit onderneming
1. De voordelen van een onderneming van een Verdragsluitende Staat
zijn slechts in die Staat belastbaar, tenzij de onderneming in de andere
 41 109
Verdragsluitende Staat haar bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting. Indien de onderneming aldus haar bedrijf
uitoefent, mogen de voordelen van de onderneming in de andere Staat
worden belast, maar slechts in zoverre als zij aan die vaste inrichting
kunnen worden toegerekend.
2. Onder voorbehoud van de bepalingen van het derde lid worden,
indien een onderneming van een Verdragsluitende Staat in de andere
Verdragsluitende Staat haar bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting, in elk van de Verdragsluitende Staten aan die
vaste inrichting de voordelen toegerekend die zij geacht zou kunnen
worden te behalen, indien zij een zelfstandige onderneming zou zijn die
dezelfde of soortgelijke werkzaamheden zou uitoefenen onder dezelfde
of soortgelijke omstandigheden en die geheel onafhankelijk transacties
zou aangaan met de onderneming waarvan zij een vaste inrichting is.
3. Bij het bepalen van de voordelen van een vaste inrichting worden
in aftrek toegelaten kosten, daaronder begrepen kosten van de leiding en
algemene beheerskosten, die redelijkerwijs ten behoeve van de vaste
inrichting zijn gemaakt, hetzij in de Staat waarin de vaste inrichting is
gevestigd, hetzij elders. Geen aftrek wordt echter toegestaan ter zake van
bedragen (met uitzondering van die wegens vergoeding van werkelijke
kosten) welke eventueel door de vaste inrichting aan het hoofdkantoor
van de onderneming of een van haar andere kantoren worden betaald als
royaltys, vergoedingen of andere soortgelijke betalingen voor het ge-
bruik van octrooien of andere rechten, of als commissieloon voor be-
paalde diensten of voor het geven van leiding dan wel, behalve in het
geval van een onderneming die het bankbedrijf uitoefent, als interest op
gelden die aan de vaste inrichting zijn geleend. Evenmin wordt bij het
bepalen van de voordelen van een vaste inrichting rekening gehouden
met bedragen (met uitzondering van die wegens vergoeding van werke-
lijke kosten) welke door de vaste inrichting aan het hoofdkantoor van de
onderneming of een van haar andere kantoren in rekening worden
gebracht als royaltys, vergoedingen of andere soortgelijke betalingen
voor het gebruik van octrooien of andere rechten, of als commissieloon
voor bepaalde diensten of voor het geven van leiding, dan wel, behalve
in het geval van een onderneming die het bankbedrijf uitoefent, als inte-
rest op gelden die aan het hoofdkantoor van de onderneming of een van
haar andere kantoren zijn geleend.
4. Voor zover het in een Verdragsluitende Staat gebruikelijk is de aan
een vaste inrichting toe te rekenen voordelen te bepalen op basis van een
verdeling van de totale winst van de onderneming over haar verschil-
lende delen, belet het tweede lid die Verdragsluitende Staat niet de te
belasten voordelen te bepalen volgens de gebruikelijke verdeling; de
gevolgde methode van verdeling moet echter zodanig zijn, dat het resul-
taat in overeenstemming is met de in dit artikel neergelegde beginselen.
109 42

5. Er worden geen voordelen aan een vaste inrichting toegerekend

enkel op grond van de aankoop door die vaste inrichting van goederen
of koopwaar voor de onderneming.
6. Voor de toepassing van de voorgaande leden worden de aan de
vaste inrichting toe te rekenen voordelen van jaar tot jaar volgens
dezelfde methode bepaald, tenzij er een goede en genoegzame reden
bestaat hiervan af te wijken.
7. Indien in de voordelen bestanddelen van het inkomen zijn begre-
pen die afzonderlijk in andere artikelen van dit Verdrag worden behan-
deld, worden de bepalingen van die artikelen niet aangetast door de
bepalingen van dit artikel.
Artikel 8
Zee- en luchtvervoer
1. Voordelen uit de exploitatie van schepen of luchtvaartuigen in
internationaal verkeer zijn slechts belastbaar in de Verdragsluitende Staat
waarin de onderneming is gevestigd. Deze voordelen omvatten voorde-
len verkregen door de onderneming uit het gebruik, het onderhoud of de
verhuur van containers gebezigd voor het vervoer van goederen of koop-
waar in het internationaal verkeer, indien dit gebruik, onderhoud of deze
verhuur, naargelang van het geval, voortvloeien uit de exploitatie van
schepen of luchtvaartuigen in internationaal verkeer.
2. De bepalingen van het eerste lid zijn ook van toepassing op voor-
delen uit de deelneming in een pool, een gemeenschappelijke onder-
neming of een internationaal opererend agentschap.
Artikel 9
Gelieerde ondernemingen
1. Indien
a. een onderneming van een Verdragsluitende Staat onmiddellijk of
middellijk deelneemt aan de leiding van, aan het toezicht op dan wel in
het kapitaal van een onderneming van de andere Verdragsluitende Staat,
of
b. dezelfde personen onmiddellijk of middellijk deelnemen aan de
leiding van, aan het toezicht op dan wel in het kapitaal van een onder-
neming van een Verdragsluitende Staat en een onderneming van de
andere Verdragsluitende Staat,
en in het ene of in het andere geval tussen de beide ondernemingen
in hun handelsbetrekkingen of financile betrekkingen voorwaarden wor-
den overeengekomen of opgelegd, die afwijken van die welke zouden
 43 109
worden overeengekomen tussen onafhankelijke ondernemingen, mogen
alle voordelen die een van de ondernemingen zonder deze voorwaarden
zou hebben behaald, maar ten gevolge van die voorwaarden niet heeft
behaald, worden begrepen in de voordelen van die onderneming en dien-
overeenkomstig worden belast.
2. Indien een Verdragsluitende Staat in de voordelen van een onder-
neming van die Staat voordelen begrijpt en dienovereenkomstig belast
ter zake waarvan een onderneming van de andere Verdragsluitende
Staat in die andere Staat in de belastingheffing is betrokken en deze
voordelen bestaan uit voordelen welke de onderneming van de eerstge-
noemde Staat zou hebben behaald indien tussen de beide ondernemin-
gen zodanige voorwaarden zouden zijn overeengekomen als die welke
tussen onafhankelijke ondernemingen zouden zijn overeengekomen, past
die andere Staat het bedrag aan belasting dat in die Staat over die voor-
delen is geheven, dienovereenkomstig aan. Bij de vaststelling van deze
aanpassing wordt rekening gehouden met de overige bepalingen van dit
Verdrag en plegen de bevoegde autoriteiten van de Verdragsluitende Sta-
ten zo nodig met elkaar overleg.

Artikel 10
Dividenden
1. Dividenden betaald door een lichaam dat inwoner is van een
Verdragsluitende Staat aan een inwoner van de andere Verdragsluitende
Staat, mogen in die andere Staat worden belast.
2. Deze dividenden mogen echter ook in de Verdragsluitende Staat
waarvan het lichaam dat de dividenden betaalt inwoner is, overeenkom-
stig de wetgeving van die Staat worden belast, maar indien de uiteinde-
lijk gerechtigde tot de dividenden een inwoner van de andere Verdrag-
sluitende Staat is, mag de aldus geheven belasting:
a. 5 percent van het brutobedrag van de dividenden niet overschrij-
den, indien de uiteindelijk gerechtigde een lichaam is (niet zijnde een
transparante entiteit) dat onmiddellijk ten minste 10 percent bezit van
het kapitaal van het lichaam dat de dividenden betaalt;
b. in alle overige gevallen 10 percent van het brutobedrag van de
dividenden niet overschrijden.
3. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
4. De bepalingen van het tweede lid laten onverlet de belastinghef-
fing van het lichaam ter zake van de winst waaruit de dividenden wor-
den betaald.
109 44

5. De uitdrukking dividenden, zoals gebezigd in dit artikel, bete-

kent inkomsten uit aandelen, winstaandelen of winstbewijzen, mijn-
aandelen, oprichtersaandelen of andere rechten, niet zijnde schuldvorde-
ringen, die aanspraak geven op een aandeel in de winst alsmede
inkomsten uit andere vennootschappelijke rechten die door de wetgeving
van de Staat waarvan het lichaam dat de uitdeling doet inwoner is, op
dezelfde wijze aan de belastingheffing worden onderworpen als inkom-
sten uit aandelen en omvat tevens alle andere bestanddelen die uit
hoofde van de wetgeving van de Verdragsluitende Staat waarvan het
lichaam dat de dividenden betaalt inwoner is, worden behandeld als divi-
dend of een uitdeling van dividend van een lichaam.
6. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de dividenden, die inwoner is van
een Verdragsluitende Staat, in de andere Verdragsluitende Staat waarvan
het lichaam dat de dividenden betaalt inwoner is, een bedrijf uitoefent
door middel van een aldaar gevestigde vaste inrichting of in die andere
Staat zelfstandige arbeid verricht vanuit een aldaar gevestigd vast mid-
delpunt en het aandelenbezit uit hoofde waarvan de dividenden worden
betaald, tot het bedrijfsvermogen van die vaste inrichting of tot het
beroepsvermogen van dat vaste middelpunt behoort. In dat geval zijn de
bepalingen van artikel 7 of van artikel 14 naargelang van het geval, van
toepassing.
7. Indien een lichaam dat inwoner is van een Verdragsluitende Staat,
voordelen of inkomsten verkrijgt uit de andere Verdragsluitende Staat,
mag die andere Staat geen belasting heffen op de dividenden die door
het lichaam worden betaald, behalve voor zover deze dividenden wor-
den betaald aan een inwoner van die andere Staat of voor zover het
aandelenbezit uit hoofde waarvan de dividenden worden betaald, tot het
bedrijfsvermogen van een in die andere Staat gevestigde vaste inrichting
of tot het beroepsvermogen van een aldaar gevestigd vast middelpunt
behoort, noch de niet-uitgedeelde winst van het lichaam onderwerpen
aan een belasting op niet-uitgedeelde winst van het lichaam, zelfs indien
de betaalde dividenden of de niet-uitgedeelde winst geheel of gedeelte-
lijk bestaan uit voordelen of inkomsten die uit die andere Staat afkom-
stig zijn.

Artikel 11
Interest
1. Interest afkomstig uit een Verdragsluitende Staat en betaald aan
een inwoner van de andere Verdragsluitende Staat mag in die andere
Staat worden belast.
 45 109
2. Deze interest mag echter ook in de Verdragsluitende Staat waaruit
hij afkomstig is overeenkomstig de wetgeving van die Staat worden
belast, maar indien de uiteindelijk gerechtigde tot de interest een inwo-
ner van de andere Verdragsluitende Staat is, mag de aldus geheven belas-
ting 8 percent van het brutobedrag van de interest niet overschrijden.
3. Niettegenstaande de bepalingen van het tweede lid is de interest
bedoeld in het eerste lid vrijgesteld van belasting in de Verdragsluitende
Staat waaruit de interest afkomstig is indien de genieter de uiteindelijk
gerechtigde tot de interest is en indien:
a. de schuldenaar of de genieter van de interest de Regering van een
Verdragsluitende Staat zelf is, een overheidslichaam, een staatkundig
onderdeel of plaatselijk publiekrechtelijk lichaam daarvan of de Centrale
Bank van een Verdragsluitende Staat; of
b. de interest wordt betaald in verband met een lening verstrekt,
goedgekeurd, gegarandeerd of verzekerd door de Regering van een
Verdragsluitende Staat, de Centrale Bank van een Verdragsluitende Staat
of door enig agentschap of enige instantie (waaronder begrepen een
financile instelling) dat of die eigendom is van of wordt beheerst door
de Regering van een Verdragsluitende Staat.
4. Niettegenstaande de bepalingen van het tweede lid, is interest als
bedoeld in het eerste lid, uitsluitend belastbaar in de Verdragsluitende
Staat waarvan de genieter inwoner is, indien de genieter de uiteindelijk
gerechtigde tot de interest is en de interest wordt betaald in verband met:
a. een lening verstrekt door een bank of een andere financile instel-
ling (met inbegrip van een verzekeringsmaatschappij) of een pensioen-
fonds;
b. de verkoop op krediet van nijverheids- en handelsuitrusting of
wetenschappelijke uitrusting;
c. de verkoop op krediet van goederen door een onderneming aan een
andere onderneming.
5. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede,
derde en vierde lid.
6. De uitdrukking interest, zoals gebezigd in dit artikel, betekent
inkomsten uit schuldvorderingen van welke aard ook, al dan niet verze-
kerd door hypotheek en al dan niet aanspraak gevend op een aandeel in
de winst van de schuldenaar, en in het bijzonder inkomsten uit overheids-
leningen en inkomsten uit obligaties of schuldbewijzen, waaronder be-
grepen de aan zodanige leningen, obligaties of schuldbewijzen verbon-
den premies en prijzen. In rekening gebrachte boetes voor te late betaling
worden voor de toepassing van dit artikel niet als interest aangemerkt.
109 46

7. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de interest, die inwoner is van een
Verdragsluitende Staat, in de andere Verdragsluitende Staat waaruit de
interest afkomstig is, een bedrijf uitoefent door middel van een aldaar
gevestigde vaste inrichting of in die andere Staat zelfstandige arbeid ver-
richt vanuit een aldaar gevestigd vast middelpunt, en de schuldvordering
uit hoofde waarvan de interest wordt betaald, tot het bedrijfsvermogen
van die vaste inrichting of tot het beroepsvermogen van dat vaste mid-
delpunt behoort. In dat geval zijn de bepalingen van artikel 7 of van arti-
kel 14 naargelang van het geval, van toepassing.
8. Interest wordt geacht afkomstig te zijn uit een Verdragsluitende
Staat indien zij wordt betaald door die Staat zelf, een staatkundig onder-
deel of een plaatselijk publiekrechtelijk lichaam daarvan of door een
inwoner van die Staat. Indien evenwel de persoon die de interest betaalt,
of hij inwoner van een Verdragsluitende Staat is of niet, in een Verdrag-
sluitende Staat een vaste inrichting of een vast middelpunt heeft waar-
voor de schuld ter zake waarvan de interest wordt betaald was aange-
gaan en deze interest ten laste komt van die vaste inrichting of van dat
vaste middelpunt, wordt deze interest geacht afkomstig te zijn uit de
Staat waar de vaste inrichting of het vaste middelpunt is gevestigd.
9. Indien, wegens een bijzondere verhouding tussen de schuldenaar
en de uiteindelijk gerechtigde of tussen hen beiden en een derde, het
bedrag van de interest, gelet op de schuldvordering ter zake waarvan
deze wordt betaald, hoger is dan het bedrag dat zonder zulk een verhou-
ding door de schuldenaar en de uiteindelijk gerechtigde zou zijn over-
eengekomen, zijn de bepalingen van dit artikel slechts op het laatst-
bedoelde bedrag van toepassing. In dat geval blijft het daarboven
uitgaande deel van het betaalde bedrag belastbaar overeenkomstig de
wetgeving van elk van de Verdragsluitende Staten, zulks met inachtne-
ming van de overige bepalingen van dit Verdrag.

Artikel 12
Royaltys en vergoedingen voor technische diensten
1. Royaltys en vergoedingen voor technische diensten afkomstig uit
een Verdragsluitende Staat die worden betaald aan een inwoner van de
andere Verdragsluitende Staat mogen in die andere Staat worden belast.
2. Deze royaltys of vergoedingen voor technische diensten mogen
echter ook in de Verdragsluitende Staat waaruit zij afkomstig zijn over-
eenkomstig de wetgeving van die Staat worden belast, maar indien de
uiteindelijk gerechtigde tot de royaltys of vergoedingen voor technische
diensten een inwoner van de andere Verdragsluitende Staat is, mag de
 47 109
aldus geheven belasting 8 percent van het brutobedrag van de royaltys
of vergoedingen voor technische diensten niet overschrijden.
3. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
4. De uitdrukking royaltys, zoals gebezigd in dit artikel, betekent
vergoedingen van welke aard ook voor het gebruik van, of voor het recht
van gebruik van, een auteursrecht op een werk op het gebied van letter-
kunde, kunst of wetenschap, waaronder begrepen bioscoopfilms of films
of banden voor radio- of televisieuitzendingen, een octrooi, een fabrieks-
of handelsmerk, een tekening of model, een plan, een geheim recept of
een geheime werkwijze, of voor het gebruik van of het recht van gebruik
van inlichtingen omtrent ervaringen op het gebied van nijverheid, han-
del of wetenschap.
5. De uitdrukking vergoedingen voor technische diensten zoals
gebezigd in dit artikel betekent vergoedingen van welke aard ook aan
personen, niet zijnde werknemers van de persoon die de vergoedingen
betaalt, ter zake van diensten van leidinggevende, technische of advise-
rende aard. Het is wel te verstaan dat de uitdrukking vergoedingen voor
technische diensten niet mede omvat vergoedingen ter zake van toe-
zichthoudende activiteiten die verband houden met een plaats van uit-
voering van een bouwwerk of van constructie-, montage- of installatie-
werkzaamheden of terzake van toezichthoudende activiteiten die
voortvloeien uit installatiewerkzaamheden in verband met de verkoop
van machinerie of onderdelen daarvan en inkomsten bedoeld in artikel
14, eerste lid.
6. De bepalingen van het eerste en tweede lid zijn niet van toepassing
indien de uiteindelijk gerechtigde tot de royaltys of vergoedingen voor
technische diensten, die inwoner is van een Verdragsluitende Staat, in de
andere Verdragsluitende Staat waaruit de royaltys of vergoedingen voor
technische diensten afkomstig zijn, een bedrijf uitoefent door middel van
een aldaar gevestigde vaste inrichting of in die andere Staat zelfstandige
arbeid verricht vanuit een aldaar gevestigd vast middelpunt, en het recht
of de zaak uit hoofde waarvan de royaltys of vergoedingen voor tech-
nische diensten worden betaald, tot het bedrijfsvermogen van die vaste
inrichting of tot het beroepsvermogen van dat vaste middelpunt behoort.
In dat geval zijn de bepalingen van artikel 7 of van artikel 14 naarge-
lang van het geval, van toepassing.
7. Royaltys of vergoedingen voor technische diensten worden geacht
afkomstig te zijn uit een Verdragsluitende Staat indien zij worden be-
taald door die Staat zelf, een staatkundig onderdeel of een plaatselijk
publiekrechtelijk lichaam daarvan of door een inwoner van die Staat.
Indien evenwel de persoon die de royaltys of vergoedingen voor tech-
109 48

nische diensten betaalt, ongeacht of hij inwoner van een Verdragsluitende

Staat is of niet, in een Verdragsluitende Staat een vaste inrichting of een
vast middelpunt heeft waarvoor de verplichting tot het betalen van
royaltys of vergoedingen voor technische diensten was aangegaan en
deze royaltys of vergoedingen voor technische diensten ten laste komen
van die vaste inrichting of dat vaste middelpunt, worden deze royaltys
of vergoedingen voor technische diensten geacht afkomstig te zijn uit de
Staat waar de vaste inrichting of het vaste middelpunt is gevestigd.
8. Indien, wegens een bijzondere verhouding tussen de schuldenaar
en de uiteindelijk gerechtigde of tussen hen beiden en een derde, het
bedrag van de royaltys of vergoedingen voor technische diensten, gelet
op het gebruik, het recht of de inlichtingen waarvoor zij worden betaald,
hoger is dan het bedrag dat zonder zulk een verhouding door de schul-
denaar en de uiteindelijk gerechtigde zou zijn overeengekomen, zijn de
bepalingen van dit artikel slechts op het laatstbedoelde bedrag van toe-
passing. In dat geval blijft het daarboven uitgaande deel van het betaalde
bedrag belastbaar overeenkomstig de wetgeving van elk van de Verdrag-
sluitende Staten, zulks met inachtneming van de overige bepalingen van
dit Verdrag.

Artikel 13
Vermogenswinsten
1. Voordelen verkregen door een inwoner van een Verdragsluitende
Staat uit de vervreemding van onroerende zaken als bedoeld in artikel 6
en die zijn gelegen in de andere Verdragsluitende Staat, mogen in die
andere Staat worden belast.
2. Voordelen verkregen uit de vervreemding van roerende goederen
die deel uitmaken van het bedrijfsvermogen van een vaste inrichting die
een onderneming van een Verdragsluitende Staat in de andere Verdrag-
sluitende Staat heeft of van roerende goederen die behoren tot een vast
middelpunt waarover een inwoner van een Verdragsluitende Staat in de
andere Verdragsluitende Staat beschikt voor het verrichten van zelfstan-
dige arbeid, waaronder begrepen voordelen verkregen uit de vervreem-
ding van de vaste inrichting (afzonderlijk of met de gehele onderne-
ming) of van dat vaste middelpunt, mogen in die andere Staat worden
belast.
3. Voordelen verkregen door een onderneming van een Verdrag-
sluitende Staat uit de vervreemding van schepen of luchtvaartuigen die
in internationaal verkeer worden gexploiteerd of van roerende goede-
ren die worden gebruikt bij de exploitatie van deze schepen of luchtvaar-
tuigen zijn slechts belastbaar in die Staat.
 49 109
4. Voordelen verkregen door een inwoner van een Verdragsluitende
Staat uit de vervreemding van aandelen in een lichaam waarvan meer
dan 90 per cent van de waarde onmiddellijk of middellijk ontleend wordt
aan onroerende zaken gelegen in de andere Verdragsluitende Staat (niet
zijnde aandelen genoteerd op een aandelenbeurs van een van beide
Verdragsluitende Staten) mogen in die andere Staat worden belast, mits
de inwoner onmiddellijk of middellijk ten minste 5 percent van de
geplaatste aandelen bezit.
5. Voordelen verkregen uit de vervreemding van alle andere goederen
dan die bedoeld in het eerste, tweede, derde en vierde lid, zijn slechts
belastbaar in de Verdragsluitende Staat waarvan de vervreemder inwo-
ner is.
6. Niettegenstaande de bepalingen van het vijfde lid, mag Nederland,
overeenkomstig zijn eigen wetgeving, de betekenis van de uitdrukking
vervreemding daaronder begrepen, belasting heffen over voordelen
verkregen door een natuurlijke persoon die inwoner is van Ghana ver-
kregen uit de vervreemding van aandelen in, winstbewijzen van of
schuldvorderingen op een lichaam met een in aandelen verdeeld kapi-
taal, dat volgens de wetgeving van Nederland inwoner is van Nederland,
alsmede uit de vervreemding van een gedeelte van de in die aandelen,
winstbewijzen of schuldvorderingen besloten liggende rechten, indien
die natuurlijke persoon al dan niet tezamen met zijn of haar echtge-
noot dan wel een van hun bloed- of aanverwanten in de rechte lijn
onmiddellijk of middellijk ten minste vijf percent bezit van het ge-
plaatste kapitaal van een bepaalde soort van aandelen van dat lichaam.
Deze bepaling vindt alleen toepassing wanneer de natuurlijke persoon
die de voordelen verkrijgt in de loop van de laatste tien jaar vooraf-
gaande aan het jaar waarin die voordelen worden verkregen inwoner van
Nederland is geweest en mits op het tijdstip waarop hij inwoner werd
van Ghana werd voldaan aan de eerdergenoemde voorwaarden ten aan-
zien van het aandelenbezit in eerdergenoemd lichaam.
In de gevallen waarin, ingevolge de nationale wetgeving van Neder-
land, aan de natuurlijke persoon een aanslag is opgelegd ter zake van de
vorenbedoelde aandelen die geacht worden bij diens emigratie uit Ne-
derland te zijn vervreemd, geldt het vorenstaande alleen voor zover er
van deze aanslag nog een bedrag openstaat.
7. Niettegenstaande de bepalingen van het vijfde lid, mogen de voor-
delen uit de vervreemding van goederen in de zin van het vijfde lid die
zich in Ghana bevinden en zijn verworven door een natuurlijke persoon
die inwoner is geweest van Ghana en inwoner is geworden van Neder-
land in Ghana worden belast indien de vervreemding van de goederen
plaatsvindt binnen vijf jaar na de datum waarop de natuurlijke persoon
is opgehouden inwoner van Ghana te zijn.
109 50

Artikel 14
Zelfstandige arbeid
1. Inkomsten verkregen door een inwoner van een Verdragsluitende
Staat in de uitoefening van een vrij beroep of ter zake van andere werk-
zaamheden van zelfstandige aard zijn slechts in die Staat belastbaar, ten-
zij:
a. hij in de andere Verdragsluitende Staat voor het verrichten van zijn
werkzaamheden geregeld over een vast middelpunt beschikt; in dat
geval mogen de inkomsten slechts in zoverre zij zijn toe te rekenen aan
dat vaste middelpunt in die andere Verdragsluitende Staat worden belast;
of
b. hij in de andere Verdragsluitende Staat verblijft gedurende een tijd-
vak dat of tijdvakken die tezamen in een tijdvak van twaalf maanden
beginnend of eindigend in het desbetreffende belastingjaar in totaal 9
maanden of meer beslaat of beslaan; in dat geval mogen de inkomsten
slechts in die andere Verdragsluitende Staat worden belast voor zover zij
verkregen zijn met de werkzaamheden die hij in die Staat verricht.
2. De uitdrukking vrij beroep omvat in het bijzonder zelfstandige
werkzaamheden op het gebied van wetenschap, letterkunde, kunst, op-
voeding of onderwijs, alsmede de zelfstandige werkzaamheden van art-
sen, advocaten, ingenieurs, architecten, tandartsen en accountants.
Artikel 15
Niet-zelfstandige arbeid
1. Onder voorbehoud van de bepalingen van de artikelen 16, 18, 19,
20 en 21, zijn salarissen, lonen en andere soortgelijke beloningen ver-
kregen door een inwoner van een Verdragsluitende Staat ter zake van
een dienstbetrekking slechts in die Staat belastbaar, tenzij de dienstbe-
trekking in de andere Verdragsluitende Staat wordt uitgeoefend. Indien
de dienstbetrekking aldaar wordt uitgeoefend, mag de ter zake daarvan
verkregen beloning in die andere Staat worden belast.
2. Niettegenstaande de bepalingen van het eerste lid is de beloning
verkregen door een inwoner van een Verdragsluitende Staat ter zake van
een in de andere Verdragsluitende Staat uitgeoefende dienstbetrekking
slechts in de eerstbedoelde Staat belastbaar, indien:
a. de genieter in de andere Staat verblijft gedurende een tijdvak dat
of tijdvakken die in een tijdvak van twaalf maanden beginnend of ein-
digend in het desbetreffende belastingjaar een totaal van 183 dagen niet
te boven gaat of gaan, en
b. de beloning wordt betaald door of namens een werkgever die geen
inwoner van de andere Staat is, en
 51 109
c. de beloning niet ten laste komt van een vaste inrichting die of een
vast middelpunt dat de werkgever in de andere Staat heeft.
3. Niettegenstaande de voorgaande bepalingen van dit artikel, is de
beloning verkregen door een inwoner van een Verdragsluitende Staat
slechts in die Staat belastbaar indien de beloning is betaald ter zake van
een dienstbetrekking uitgeoefend in de andere Verdragsluitende Staat in
verband met een plaats van uitvoering van een bouwwerk of van
constructie-, montage- of installatiewerkzaamheden of toezichthoudende
activiteiten die daarmee verband houden gedurende het tijdvak van
negen maanden gedurende welke deze plaats, die werkzaamheden of die
activiteiten geen vaste inrichting in die andere Staat vormen.
4. Niettegenstaande de bepalingen van het derde lid van dit artikel, is
de beloning verkregen door een inwoner van een Verdragsluitende Staat
slechts in die Staat belastbaar indien de beloning is betaald ter zake van
een dienstbetrekking uitgeoefend in de andere Verdragsluitende Staat in
verband met toezichthoudende activiteiten die geen verband houden met
een plaats van uitvoering van een bouwwerk, of van constructie-, mon-
tage of installatiewerkzaamheden gedurende het tijdvak van negen maan-
den gedurende welke deze activiteiten geen vaste inrichting in die
andere Staat vormen.
5. Niettegenstaande de voorgaande bepalingen van dit artikel mag de
beloning verkregen door een inwoner van een Verdragsluitende Staat ter
zake van een dienstbetrekking uitgeoefend aan boord van een schip of
luchtvaartuig dat in internationaal verkeer wordt gexploiteerd, in de
Verdragsluitende Staat worden belast waarin de onderneming is geves-
tigd.
Artikel 16
Directeursbeloningen
Directeursbeloningen en andere beloningen verkregen door een inwo-
ner van een Verdragsluitende Staat in zijn hoedanigheid van lid van de
raad van beheer van een lichaam dat inwoner is van de andere Verdrag-
sluitende Staat, mogen in die andere Staat worden belast.
Artikel 17
Artiesten en sportbeoefenaars
1. Niettegenstaande de bepalingen van de artikelen 7, 14 en 15
mogen voordelen of inkomsten verkregen door een inwoner van een
Verdragsluitende Staat als artiest, zoals een toneelspeler, een film-,
radio- of televisie-artiest of een musicus, of als sportbeoefenaar, uit zijn
109 52

persoonlijke werkzaamheden als zodanig die worden verricht in de

andere Verdragsluitende Staat, worden belast in die andere Staat.
2. Indien voordelen of inkomsten ter zake van persoonlijke werk-
zaamheden die door een artiest of een sportbeoefenaar in die hoedanig-
heid worden verricht, niet aan de artiest of sportbeoefenaar zelf toeko-
men, maar aan een andere persoon, mogen die voordelen of inkomsten,
niettegenstaande de bepalingen van de artikelen 7, 14 en 15, worden
belast in de Verdragsluitende Staat waarin de werkzaamheden van de
artiest of sportbeoefenaar worden verricht.
3. De bepalingen van het eerste en tweede lid zijn niet van toepassing
op voordelen of inkomsten die worden verkregen door een inwoner van
een Verdragsluitende Staat uit werkzaamheden die worden verricht in de
andere Verdragsluitende Staat, indien het bezoek aan die andere Staat
geheel of grotendeels wordt bekostigd uit de openbare middelen van een
of beide Verdragsluitende Staten, een staatkundig onderdeel of een plaat-
selijk publiekrechtelijk lichaam daarvan, of plaatsvindt in het kader van
een uitwisselingsprogramma op het gebied van cultuur of sport tussen
de Regeringen van de Verdragsluitende Staten. In een zodanig geval zijn
de voordelen of inkomsten slechts belastbaar in de Verdragsluitende
Staat waarvan de artiest of sportbeoefenaar inwoner is.
Artikel 18
Pensioenen, lijfrenten en socialezekerheidsuitkeringen
1. Onder voorbehoud van de bepalingen van artikel 19, tweede lid,
zijn pensioenen en andere soortgelijke beloningen betaald aan een inwo-
ner van een Verdragsluitende Staat ter zake van een vroegere dienstbe-
trekking alsmede lijfrenten betaald aan een inwoner van een Verdrag-
sluitende Staat slechts in die Staat belastbaar. Pensioenen en andere
uitkeringen betaald krachtens de bepalingen van een socialezekerheids-
stelsel van een Verdragsluitende Staat aan een inwoner van de andere
Verdragsluitende Staat zijn slechts in die andere Staat belastbaar.
2. Niettegenstaande het bepaalde in het eerste lid, mag een pensioen
of andere soortgelijke beloning, een lijfrente of ieder pensioen en andere
uitkering betaald krachtens de bepalingen van een socialezekerheids-
stelsel van een Verdragsluitende Staat ook worden belast in de Verdrag-
sluitende Staat waaruit deze afkomstig is, overeenkomstig de wetgeving
van die Staat:
a. voor zover de aanspraak op dit pensioen of andere soortgelijke
beloning of lijfrente in de Verdragsluitende Staat, waaruit het pensioen
of de andere soortgelijke beloning of lijfrente afkomstig is, van belas-
ting is vrijgesteld, dan wel de met het pensioen of andere soortgelijke
beloning of lijfrente samenhangende bijdragen aan de pensioenregeling
 53 109
of verzekeringsmaatschappij, in het verleden bij het bepalen van het in
die Staat belastbare inkomen in aftrek zijn gebracht, dan wel anderszins
in die Staat in aanmerking zijn gekomen voor een fiscale faciliring; en
b. voorzover dit pensioen of andere soortgelijke beloning of lijfrente
of dit pensioen of andere uitkering betaald krachtens de bepalingen van
een socialezekerheidsstelsel van een Verdragsluitende Staat in de
Verdragsluitende Staat waarvan de genieter inwoner is, niet tegen het
algemeen van toepassing zijnde belastingtarief voor inkomsten verkre-
gen uit niet-zelfstandige arbeid dan wel het brutobedrag van dat pen-
sioen of andere soortgelijke beloning of lijfrente voor minder dan 90
percent, in de belastingheffing wordt betrokken; en
c. indien het totale brutobedrag van de pensioenen en andere soort-
gelijke beloning of lijfrenten en ieder pensioen en andere uitkering
betaald krachtens de bepalingen van een socialezekerheidsstelsel van
een Verdragsluitende Staat, in enig kalenderjaar een bedrag van twintig-
duizend (20.000) euro te boven gaat.
3. Niettegenstaande de bepalingen van het eerste en tweede lid, mag,
indien dit pensioen of andere soortgelijke beloning geen periodiek ka-
rakter draagt, wordt betaald ter zake van een vroegere dienstbetrekking
in de andere Verdragsluitende Staat en uitbetaling plaatsvindt vr de
datum waarop het pensioen ingaat, of indien in plaats van het recht op
lijfrente vr de datum waarop de lijfrente ingaat een afkoopsom wordt
betaald, de betaling of deze afkoopsom ook in de Verdragsluitende Staat
waaruit zij afkomstig is worden belast.
4. Een pensioen of andere soortelijke beloning of lijfrente wordt
geacht afkomstig te zijn uit een Verdragsluitende Staat voorzover de met
dit pensioen of andere soortgelijke beloning of lijfrente samenhangende
bijdragen of betalingen, dan wel de aanspraken op dit pensioen of andere
soortgelijke beloning of lijfrente in die Staat in aanmerking zijn geko-
men voor een fiscale faciliring. De ingevolge dit artikel aan een Verdrag-
sluitende Staat toegekende heffingsrechten worden op geen enkele wijze
beperkt door de overdracht van een pensioen van een in een Verdrag-
sluitende Staat gevestigd pensioenfonds of aldaar gevestigde verzeke-
ringsmaatschappij naar een in een andere Staat gevestigd pensioenfonds
of aldaar gevestigde verzekeringsmaatschappij.
5. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het tweede lid.
Zij beslissen tevens welke gegevens de inwoner van een Verdrag-
sluitende Staat ten behoeve van de juiste toepassing van het Verdrag in
de andere Verdragsluitende Staat moet overleggen, met name om te kun-
nen vaststellen of al dan niet voldaan is aan de voorwaarden als bedoeld
in de onderdelen a, b en c van het tweede lid.
109 54

6. De uitdrukking lijfrente betekent een vaste som, periodiek be-

taalbaar op vaste tijdstippen, hetzij gedurende het leven, hetzij gedu-
rende een vastgesteld of voor vaststelling vatbaar tijdvak, ingevolge een
verbintenis tot het doen van betalingen, welke tegenover een voldoende
en volledige tegenprestatie in geld of geldswaarde staat.
7. Of en in hoeverre een pensioen of soortgelijke beloning onder dit
artikel of onder artikel 19 valt, wordt bepaald door het karakter van de
vroegere dienstbetrekking, zijnde particulier of overheid, gedurende
welke de aanspraak op dat gedeelte van het pensioen of soortgelijke
beloning werd opgebouwd.
8. Bijdragen die door of namens een natuurlijke persoon die in een
Verdragsluitende Staat diensten verleent zijn betaald aan een voor de
belastingheffing in de andere Verdragsluitende Staat erkende pensioen-
regeling,
i. waaraan de natuurlijke persoon onmiddellijk voordat hij begon met
de dienstverlening in de eerstbedoelde Staat deelnam,
ii. waaraan de natuurlijke persoon deelnam op het tijdstip waarop hij
diensten verleende in of inwoner was van de andere Staat, en
iii. die de bevoegde autoriteit van de eerstbedoelde Staat heeft aan-
vaard als zijnde gelijkwaardig aan een door die Staat voor de
belastingheffing erkende pensioenregeling,
dienen voor het vaststellen van de belasting die de natuurlijke persoon
verschuldigd is in de eerstbedoelde Staat en van de voordelen van een
onderneming die in de eerstbedoelde Staat mogen worden belast, in die
Staat op dezelfde wijze en onder dezelfde voorwaarden en beperkingen
te worden behandeld als bijdragen die zijn betaald aan een pensioen-
regeling die in die Staat voor de belastingheffing is erkend.
Voor de toepassing van dit lid:
a. betekent de uitdrukking pensioenregeling een regeling waaraan
de natuurlijke persoon deelneemt teneinde pensioenuitkeringen veilig te
stellen die hem verschuldigd zijn ter zake van de diensten bedoeld in dit
lid; en
b. wordt een pensioenregeling voor de belastingheffing in een Staat
erkend indien de bijdragen aan de regeling in die Staat in aanmerking
komen voor een fiscale faciliring.
Artikel 19
Overheidsfuncties

1. a. Salarissen, lonen en andere soortgelijke beloningen, betaald

door een Verdragsluitende Staat of een staatkundig onderdeel of een
plaatselijk publiekrechtelijk lichaam daarvan, aan een natuurlijke per-
soon ter zake van diensten verleend aan die Staat of dat onderdeel of dat
publiekrechtelijke lichaam, zijn slechts in die Staat belastbaar.
 55 109
b. Deze salarissen, lonen en andere soortgelijke beloningen zijn ech-
ter slechts in de andere Verdragsluitende Staat belastbaar, indien de dien-
sten in die Staat worden verleend en de natuurlijke persoon een inwoner
is van die Staat die:
i. onderdaan is van die Staat; of
ii. niet uitsluitend voor het verlenen van de diensten inwoner van
die Staat werd.

2. a. Niettegenstaande de bepalingen van het eerste lid, zijn pensioe-

nen en andere soortgelijke beloningen betaald door, of uit fondsen in het
leven geroepen door, een Verdragsluitende Staat of een staatkundig
onderdeel of een plaatselijk publiekrechtelijk lichaam daarvan aan een
natuurlijke persoon ter zake van diensten verleend aan die Staat of dat
onderdeel of dat lichaam, slechts in die Staat belastbaar.
b. Deze pensioenen en andere soortgelijke beloningen zijn echter
slechts in de andere Verdragsluitende Staat belastbaar, indien de natuur-
lijke persoon inwoner en onderdaan is van die Staat.
3. De bepalingen van de artikelen 15, 16, 17 en 18 zijn van toepas-
sing op salarissen, lonen, pensioenen en andere soortgelijke beloningen
betaald ter zake van diensten verleend in het kader van een op winst
gericht bedrijf, uitgeoefend door een Verdragsluitende Staat of een staat-
kundig onderdeel of een plaatselijk publiekrechtelijk lichaam daarvan.

Artikel 20
Hoogleraren, onderzoekers en docenten
1. Een natuurlijke persoon die een Verdragsluitende Staat bezoekt uit-
sluitend met het doel onderwijs te geven of onderzoek te verrichten aan
een universiteit, hogeschool, school of andere officieel erkende inrich-
ting voor onderwijs in die Staat en die onmiddellijk voorafgaand aan dat
bezoek inwoner is of was van de andere Verdragsluitende Staat, is in de
eerstbedoelde Verdragsluitende Staat vrijgesteld van belasting over de
beloning voor het geven van onderwijs of het verrichten van onderzoek
gedurende een tijdvak van ten hoogste twee jaar vanaf de datum van zijn
eerste bezoek met dat doel, mits deze beloning afkomstig is uit bronnen
buiten die Staat.
2. Dit artikel is niet van toepassing op inkomsten uit het verrichten
van wetenschappelijk onderzoek, indien dit onderzoek niet wordt ver-
richt in het algemeen belang, maar in de eerste plaats voor het persoon-
lijk nut van een bepaalde persoon of bepaalde personen.
109 56

Artikel 21
Studenten
1. Vergoedingen die een student of een voor een beroep of bedrijf in
opleiding zijnde persoon die inwoner is of onmiddellijk voorafgaande
aan zijn bezoek aan een Verdragsluitende Staat inwoner was van de
andere Verdragsluitende Staat en die uitsluitend voor zijn studie of oplei-
ding in de eerstbedoelde Staat verblijft, ontvangt ten behoeve van zijn
onderhoud, studie of opleiding, zijn in die Staat niet belastbaar, mits
deze betalingen aan hem worden gedaan uit bronnen buiten die Staat.
2. Daarnaast is een student of een voor een beroep of bedrijf in oplei-
ding zijnde persoon zoals beschreven in het eerste lid, met betrekking
tot toelagen, beurzen en beloningen uit een dienstbetrekking waarin het
eerste lid niet voorziet gedurende zijn opleiding of training gerechtigd
tot dezelfde vrijstellingen, tegemoetkomingen of verminderingen met
betrekking tot belastingen die beschikbaar zijn voor de inwoners van de
Verdragsluitende Staat die hij bezoekt.
Artikel 22
Overige inkomsten
1. Bestanddelen van het inkomen van een inwoner van een Verdrag-
sluitende Staat, van waaruit ook afkomstig, die niet in de voorgaande
artikelen van dit Verdrag zijn behandeld, zijn slechts in die Staat belast-
baar.
2. De bepalingen van het eerste lid zijn niet van toepassing op inkom-
sten, niet zijnde inkomsten uit onroerende zaken zoals omschreven in
artikel 6, tweede lid, indien de genieter van die inkomsten, die inwoner
is van een Verdragsluitende Staat, in de andere Verdragsluitende Staat
een bedrijf uitoefent door middel van een aldaar gevestigde vaste inrich-
ting of in die andere Staat zelfstandige arbeid verricht vanuit een vast
middelpunt aldaar, en het recht of de zaak ter zake waarvan de inkom-
sten worden betaald tot het bedrijfsvermogen van die vaste inrichting of
tot het beroepsvermogen van dat vaste middelpunt behoort. In dat geval
zijn de bepalingen van artikel 7 of van artikel 14 naargelang van het
geval, van toepassing.
Artikel 23
Overmakingen
1. Indien ingevolge een bepaling van dit Verdrag een Verdragsluitende
Staat het belastingtarief op inkomsten of vermogenswinsten verlaagt of
 57 109
inkomsten of vermogenswinsten van belasting vrijstelt en een persoon,
ingevolge de in de andere Verdragsluitende Staat geldende wetgeving,
ter zake van die inkomsten of vermogenswinsten niet voor het volle
bedrag aan belasting is onderworpen maar slechts voor zover het bedrag
daarvan naar de andere Verdragsluitende Staat is overgemaakt of aldaar
is ontvangen, vindt de vermindering of vrijstelling die de eerstbedoelde
Verdragsluitende Staat ingevolge dit Verdrag moet verlenen slechts toe-
passing op het gedeelte van de inkomsten dat of de vermogenswinsten
die in de andere Verdragsluitende Staat belast wordt of worden.
2. Het bepaalde in het eerste lid van dit artikel is echter niet van toe-
passing op inkomsten of vermogenswinsten verkregen door de Regering,
een staatkundig onderdeel of een plaatselijk publiekrechtelijk lichaam of
een agentschap van een Verdragsluitende Staat of de Centrale Bank van
een Verdragsluitende Staat.

HOOFDSTUK IV
VERMIJDING VAN DUBBELE BELASTING

Artikel 24
Vermijding van dubbele belasting
1. Nederland is bevoegd bij het heffen van belasting van zijn inwo-
ners in de grondslag waarnaar de belasting wordt geheven, de bestand-
delen van het inkomen te begrijpen die overeenkomstig de bepalingen
van dit Verdrag in Ghana mogen worden belast of slechts in Ghana
belastbaar zijn.
2. Indien echter een inwoner van Nederland bestanddelen van het
inkomen verkrijgt die volgens artikel 6, eerste, derde en vierde lid, arti-
kel 7, eerste lid, artikel 10, zesde lid, artikel 11, zevende lid, artikel 12,
zesde lid, artikel 13, eerste, tweede en vierde lid, artikel 14, eerste lid,
artikel 15, eerste en vijfde lid, artikel 18, tweede lid, artikel 19, eerste
lid (onderdeel a) en tweede lid (onderdeel a) en artikel 22, tweede lid,
van dit Verdrag in Ghana mogen worden belast en die in de in het eer-
ste lid bedoelde grondslag zijn begrepen, stelt Nederland deze bestand-
delen van het inkomen vrij door een vermindering op zijn belasting te
verlenen. Deze vermindering wordt berekend overeenkomstig de bepa-
lingen in de Nederlandse wetgeving tot het vermijden van dubbele belas-
ting. Te dien einde worden bedoelde bestanddelen van het inkomen
geacht te zijn begrepen in het bedrag van de bestanddelen van het inko-
men die ingevolge die bepalingen van Nederlandse belasting zijn vrijge-
steld.
109 58

3. Nederland verleent voorts een vermindering op de aldus berekende

Nederlandse belasting voor de bestanddelen van het inkomen die vol-
gens artikel 10, tweede lid, artikel 11, tweede lid, artikel 12, tweede lid,
artikel 13, zevende lid, artikel 16, artikel 17, eerste en tweede lid, en
artikel 18, derde lid, van dit Verdrag in Ghana mogen worden belast, in
zoverre deze bestanddelen in de in het eerste lid bedoelde grondslag zijn
begrepen.
Het bedrag van deze vermindering is gelijk aan de in Ghana over deze
bestanddelen van het inkomen betaalde belasting, maar bedraagt, indien
de bepalingen in de Nederlandse wetgeving tot het vermijden van dub-
bele belasting daarin voorzien, niet meer dan het bedrag van de vermin-
dering die zou zijn verleend indien de aldus in het inkomen begrepen
bestanddelen van het inkomen de enige bestanddelen van het inkomen
zouden zijn geweest die uit hoofde van de bepalingen in de Nederlandse
wetgeving tot het vermijden van dubbele belasting van Nederlandse
belasting zijn vrijgesteld.
Dit lid zal een tegemoetkoming nu of in de toekomst verleend uit
hoofde van de bepalingen in de Nederlandse wetgeving tot het vermij-
den van dubbele belasting niet beperken, echter uitsluitend voor zover
het de berekening van het bedrag van de vermindering op de Neder-
landse belasting betreft die betrekking heeft op de som van inkomsten
afkomstig uit meer dan een land en de voortwenteling van de belasting
betaald in Ghana op bedoelde bestanddelen van het inkomen naar de
volgende jaren.
4. Niettegenstaande de bepalingen van het tweede lid, verleent Neder-
land een vermindering op de Nederlandse belasting voor de in Ghana
betaalde belasting op bestanddelen van het inkomen die volgens artikel
7, eerste lid, artikel 10, zesde lid, artikel 11, zevende lid, artikel 12,
zesde lid, artikel 14, eerste lid, en artikel 22, tweede lid, van dit Verdrag
in Ghana mogen worden belast, voor zover deze bestanddelen in de in
het eerste lid bedoelde grondslag zijn begrepen, indien en voor zover
Nederland uit hoofde van de bepalingen in de Nederlandse wetgeving tot
het vermijden van dubbele belasting een vermindering verleent op de
Nederlandse belasting voor de in een ander land over die bestanddelen
van het inkomen geheven belasting. Voor de berekening van deze ver-
mindering zijn de bepalingen van het derde lid van dit artikel van over-
eenkomstige toepassing.
5. Dubbele belasting wordt in Ghana als volgt vermeden:
a. Nederlandse belasting over voordelen, inkomsten of belastbare
vermogenswinsten afkomstig uit bronnen in Nederland die hetzij recht-
streeks (door middel van een aanslag) hetzij door middel van aftrek
(inhouding) verschuldigd is krachtens de wetgeving van Nederland en in
overeenstemming met de bepalingen van het Verdrag (met uitzondering
van, in het geval van dividenden, belasting verschuldigd ter zake van de
voordelen waaruit de dividenden worden betaald), wordt in aftrek toe-
 59 109
gestaan op elke Ghanese belasting berekend met betrekking tot dezelfde
voordelen, inkomsten of belastbare vermogenswinsten als die met be-
trekking tot welke de Nederlandse belasting is berekend;
b. In het geval van dividenden betaald door een lichaam dat inwoner
is van Nederland aan een lichaam dat inwoner is van Ghana en dat recht-
streeks ten minste tien percent van het kapitaal beheerst van het lichaam
dat de dividenden betaalt, wordt bij de aftrek (naast de ingevolge de
bepalingen van onderdeel a eventueel aftrekbare Nederlandse belasting)
mede in aanmerking genomen de door het lichaam in Nederland ver-
schuldigde belasting ter zake van de voordelen waaruit die dividenden
worden betaald.
c. Het uit hoofde van dit lid in aftrek toegestane bedrag mag niet
hoger zijn dan de Ghanese belasting die drukt op deze voordelen,
inkomsten of belastbare vermogenswinsten die tot de Ghanese belasting
berekend over de volledige in Ghana belastbare voordelen, inkomsten of
vermogenswinsten in dezelfde verhouding staat als deze voordelen,
inkomsten of belastbare vermogenswinsten staan tot de volledige voor-
delen, inkomsten of belastbare vermogenswinsten die, al naargelang van
het geval, aan de Ghanese belasting mogen worden onderworpen.

HOOFDSTUK V
BIJZONDERE BEPALINGEN

Artikel 25
Non-discriminatie
1. Onderdanen van een Verdragsluitende Staat worden in de andere
Verdragsluitende Staat niet aan enige belastingheffing of daarmede ver-
band houdende verplichting onderworpen, die anders of zwaarder is dan
de belastingheffing en daarmede verband houdende verplichtingen waar-
aan onderdanen van die andere Staat onder dezelfde omstandigheden, in
het bijzonder met betrekking tot woonplaats, zijn of kunnen worden
onderworpen. Deze bepaling is, niettegenstaande het bepaalde in artikel
1, ook van toepassing op personen die geen inwoner zijn van een of van
beide Verdragsluitende Staten.
2. Staatlozen die inwoner zijn van een Verdragsluitende Staat worden
in geen van de Verdragsluitende Staten aan enige belastingheffing of
daarmede verband houdende verplichting onderworpen, die anders of
zwaarder is dan de belastingheffing en daarmede verband houdende ver-
plichtingen waaraan onderdanen van de betreffende Staat onder dezelfde
omstandigheden, in het bijzonder met betrekking tot de woonplaats, zijn
of kunnen worden onderworpen.
109 60

3. De belastingheffing van een vaste inrichting die een onderneming

van een Verdragsluitende Staat in de andere Verdragsluitende Staat heeft,
is in die andere Staat niet ongunstiger dan de belastingheffing van onder-
nemingen van die andere Staat die dezelfde werkzaamheden uitoefenen.
Deze bepaling mag niet aldus worden uitgelegd, dat zij een Verdrag-
sluitende Staat verplicht aan inwoners van de andere Verdragsluitende
Staat bij de belastingheffing de persoonlijke aftrekken, tegemoetkomin-
gen en verminderingen uit hoofde van de samenstelling van het gezin of
gezinslasten te verlenen, die eerstbedoelde Staat aan zijn eigen inwoners
verleent.
4. Behalve indien de bepalingen van artikel 9, eerste lid, artikel 11,
negende lid, of artikel 12, achtste lid, van toepassing zijn, zijn interest,
royaltys en andere uitgaven betaald door een onderneming van een
Verdragsluitende Staat aan een inwoner van de andere Verdragsluitende
Staat, bij de vaststelling van de belastbare winst van die onderneming
onder dezelfde voorwaarden aftrekbaar als wanneer zij betaald waren
aan een inwoner van de eerstbedoelde Staat.
5. Ondernemingen van een Verdragsluitende Staat, waarvan het kapi-
taal geheel of gedeeltelijk, onmiddellijk of middellijk, in het bezit is van
of wordt beheerst door een of meer inwoners van de andere Verdrag-
sluitende Staat, worden in de eerstbedoelde Staat niet aan enige belas-
tingheffing of daarmede verband houdende verplichting onderworpen,
die anders of zwaarder is dan de belastingheffing en daarmede verband
houdende verplichtingen waaraan andere soortgelijke ondernemingen
van de eerstbedoelde Staat zijn of kunnen worden onderworpen.
6. Niettegenstaande de bepalingen van artikel 2, zijn de bepalingen
van dit artikel van toepassing op belastingen van elke soort en bena-
ming.
Artikel 26
Regeling voor onderling overleg
1. Indien een persoon van oordeel is dat de maatregelen van een of
van beide Verdragsluitende Staten voor hem leiden of zullen leiden tot
een belastingheffing die niet in overeenstemming is met de bepalingen
van dit Verdrag, kan hij, ongeacht de rechtsmiddelen waarin de natio-
nale wetgeving van die Staten voorziet, zijn geval voorleggen aan de
bevoegde autoriteit van de Verdragsluitende Staat waarvan hij inwoner
is, of, indien zijn geval valt onder artikel 25, eerste lid, aan die van de
Verdragsluitende Staat waarvan hij onderdaan is. Het geval moet wor-
den voorgelegd binnen drie jaar nadat de maatregel die leidt tot een
belastingheffing die niet in overeenstemming is met de bepalingen van
het Verdrag, voor het eerst te zijner kennis is gebracht.
 61 109
2. De bevoegde autoriteit tracht, indien het bezwaar haar gegrond
voorkomt en indien zij niet zelf in staat is tot een bevredigende oplos-
sing te komen, de aangelegenheid in onderlinge overeenstemming met
de bevoegde autoriteit van de andere Verdragsluitende Staat te regelen
teneinde een belastingheffing die niet in overeenstemming is met het
Verdrag te vermijden. De overeengekomen regeling wordt uitgevoerd
niettegenstaande de verjaringstermijnen in de nationale wetgeving van
de Verdragsluitende Staten.
3. De bevoegde autoriteiten van de Verdragsluitende Staten trachten
moeilijkheden of twijfelpunten die mochten rijzen met betrekking tot de
uitlegging of de toepassing van het Verdrag in onderlinge overeenstem-
ming op te lossen. Zij kunnen ook met elkaar overleg plegen teneinde
dubbele belasting ongedaan te maken in gevallen die niet in het Verdrag
zijn geregeld.
4. De bevoegde autoriteiten van de Verdragsluitende Staten regelen in
onderlinge overeenstemming de wijze van toepassing van het Verdrag en
in het bijzonder de vereisten waaraan de inwoners van een Verdrag-
sluitende Staat dienen te voldoen teneinde in de andere Verdragsluitende
Staat belastingverminderingen, vrijstellingen en andere voordelen te ver-
werven zoals voorzien in het Verdrag.
5. De bevoegde autoriteiten van de Verdragsluitende Staten kunnen
zich rechtstreeks, waaronder via een gezamenlijke commissie bestaande
uit hun vertegenwoordigers, met elkaar in verbinding stellen teneinde
een overeenstemming als bedoeld in de voorgaande leden te bereiken.
6. Wanneer moeilijkheden of twijfelpunten die zijn gerezen met be-
trekking tot de uitlegging of toepassing van het Verdrag niet binnen een
periode van twee jaar nadat de vraag is gerezen opgelost kunnen wor-
den door de bevoegde autoriteiten van de Verdragsluitende Staten in een
procedure voor onderling overleg ingevolge de voorgaande leden van dit
artikel, kan het geval op verzoek van een van de Verdragsluitende Sta-
ten, worden voorgelegd voor arbitrage, echter slechts nadat de procedu-
res die beschikbaar zijn op grond van het eerste tot en met het vijfde lid
van dit artikel volledig zijn uitgeput en mits de betrokken belastingplich-
tige of belastingplichtigen er schriftelijk mee instemt of instemmen te
zijn gebonden door de beslissing van de arbitragecommissie.
De beslissing van de arbitragecommissie in een bepaald geval is voor
dat geval bindend voor beide Verdragsluitende Staten en de betrokken
belastingplichtige of belastingplichtigen.
109 62

Artikel 27
Uitwisseling van inlichtingen
1. De bevoegde autoriteiten van de Verdragsluitende Staten wisselen
de inlichtingen uit die naar verwachting essentieel zijn voor het uitvoe-
ren van de bepalingen van dit Verdrag of voor de administratie of de
tenuitvoerlegging van de nationale wetgeving met betrekking tot belas-
tingen van elke soort en benaming die worden geheven ten behoeve van
de Verdragsluitende Staten, of van de staatkundige onderdelen of plaat-
selijke publiekrechtelijke lichamen daarvan, voor zover de heffing van
die belastingen niet in strijd is met het Verdrag. De uitwisseling van
inlichtingen wordt niet beperkt door de artikelen 1 en 2.
2. Alle uit hoofde van het eerste lid door een Verdragsluitende Staat
ontvangen inlichtingen worden op dezelfde wijze geheim gehouden als
inlichtingen die volgens de nationale wetgeving van die Staat zijn ver-
kregen en worden alleen ter kennis gebracht van personen of autoritei-
ten (daaronder begrepen rechterlijke instanties en administratief-
rechtelijke lichamen) die betrokken zijn bij de vaststelling of invordering
van, de tenuitvoerlegging of vervolging ter zake van, of de beslissing in
beroepszaken betrekking hebbende op de in het eerste lid bedoelde
belastingen, of het toezicht daarop. Deze personen of autoriteiten mogen
van de inlichtingen alleen voor deze doeleinden gebruik maken. Zij
mogen de inlichtingen bekendmaken in openbare rechtszittingen of in
rechterlijke beslissingen.
3. In geen geval worden de bepalingen van de voorgaande leden zo
uitgelegd dat zij een Verdragsluitende Staat de verplichting opleggen:
a. bestuurlijke maatregelen te nemen die in strijd zijn met de wetge-
ving of bestuurlijke praktijk van die of van de andere Verdragsluitende
Staat;
b. inlichtingen te verstrekken die niet verkrijgbaar zijn volgens de
wetgeving of in de normale gang van zaken in het bestuur van die of
van de andere Verdragsluitende Staat;
c. inlichtingen te verstrekken die een handels-, bedrijfs-, nijverheids-,
commercieel of beroepsgeheim of een fabrieks- of handelswerkwijze
zouden onthullen, dan wel inlichtingen waarvan het verstrekken in strijd
zou zijn met de openbare orde (ordre public).
4. Indien inlichtingen worden verzocht door een Verdragsluitende
Staat in overeenstemming met dit artikel, wendt de andere Verdrag-
sluitende Staat zijn maatregelen inzake het verzamelen van inlichtingen
aan om de verlangde inlichtingen te verkrijgen, ongeacht het feit dat de
andere Staat ten behoeve van zijn eigen belastingheffing niet over der-
gelijke inlichtingen behoeft te beschikken. Op de in de vorige zin ver-
vatte verplichting zijn de beperkingen van het derde lid van toepassing,
 63 109
maar deze beperkingen mogen in geen geval zodanig worden uitgelegd
dat het een Verdragsluitende Staat toegestaan is uitsluitend op grond van
het feit dat hij geen nationaal belang heeft bij dergelijke inlichtingen te
weigeren inlichtingen te verstrekken.
5. Wat Nederland betreft mogen de bepalingen van het derde lid van
dit artikel in geen geval zodanig worden uitgelegd dat het Nederland toe-
gestaan is het verschaffen van inlichtingen te weigeren uitsluitend op
grond van het feit dat de betreffende gegevens berusten bij een bank, een
andere financile instelling, een gevolmachtigde, of een persoon die bij
wijze van vertegenwoordiging of als vertrouwenspersoon optreedt, dan
wel omdat deze betrekking hebben op eigendomsbelangen in een per-
soon.
6. Wat Ghana betreft, verschaft Ghana Nederland op verzoek inlich-
tingen indien deze door Ghana worden verkregen tijdens gerechtelijke
procedures ter zake van een gerechtelijke vervolging die betrekking
heeft op belastingfraude aanhangig bij de rechterlijke instanties in Ghana.

Artikel 28
Bijstand bij de invordering van belastingen
De bevoegde autoriteiten van de Verdragsluitende Staten kunnen in
onderlinge overeenstemming regels en voorwaarden voorschrijven ten-
einde elkaar bijstand en ondersteuning te verlenen bij de invordering van
de belastingen waarop dit Verdrag van toepassing is en van de eventuele
interest, administratieve boetes en de kosten van invordering die verband
houden met dat bedrag.

Artikel 29
Leden van diplomatieke vertegenwoordigingen en consulaire posten
1. De bepalingen in dit Verdrag tasten in geen enkel opzicht de fis-
cale voorrechten aan die leden van diplomatieke vertegenwoordigingen
of consulaire posten ontlenen aan de algemene regels van het volken-
recht of aan de bepalingen van bijzondere overeenkomsten.
2. Het Verdrag is niet van toepassing op internationale organisaties,
op hun organen of functionarissen, noch op personen die lid zijn van een
diplomatieke vertegenwoordiging of consulaire post van een derde Staat,
die in een van de Verdragsluitende Staten verblijven en die in geen van
de Verdragsluitende Staten als inwoner worden behandeld met betrek-
king tot belastingen naar het inkomen en naar vermogenswinsten.
109 64

Artikel 30
Uitbreiding tot andere gebieden
1. Dit Verdrag kan, hetzij in zijn geheel, hetzij met de noodzakelijke
wijzigingen, worden uitgebreid tot de Nederlandse Antillen en Aruba, of
tot de Nederlandse Antillen of Aruba afzonderlijk, indien het desbetref-
fende land belastingen heft die in wezen gelijksoortig zijn aan de belas-
tingen waarop het Verdrag van toepassing is. Een dergelijke uitbreiding
wordt van kracht met ingang van een datum en met inachtneming van
wijzigingen en voorwaarden, daaronder begrepen voorwaarden ten aan-
zien van de beindiging, nader vast te stellen en overeen te komen bij
diplomatieke notawisseling.
2. Tenzij anders is overeengekomen, brengt de beindiging van het
Verdrag niet met zich mede, dat tevens de uitbreiding van het Verdrag
tot enig land waartoe het ingevolge dit artikel is uitgebreid, wordt bein-
digd.
HOOFDSTUK VI
SLOTBEPALINGEN
Artikel 31
Inwerkingtreding
De Verdragsluitende Staten stellen elkaar er langs diplomatieke weg
van in kennis dat de wettelijk vereiste procedures voor het in werking
doen treden van dit Verdrag zijn voltooid. De bepalingen van het Ver-
drag treden in werking dertig dagen na de datum van ontvangst van de
laatste van deze kennisgevingen en vinden in beide Verdragsluitende
Staten toepassing:
a. in het geval van belastingen geheven aan de bron, ter zake van
bedragen betaald op of na 1 januari van het kalenderjaar volgend op het
jaar waarin het Verdrag in werking is getreden;
b. in het geval van overige belastingen, ter zake van belastingen
geheven over tijdvakken beginnend op of na 1 januari van het kalender-
jaar volgend op het jaar waarin het Verdrag in werking is getreden.
Artikel 32
Beindiging
1. Dit Verdrag blijft van kracht totdat het door een Verdragsluitende
Staat wordt beindigd. Elk van de Verdragsluitende Staten kan het Ver-
drag langs diplomatieke weg beindigen door ten minste zes maanden
 65 109
voor het einde van enig kalenderjaar na het verstrijken van het vijfde
jaar na de datum van inwerkingtreding van het Verdrag kennis te geven
van de beindiging.
2. In dat geval houdt het Verdrag op van toepassing te zijn ter zake
van belastingjaren die beginnen na het eind van het kalenderjaar waarin
de kennisgeving van beindiging is gedaan.

TEN BLIJKE WAARVAN de ondergetekenden, daartoe naar behoren

gemachtigd, dit Verdrag hebben ondertekend.
GEDAAN in tweevoud te Accra op 10 maart 2008, in de Engelse taal.
Voor de Regering van het Koninkrijk der Nederlanden
J.C. DE JAGER
Voor de Regering van de Republiek Ghana
A. AKOTO OSEI

Protocol
Bij de ondertekening van het Verdrag tot het vermijden van dubbele
belasting en het voorkomen van het ontgaan van belasting met betrek-
king tot belastingen naar het inkomen en naar vermogenswinsten, heden
gesloten tussen het Koninkrijk der Nederlanden en de Republiek Ghana,
zijn de ondergetekenden overeengekomen dat de volgende bepalingen
een integrerend deel van het Verdrag vormen.
I.
Algemeen
1. De voordelen uit het Verdrag zijn niet van toepassing op lichamen
of andere personen die geheel of gedeeltelijk van belasting zijn vrijge-
steld uit hoofde van een bijzondere regeling krachtens de wetten van een
van de Verdragsluitende Staten. Zij zijn evenmin van toepassing op door
een inwoner van de andere Verdragsluitende Staat van dergelijke licha-
men of andere personen verkregen inkomsten, noch op aandelen, winst-
bewijzen of belangen in dergelijke lichamen of andere personen.
2. De bepalingen van het eerste lid van deze protocolbepaling zijn
ook van toepassing ingeval een lichaam of andere persoon krachtens de
109 66

bestuurlijke praktijk van die Staat op dezelfde of op soortgelijke wijze

wordt behandeld als een lichaam of persoon zoals bedoeld in dat lid.
3. De bevoegde autoriteiten van de Staten bepalen in onderlinge over-
eenstemming welke bijzondere regeling wordt bedoeld in het eerste lid
van deze protocolbepaling. De bepalingen van het eerste lid zijn tevens
van toepassing op identieke of in wezen gelijksoortige wettelijke voor-
schriften naast of in de plaats van een dergelijke bijzondere regeling die
worden uitgevaardigd na 1 januari 2007, tenzij de bevoegde autoriteiten
van de Staten in onderlinge overeenstemming anders beslissen.
4. Het is wel te verstaan dat beide Verdragsluitende Staten erop kun-
nen vertrouwen dat algemeen aanvaarde fiscale grondbeginselen worden
toegepast teneinde misbruik van het Verdrag te voorkomen. In elk geval
waarin een Verdragsluitende Staat beoogt dit lid toe te passen, dient zijn
bevoegde autoriteit vooraf te overleggen met de bevoegde autoriteit van
de andere Verdragsluitende Staat.
II.
Ad artikel 3, eerste lid, onderdeel e
Ingeval een entiteit die voor de belastingheffing als een rechtspersoon
wordt behandeld als zodanig in een Verdragsluitende Staat aan belasting
is onderworpen, maar het inkomen van die eenheid in de andere Verdrag-
sluitende Staat als inkomen van de participanten van die eenheid wordt
belast, nemen de bevoegde autoriteiten dusdanige maatregelen dat er
enerzijds geen dubbele belasting blijft bestaan, maar anderzijds wordt
voorkomen dat louter als gevolg van de toepassing van het Verdrag inko-
men geheel of gedeeltelijk niet aan belastingheffing wordt onderworpen.

III.
Ad artikel 3, tweede lid, en artikel 26
Het is wel te verstaan dat indien de bevoegde autoriteiten van de
Verdragsluitende Staten in onderlinge overeenstemming een oplossing
binnen de context van het Verdrag hebben bereikt voor gevallen waar-
in
a. artikel 3, tweede lid, wordt toegepast met betrekking tot de uitleg-
ging van een in het Verdrag niet omschreven uitdrukking; of
b. verschillen in kwalificatie (bijvoorbeeld van een bestanddeel van
het inkomen of van een persoon)
zou of zouden leiden tot dubbele belasting of dubbele vrijstelling,
deze oplossing, na bekendmaking ervan door beide bevoegde autoritei-
 67 109
ten, ook bindend zal zijn bij de toepassing van de bepalingen van het
Verdrag in andere, gelijksoortige gevallen.
IV.
Ad artikel 4
Een natuurlijke persoon die aan boord van een schip woont zonder
een werkelijke woonplaats in een van de Verdragsluitende Staten te heb-
ben, wordt geacht inwoner te zijn van de Verdragsluitende Staat waarin
het schip zijn thuishaven heeft.
V.
Ad artikelen 5, 6, 7 en 13
Het is wel te verstaan dat rechten tot exploratie en exploitatie van
natuurlijke rijkdommen worden beschouwd als onroerende zaken die
zijn gelegen in de Verdragsluitende Staat op wiens zeebodem en de
ondergrond daarvan deze rechten betrekking hebben, alsmede dat deze
rechten geacht worden te behoren tot de activa van een vaste inrichting
in die Staat. Voorts is het wel te verstaan dat de hiervoor genoemde rech-
ten ook omvatten rechten op belangen bij of voordelen uit vermogens-
bestanddelen die voortvloeien uit die exploratie of exploitatie.
VI.
Ad artikel 7
Met betrekking tot artikel 7, eerste en tweede lid, geldt dat, indien een
onderneming van een Verdragsluitende Staat in de andere Verdrag-
sluitende Staat goederen of koopwaar verkoopt of een bedrijf uitoefent
door middel van een aldaar gevestigde vaste inrichting, de voordelen van
die vaste inrichting niet worden bepaald op basis van het totale door de
onderneming ontvangen bedrag, doch slechts op basis van dat deel van
de inkomsten van de onderneming dat aan de werkelijke werkzaamhe-
den van de vaste inrichting voor die verkopen of die bedrijfsuitoefening
is toe te rekenen.
Met name bij overeenkomsten betreffende het toezicht op, de levering,
installatie of constructie van nijverheids- en handelsuitrusting of weten-
schappelijke uitrusting of gebouwen alsmede bij openbare werken, wor-
den, indien de onderneming een vaste inrichting heeft, de voordelen van
die vaste inrichting niet bepaald op basis van het totale bedrag van de
overeenkomst, doch slechts op basis van dat deel van de overeenkomst
dat werkelijk wordt uitgevoerd door de vaste inrichting in de Verdrag-
sluitende Staat waar de vaste inrichting is gevestigd. De voordelen die
betrekking hebben op het deel van de overeenkomst, dat wordt uitge-
109 68

voerd door het hoofdkantoor van de onderneming, zijn slechts belastbaar

in de Verdragsluitende Staat waarvan de onderneming inwoner is.
VII.
Ad artikel 8
Het is wel te verstaan dat de bepalingen van artikel 8 tevens van toe-
passing zijn op belastingen geheven op basis van bruto ontvangsten uit
het vervoer van passagiers en vracht in internationaal verkeer.
VIII.
Ad artikel 9
Het is wel te verstaan dat de omstandigheid dat gelieerde ondernemin-
gen overeenkomsten hebben afgesloten, zoals costsharing-overeen-
komsten of algemene dienstverleningsovereenkomsten, voor of geba-
seerd op de toerekening van kosten van de leiding, de algemene beheers-
kosten, de technische en zakelijke kosten, kosten voor onderzoek en ont-
wikkeling en andere soortgelijke kosten, op zichzelf geen voorwaarde is
als bedoeld in artikel 9, eerste lid.
IX.
Ad artikel 10
1. Niettegenstaande artikel 10, tweede lid, heft de Verdragsluitende
Staat waarvan het lichaam inwoner is geen belasting over door dat
lichaam betaalde dividenden, indien de uiteindelijk gerechtigde tot de
dividenden een pensioenfonds is als bedoeld in artikel 4, tweede lid.
2. Het is wel te verstaan dat voor de toepassing van dit Verdrag
a. onder de uitdrukking winstaandelen worden verstaan waardepa-
pieren die recht geven op een aandeel in de nettowinst van het lichaam
en die geen kapitaal van het lichaam vertegenwoordigen, maar een niet-
financile bijdrage, zoals een bijdrage aan de knowhow;
b. onder de uitdrukking winstbewijzen worden verstaan rechten, al
dan niet vastgelegd in officile documenten, op een aandeel in de netto-
winst van het lichaam die geen kapitaal van het lichaam vertegenwoor-
digen, maar een niet-financile bijdrage, zoals een bijdrage aan de
knowhow;
c. onder de uitdrukking mijnaandelen worden verstaan aandelen in
een mijnlichaam waarop de mijnbouwwetgeving van toepassing is en dat
georganiseerd is volgens een specifieke rechtsvorm;
 69 109
d. onder de uitdrukking oprichtersaandelen worden verstaan aande-
len die worden geplaatst als beloning voor diensten verricht door de
oprichters tijdens de oprichting van een lichaam en die geen kapitaal van
het lichaam vertegenwoordigen.
X.
Ad artikelen 10, 11 en 12
Indien aan de bron belasting is geheven die het belastingbedrag dat
ingevolge de bepalingen van de artikelen 10, 11 of 12 mag worden gehe-
ven te boven gaat, moeten verzoeken om teruggaaf van het daarboven
uitgaande belastingbedrag worden ingediend bij de bevoegde autoriteit
van de Staat die de belasting heeft geheven, binnen een tijdvak van drie
jaar na afloop van het kalenderjaar waarin de belasting is geheven.
XI.
Ad artikelen 10 en 13
Het is wel te verstaan dat inkomsten die worden ontvangen in verband
met de (gedeeltelijke) liquidatie van een lichaam of een inkoop van
eigen aandelen door een lichaam worden behandeld als inkomsten uit
aandelen en niet als vermogenswinsten.
XII.
Ad artikel 13, vierde lid
Het is wel te verstaan dat het bepaalde in artikel 13, vierde lid, niet
van toepassing is indien de voordelen voortvloeien uit een reorganisatie,
fusie, splitsing of soortgelijke transactie.
Het is voorts wel te verstaan dat artikel 13, vierde lid, voor Nederland
van toepassing is op aandelen genoteerd aan elke andere aandelenbeurs
die onderworpen is aan de voorschriften van de Autoriteit Financile
Markten (of haar rechtsopvolger) in Nederland.
XIII.
Ad artikel 16
Het is wel te verstaan dat een bestuurder of commissaris van een
in Nederland gevestigd lichaam beschouwd wordt als een lid van de raad
van beheer zoals bedoeld in artikel 16. Indien een inwoner van Neder-
land in zijn hoedanigheid van lid van de raad van beheer van een
lichaam gevestigd in Ghana beloningen ontvangt, mogen deze belonin-
109 70

gen in Ghana worden belast. Het is voorts wel te verstaan dat het
bepaalde in dit artikel van toepassing is niettegenstaande het bepaalde in
artikel 15.
XIV.
Ad artikel 26
De bevoegde autoriteiten van de Staten kunnen ter zake van een over-
eengekomen regeling in het kader van een procedure voor onderling
overleg als bedoeld in artikel 26, tevens overeenkomen dat de Staat,
waar ingevolge eerdergenoemde regeling sprake is van een additionele
belastingheffing, met betrekking tot deze additionele belastingheffing
geen bestuursrechtelijke boetes, verhogingen, interest en kosten zal op-
leggen, indien de andere Staat, waarin ingevolge de regeling sprake is
van een overeenkomstige vermindering van belasting, afziet van de beta-
ling van interest verschuldigd met betrekking tot een dergelijke vermin-
dering van belasting.
XV.
Ad artikel 27
De Verdragsluitende Staten kunnen aan de arbitragecommissie, inge-
steld volgens de bepalingen van artikel 26, zesde lid, de inlichtingen ver-
strekken die nodig zijn om de arbitrageprocedure uit te voeren. De leden
van de arbitragecommissie zijn met betrekking tot de aldus verstrekte
inlichtingen onderworpen aan de beperkingen van openbaarmaking als
omschreven in het tweede lid van dit artikel.

TEN BLIJKE WAARVAN de ondergetekenden, daartoe naar behoren

gemachtigd, dit Protocol hebben ondertekend.
GEDAAN in tweevoud te Accra op 10 maart 2008, in de Engelse taal.
Voor de Regering van het Koninkrijk der Nederlanden
J.C. DE JAGER
Voor de Regering van de Republiek Ghana
A. AKOTO OSEI
 71 109
D. PARLEMENT

Het Verdrag, met Protocol, behoeft ingevolge artikel 91 van de Grond-

wet de goedkeuring van de Staten-Generaal, alvorens het Koninkrijk aan
het Verdrag, met Protocol, kan worden gebonden.

G. INWERKINGTREDING

De bepalingen van het Verdrag, met Protocol, zullen ingevolge artikel

31 van het Verdrag juncto de preambule tot het Protocol in werking tre-
den dertig dagen na de ontvangst van de laatste van de kennisgevingen
langs diplomatieke weg van de voltooiing van de wettelijk vereiste pro-
cedures voor de inwerkingtreding van het Verdrag.

Uitgegeven de drientwintigste mei 2008.

De Minister van Buitenlandse Zaken,
M. J. M. VERHAGEN

TRB4697
ISSN 0920 - 2218
Sdu Uitgevers
s-Gravenhage 2008
 UK/GHANA DOUBLE TAXATION CONVENTION

SIGNED 20 JANUARY 1993

Entered into force 10 August 1994

Effective in United Kingdom from 1 April 1995 for corporation tax and from 6
April 1995 for income tax and capital gains tax

Effective in Ghana from 1 January 1995

Double Taxation Agreements are reproduced under the terms of Crown Copyright
Policy Guidance issued by HMSO.
CONTENTS

Article 1 (Personal scope) ......................................................................................... 3

Article 2 (Taxes covered) .......................................................................................... 3
Article 3 (General definitions) .................................................................................. 4
Article 4 (Fiscal domicile)......................................................................................... 5
Article 5 (Permanent establishment) ......................................................................... 6
Article 6 (Income from immovable property)........................................................... 8
Article 7 (Business profits)........................................................................................ 8
Article 8 (Shipping and air transport) ....................................................................... 9
Article 9 (Associated enterprises) ........................................................................... 10
Article 10 (Dividends)............................................................................................. 11
Article 11 (Interest) ................................................................................................. 12
Article 12 (Royalties) .............................................................................................. 13
Article 13 (Capital gains) ........................................................................................ 15
Article 14 (Independent personal services)............................................................. 15
Article 15 (Dependent personal services) ............................................................... 16
Article 16 (Directors' fees) ...................................................................................... 16
Article 17 (Management and technical fees)........................................................... 17
Article 18 (Artistes and athletes)............................................................................. 18
Article 19 (Pensions) ............................................................................................... 18
Article 20 (Government service)............................................................................. 19
Article 21 (Students) ............................................................................................... 19
Article 22 (Teachers)............................................................................................... 20
Article 23 (Other income) ....................................................................................... 20
Article 24 (Limitation of relief) .............................................................................. 20
Article 25 (Elimination of double taxation) ............................................................ 21
Article 26 (Non-discrimination).............................................................................. 22
Article 27 (Mutual agreement procedure)............................................................... 23
Article 28 (Exchange of information) ..................................................................... 24
Article 29 (Members of diplomatic or permanent missions and consular posts) ... 24
Article 30 (Entry into force).................................................................................... 24
Article 31 (Termination) ......................................................................................... 25
CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM
OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT
OF THE REPUBLIC OF GHANA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of the Republic of Ghana;

Desiring to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and capital gains;
Have agreed as follows:

Article 1
Personal scope

This Convention shall apply to persons who are residents of one or both of the
Contracting States.

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Article 2
Taxes covered

(1) The taxes which are the subject of this Convention are:

(a) in the case of the United Kingdom:

(i) the income tax;

(ii) the corporation tax; and

(iii) the capital gains tax;

(hereinafter referred to as "United Kingdom tax");

(b) in the case of Ghana:

(i) the income tax;

(ii) the capital gains tax;

(iii) the petroleum income tax;

(iv) the minerals and mining tax;

(hereinafter referred to as "Ghana tax").

(2) This Convention shall also apply to any identical or substantially similar taxes which
are imposed by either Contracting State after the date of signature of this Convention in
addition to, or in place of, the taxes of that Contracting State referred to in paragraph (1)
of this Article. The competent authorities of the Contracting States shall notify each other
of any substantial changes which have been made in their respective taxation laws.

Back to contents

Article 3
General definitions

(1) For the purposes of this Convention, unless the context otherwise requires:

(a) the term "United Kingdom" means Great Britain and Northern Ireland, including
any area outside the territorial sea of the United Kingdom which in accordance with
international law has been or may hereafter be designated, under the laws of the
United Kingdom concerning the Continental Shelf, as an area within which the rights
of the United Kingdom with respect to the sea bed and sub-soil and their natural
resources may be exercised;

(b) The term "Ghana" means the Republic of Ghana including any area outside the
territorial sea of Ghana which in accordance with international law has been or may
hereafter be designated, under the laws of Ghana concerning the Continental Shelf, as
an area within which the rights of Ghana with respect to the sea bed and sub-soil and
their natural resources may be exercised;

(c) the term "national" means:

(i) in relation to the United Kingdom, any British citizen, or any British subject
not possessing the citizenship of any other Commonwealth country or territory,
provided he has the right of abode in the United Kingdom; and any legal
person, partnership, association or other entity deriving its status as such from
the law in force in the United Kingdom;

(ii) in relation to Ghana, any citizen of Ghana and any legal person,
partnership, association or other entity deriving its status as such from the law
in force in Ghana;

(d) the terms "a Contracting State" and "the other Contracting State" mean the United
Kingdom or Ghana, as the context requires;

(e) the term "person" comprises an individual, a company and any other body of
persons, but does not include a partnership;

(f) the term "company" means any body corporate or any entity which is treated as a
body corporate for tax purposes;
 (g) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;

(h) the term "international traffic" means any transport by a ship or aircraft operated
by an enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;

(i) the term "competent authority" means, in the case of the United Kingdom, the
Commissioners of Inland Revenue or their authorised representative, and, in the case
of Ghana, the Commissioner of the Internal Revenue Service or his authorised
representative.

(2) As regards the application of this Convention by a Contracting State any term not
otherwise defined shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State relating to the taxes which are the subject of
this Convention.

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Article 4
Fiscal domicile

(1) For the purposes of this Convention, the term "resident of a Contracting State" means
any person who, under the laws of that State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar nature; the
term does not include any individual who is liable to tax in that Contracting State only if
he derives income or capital gains from sources therein.

(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a
resident of both Contracting States, then his status shall be determined in accordance with
the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he has a

permanent home available to him; if he has a permanent home available to him in
both Contracting States, he shall be deemed to be a resident of the Contracting State
with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be
determined, or if he has no permanent home available to him in either Contracting
State, he shall be deemed to be a resident of the Contracting State in which he has an
habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he

shall be deemed to be a resident of the Contracting State of which he is a national;
 (d) if he is a national of both Contracting States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual agreement.

(3) Where by reason of the provisions of paragraph (1) of this Article a person other than
an individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the Contracting State in which its place of effective management is situated.

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Article 5
Permanent establishment

(1) For the purposes of this Convention, the term "permanent establishment" means a
fixed place of business through which the business of an enterprise is wholly or partly
carried on.

(2) The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural
resources;

(g) a building site or construction or installation project which exists for more than six
months;

(h) the provision of supervisory activities for more than three months on a building
site or construction or installation project; and

(i) installation or the provision of supervisory activities in connection therewith

incidental to the sale of machinery or equipment where the charges payable for such
activities exceed 10 per cent of the free on board sale price of the machinery or
equipment.

(3) Notwithstanding the preceding provisions of this Article, the term "permanent
establishment" shall be deemed not to include:
 (a) the use of facilities solely for the purpose of storage, display or delivery of goods
or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise

solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of
activities mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that the
overall activity of the fixed place of business resulting from this combination is of a
preparatory or auxiliary character.

(4) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a
person other than an agent of an independent status to whom paragraph (5) of this
Article applies is acting on behalf of an enterprise and has, and habitually exercises, in
a Contracting State an authority to conclude contracts on behalf of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that State in respect of
any activities which that person undertakes for the enterprise, unless the activities of such
person are limited to those mentioned in paragraph (3) of this Article which, if exercised
through a fixed place of business, would not make this fixed place of business a
permanent establishment under the provisions of that paragraph.

(5) An enterprise shall not be deemed to have a permanent establishment in a Contracting

State merely because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status, provided that such persons
are acting in the ordinary course of their business.

(6) The fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or which
carries on business in that other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent establishment of the
other.

Back to contents
 Article 6
Income from immovable property

(1) Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State
may be taxed in that other State.

(2) The term "immovable property" shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term shall in any
case include property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed payments
as consideration for the working of, or the right to work, mineral deposits, sources and
other natural resources; ships and aircraft shall not be regarded as immovable property.

(3) The provisions of paragraph (1) of this Article shall apply to income derived from the
direct use, letting, or use in any other form of immovable property.

(4) The provisions of paragraphs (1) and (3) of this Article shall also apply to the income
from immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.

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Article 7
Business profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State
unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much of
them as is attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3) of this Article, where an enterprise of a
Contracting State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities under the same
or similar conditions and dealing wholly independently with the enterprise of which it is a
permanent establishment.

(3) In determining the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the permanent establishment,
including a reasonable allocation of executive and general administrative expenses
incurred for the purposes of the enterprise as a whole, whether in the Contracting State in
which the permanent establishment is situated or elsewhere. However, no such deduction
shall be allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head office of
the enterprise or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents or other rights, or by way of commission, for
specific services performed or for management, or except in the case of a banking
enterprise, by way of interest on moneys lent to the permanent establishment. Likewise,
no account shall be taken, in the determination of the profits of a permanent
establishment, of amounts charged (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return for the use of
patents or other rights, or by way of commission for specific services performed or for
management, or except in the case of a banking enterprise, by way of interest on moneys
lent to the head office of the enterprise or any of its other offices.

(4) No profits shall be attributed to a permanent establishment by reason of the mere

purchase by that permanent establishment of goods or merchandise for the enterprise.

(5) Where profits include items of income or capital gains which are dealt with separately
in other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.

(6) Insofar as it has been customary in a Contracting State to determine according to its
law the profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph (2) shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance with the principles
contained in this Article.

(7) For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.

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Article 8
Shipping and air transport

(1) Profits derived by a resident of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.

(2) For the purposes of this Article, profits from the operation of ships or aircraft in
international traffic include:

(a) income from the rental on a bareboat basis of ships or aircraft; and
 (b) profits from the use, maintenance or rental of containers (including trailers and
related equipment for the transport of containers) used for the transport of goods or
merchandise;

where such rental or such use, maintenance or rental, as the case may be, is incidental to
the operation of ships or aircraft in international traffic.

(3) Where profits within paragraphs (1) or (2) of this Article are derived by a resident of a
Contracting State from participation in a pool, a joint business, or an international
operating agency, the profits attributable to that resident shall be taxable only in the
Contracting State of which he is a resident.

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Article 9
Associated enterprises

(1) Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the

management, control or capital of an enterprise of the other Contracting State; or

(b) the same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State;

and in either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, may be included by a Contracting State in the profits of
that enterprise and taxed accordingly.

(2) Where a Contracting State includes in the profits of an enterprise of that State and
taxes accordingly profits on which an enterprise of the other Contracting State has
been charged to tax in that other State and the profits so included are profits which would
have accrued to the enterprise of the first-mentioned State if the conditions made between
the two enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the amount of
the tax charged therein on those profits. In determining such adjustment, due regard shall
be had to the other provisions of this Convention and the competent authorities of the
Contracting States shall if necessary consult each other.

Back to contents
 Article 10
Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident

of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that State, but if
the recipient is the beneficial owner of the dividends and is subject to tax in respect of the
dividends in that other Contracting State the tax so charged shall not exceed:

(a) 7.5 per cent of the gross amount of the dividends if the beneficial owner is a
company which controls, directly or indirectly, at least 10 per cent of the voting
power in the company paying the dividends;

(b) 15 per cent of the gross amount of the dividends in all other cases.

(3) The term "dividends" as used in this Article means income from shares, or other
rights, not being debt-claims, participating in profits, as well as income from other
corporate rights assimilated to income from shares by the taxation laws of the State of
which the company making the distribution is a resident and also includes any other item
which, under the laws of the Contracting State of which the company paying the dividend
is a resident, is treated as a dividend or distribution of a company.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14 of this
Convention, as the case may be, shall apply.

(5) Where a company which is a resident of a Contracting State derives profits or income
from the other Contracting State, that other State may not impose any tax on the
dividends paid by the company, except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated in that
other State, nor subject the company's undistributed profits to a tax on undistributed
profits, even if the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in that other State.

(6) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
dividends is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those dividends.
(7) The provisions of this Article shall not apply if the right giving rise to the dividends
was created or assigned mainly for the purpose of taking advantage of this Article.

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Article 11
Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises
and according to the laws of that State, but if the recipient is the beneficial owner of the
interest and is subject to tax in respect of the interest in that other Contracting State the
tax so charged shall not exceed 12.5 per cent of the gross amount of the interest.

(3) The term "interest" as used in this Article means income from debt-claims of every
kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtor's profits, and in particular, income from government securities
and income from bonds or debentures. The term "interest" shall not include any item
which is treated as a distribution under the provisions of Article 10 of this Convention.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the interest, being a resident of a Contracting State, carries on
business in the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14 of this Convention, as the case may
be, shall apply.

(5) Interest shall be deemed to arise in a Contracting State when the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base, then such interest shall be deemed
to arise in the State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the interest paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount of interest. In such case, the excess part of
the payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.
(7) Any provision in the laws of either Contracting State relating only to interest paid to a
non-resident company shall not operate so as to require such interest paid to a company
which is a resident of the other Contracting State to be treated as a distribution or
dividend by the company paying such interest. The preceding sentence shall not apply to
interest paid to a company which is a resident of one of the Contracting States in which
more than 50 per cent of the voting power is controlled, directly or indirectly, by a person
or persons who are residents of the other Contracting State.

(8) The relief from tax provided for in paragraph (2) of this Article shall not apply if the
beneficial owner of the interest:

(a) is exempt from tax on that interest in the Contracting State of which he is a
resident; and

(b) sells, or contracts to sell, the debt-claim from which that interest is derived within
three months from the date on which he acquired that debt-claim.

(9) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the debt-claim
in respect of which the interest is paid to take advantage of this Article by means of that
creation or assignment.

(10) Notwithstanding the provisions of paragraph (2) of this Article, interest arising in a
Contracting State shall be exempt from tax in that State if it is derived and beneficially
owned by the Government of the other Contracting State or a local authority thereof or
any agency or instrumentality of that Government or local authority or by the
Commonwealth Development Corporation.

(11) Notwithstanding the provisions of Article 7 of this Convention and of paragraph (2)
of this Article, interest arising in Ghana which is paid to and beneficially owned by a
resident of the United Kingdom shall be exempt from tax in Ghana if it is paid in respect
of a loan made, guaranteed or insured, or any other debt-claim or credit guaranteed or
insured by the United Kingdom Export Credits Guarantee Department.

(12) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
interest is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of that interest.

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Article 12
Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
(2) However, such royalties may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the beneficial owner of
the royalties and is subject to tax in respect of the royalties in that other Contracting State
the tax so charged shall not exceed 12.5 per cent of the gross amount of the royalties.

(3) The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or
scientific work (but not including cinematograph films, and films or tapes for radio or
television broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for information (know-how) concerning industrial, commercial or scientific
experience.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, through a permanent establishment situated
therein, or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties are paid is
effectively connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14 of this Convention, as the case may be, shall apply.

(5) Royalties shall be deemed to arise in a Contracting State where the payer is that State
itself, a political subdivision, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or fixed base in connection with which
the obligation to pay the royalties was incurred, and such royalties are borne by such
permanent establishment or fixed base, then such royalties shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the royalties paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.

(7) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the right or
property in respect of which the royalties are paid to take advantage of this Article by
means of that creation or assignment.

(8) For the purposes of paragraph (2) of this Article, if the beneficial owner of the
royalties is a body of persons or trust established for charitable purposes only and is a
resident of one of the Contracting States, that body of persons or trust shall be deemed to
be subject to tax in that State in respect of those royalties.

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 Article 13
Capital gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable
property referred to in Article 6 of this Convention and situated in the other Contracting
State may be taxed in that other State.

(2) Gains derived by a resident of a Contracting State from the alienation of:

(a) shares deriving their value or the greater part of their value directly or indirectly
from immovable property situated in the other Contracting State, or

(b) an interest in a partnership or trust the assets of which consist principally of

immovable property situated in the other Contracting State, or of shares referred to in
sub-paragraph (a) above,

may be taxed in that other State.

(3) Gains from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.

(4) Gains derived by a resident of a Contracting State from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to the operation of
such ships or aircraft, shall be taxable only in that State.

(5) Gains from the alienation of any property other than that referred to in paragraphs (1),
(2), (3) and (4) of this Article shall be taxable only in the Contracting State of which the
alienator is a resident.

(6) The provisions of paragraph (5) of this Article shall not affect the right of a
Contracting State to levy according to its law a tax on capital gains from the alienation of
any property derived by an individual who is a resident of the other Contracting State and
has been a resident of the first-mentioned Contracting State at any time during the five
years immediately preceding the alienation of the property.

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Article 14
Independent personal services

(1) Subject to the provisions of Article 17 of this Convention income derived by a

resident of a Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that State unless he has a fixed base
regularly available to him in the other Contracting State for the purpose of performing his
activities. If he has such a fixed base, the income may be taxed in the other State but only
so much of it as is attributable to that fixed base.

(2) The term "professional services" includes especially independent scientific, literary,
artistic, educational or teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.

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Article 15
Dependent personal services

(1) Subject to the provisions of Articles 16, 19, 20, 21 and 22 of this Convention, salaries,
wages and other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived
by a resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days within any period of twelve months; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Article, remuneration derived in

respect of an employment exercised aboard a ship or aircraft operated in international
traffic may be taxed in the Contracting State of which the enterprise operating the ship or
aircraft is a resident.

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Article 16
Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a resident
of the other Contracting State may be taxed in that other State.
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Article 17
Management and technical fees

(1) Management fees arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.

(2) However, such management fees may also be taxed in the Contracting State in which
they arise, and according to the law of that State, but if the recipient is the beneficial
owner of the management fees the tax so charged shall not exceed 10 per cent of the
gross amount of the management fees.

(3) The term "management fees" as used in this Article means payments of any kind to
any person, other than to an employee of the person making the payments, in
consideration for any services of a managerial, technical or consultancy nature.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the
beneficial owner of the management fees, being a resident of a Contracting State, carries
on business in the other Contracting State in which the management fees arise through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the obligation in respect of
which the management fees are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the
case may be, shall apply.

(5) A resident of one of the Contracting States who derives and beneficially owns
management fees which arise in the other Contracting State may elect, for any year of
assessment or financial year, that the tax chargeable in respect of those management fees
in the Contracting State in which they arise shall be calculated as if he had a permanent
establishment or fixed base in the last-mentioned Contracting State and as if those
management fees were taxable in accordance with Article 7 or Article 14, as the case may
be, as profits attributable to that permanent establishment or fixed base.

(6) Management fees shall be deemed to arise in a Contracting State when the payer is
that State itself, a political subdivision, a local authority or a resident of that State.
Where, however, the person paying the management fees, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment or a fixed
base in connection with which the obligation to pay the management fees was incurred,
and where such management fees are borne by such permanent establishment or fixed
base then such management fees shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.

(7) Where, by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the management fees paid
exceeds, for whatever reason, the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the law of each Contracting State, due regard
being had to the other provisions of this Convention.

(8) The provisions of this Article shall not apply if it was the main purpose or one of the
main purposes of any person concerned with the creation or assignment of the rights in
respect of which the management fees are paid to take advantage of this Article by means
of that creation or assignment.

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Article 18
Artistes and athletes

(1) Notwithstanding the provisions of Article 14 and Article 15 of this Convention,

income derived by a resident of a Contracting State as an entertainer, such as a theatre,
motion picture, radio or television artiste, or a musician, or as an athlete, from his
personal activities as such exercised in the other Contracting State, may be taxed in that
other State.

(2) Where income in respect of personal activities exercised by an entertainer or an

athlete in his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15
of this Convention, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.

(3) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, income
derived from activities as defined in paragraph (1) performed under a cultural agreement
or arrangement between the Contracting States shall be exempt from tax in the
Contracting State in which those activities are exercised.

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Article 19
Pensions

(1) Subject to the provisions of paragraph (2) of Article 20 of this Convention, pensions
and other similar remuneration paid in consideration of past employment to a resident of
a Contracting State who is subject to tax in that State in respect thereof and any annuity
paid to such a resident shall be taxable only in that State.

(2) The term "annuity" means a stated sum payable periodically at stated times during life
or during a specified or ascertainable period of time under an obligation to make the
payments in return for adequate and full consideration in money or money's worth.
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Article 20
Government service
(1)
(a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.
(b) Notwithstanding the provisions of sub-paragraph (1)(a) of this Article, such
remuneration shall be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering
the services.

(2)
(a) Any pension paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services rendered
to that State or subdivision or authority shall be taxable only in that State.

(b) Notwithstanding the provisions of sub-paragraph (2)(a) of this Article, such

pension shall be taxable only in the other Contracting State if the individual is a
resident of and a national of that State.

(3) The provisions of Articles 15, 16 and 19 of this Convention shall apply to
remuneration and pensions in respect of services rendered in connection with a business
carried on by a Contracting State or a political subdivision or a local authority thereof.

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Article 21
Students

Payments which a student or business apprentice who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who is
present in the first-mentioned State solely for the purpose of his education or training
receives for the purpose of his maintenance, education or training shall not be taxed in
that first-mentioned State, provided that such payments arise from sources outside that
State.

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 Article 22
Teachers

(1) A professor or teacher who visits one of the Contracting States for the purpose of
teaching or engaging in research at a university or any other recognised educational
institution in that Contracting State and who, immediately before that visit, was a resident
of the other Contracting State shall be exempted from tax by the first-mentioned
Contracting State in respect of any remuneration received for such teaching or research
for a period not exceeding two years from the date of his first arrival in that State for such
purpose.

(2) The exemption provided in this Article may be applied by the Contracting State in
which the teaching or research is performed either to the current payments to such
professor or teacher in anticipation of fulfilment of the requirements of paragraph (1) or
by way of withholding and refund, but in both cases exemption shall be conditional upon
fulfilment of the requirements of paragraph (1).

(3) This Article shall apply to income from research only if such research is undertaken
by the professor or teacher in the public interest and not primarily for the benefit of some
other private person or persons.

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Article 23
Other income

Items of income beneficially owned by a resident of a Contracting State, wherever

arising, which are not dealt with in the foregoing Articles of this Convention, other
than income paid out of trusts or the estates of deceased persons in the course of
administration, shall be taxable only in that State provided that the beneficial owner is
subject to tax in respect of those items of income in that State.

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Article 24
Limitation of relief

(1) Where under any provision of this Convention any income is relieved from tax in a
Contracting State and, under the law in force in the other Contracting State, a person, in
respect of that income, is subject to tax by reference to the amount thereof which is
remitted to or received in that other Contracting State and not by reference to the full
amount thereof, then the relief to be allowed under this Convention in the first-mentioned
Contracting State shall apply only to so much of the income as is taxed in the other
Contracting State.

(2) Where under Article 13 of this Convention gains may only be taxed in one of the
Contracting States, and under the law in force in that State a person is subject to tax in
respect of those gains by reference to the amount thereof which is received in that State
and not by reference to the full amount thereof, that Article shall apply only to so much
of the gains as are taxed in that State.

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Article 25
Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance
as a credit against United Kingdom tax of tax payable in a territory outside the United
Kingdom (which shall not affect the general principle hereof):

(a) Ghana tax payable under the laws of Ghana and in accordance with this
Convention, whether directly or by deduction, on profits, income or chargeable gains
from sources within Ghana (excluding in the case of a dividend, tax payable in respect
of the profits out of which the dividend is paid) shall be allowed as a credit against
any United Kingdom tax computed by reference to the same profits, income or
chargeable gains by reference to which the Ghana tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Ghana to a

company which is a resident of the United Kingdom and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any Ghana tax for which credit may
be allowed under the provisions of sub-paragraph (a) of this paragraph) the Ghana tax
payable by the company in respect of the profits out of which such dividend is paid.

(2) Subject to the provisions of the law of Ghana regarding the allowance as a credit
against Ghana tax of tax payable in a territory outside Ghana (which shall not affect the
general principle hereof):

(a) United Kingdom tax payable under the laws of the United Kingdom and in
accordance with this Convention, whether directly or by deduction, on profits, income
or chargeable gains from sources within the United Kingdom (excluding in the case of
a dividend, tax payable in respect of the profits out of which the dividend is paid)
shall be allowed as a credit against any Ghana tax computed by reference to the same
profits, income or chargeable gains by reference to which United Kingdom tax is
computed.

(b) In the case of a dividend paid by a company which is a resident of the United
Kingdom to a company which is resident in Ghana and which controls directly or
indirectly at least 10 per cent of the voting power in the company paying the dividend,
the credit shall take into account (in addition to any United Kingdom tax for which
credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the
United Kingdom tax payable by the company in respect of the profits out of which
such dividend is paid. In any case the amount of tax credit to be granted under this
paragraph shall not exceed the proportion of the Ghana tax which such profits, income
 or chargeable gains bear to the entire profits, income or chargeable gains chargeable
to Ghana tax.

(3) For the purposes of paragraphs (1) and (2) of this Article, profits and income owned
by a resident of a Contracting State which may be taxed in the other Contracting State in
accordance with this Convention shall be deemed to arise from sources in that other
Contracting State.

(4) For the purpose of paragraph (1) of this Article, the term "Ghana tax payable" shall be
deemed to include any amount which would have been payable as Ghana tax for any year
but for an exemption or reduction of tax granted for that year on any part thereof under
any of the following provisions of Ghana law:

(a) Sections 12 and 13 of the Investment Code 1985 (PNDCL. 116) but in the case of
Section 12 excluding the exemption or reduction of tax granted to any enterprise
solely in respect of activities specified in Part A. Manufacturing Industries: (a)
manufacturing for export; Sections 3(1)(f), 3(1)(tt), 4A and 4B of the Income Tax
Decree 1975 (SMCD5.); Sections 23 and 26 of the Minerals and Mining Law 1986
(PNDCL. 153), so far as they were in force on, and have not been modified since, the
date of signature of this Convention, or have been modified only in minor respects so
as not to affect their general character; or

(b) any other provision which may subsequently be made granting an exemption or
reduction of tax which is agreed by the competent authorities of the Contracting
States to be of a substantially similar character, if it has not been modified thereafter
or has been modified only in minor respects so as not to affect its general character.

Provided that relief from United Kingdom tax shall not be given by virtue of this
paragraph in respect of income from any source if the income arises in a period starting
more than ten years after the exemption from, or reduction of, Ghana tax was first
granted in respect of that source.

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Article 26
Non-discrimination

(1) Nationals of a Contracting State shall not be subjected in the other Contracting State
to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that other
State in the same circumstances are or may be subjected.

(2) The taxation on a permanent establishment which an enterprise of a Contracting State

has in the other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the same activities.

(3) Except where the provisions of paragraph (1) of Article 9, paragraph (6) of Article 11,
paragraph (6) of Article 12 or paragraph (7) of Article 17 of this Convention apply, and
subject to the provisions of paragraph (7) of Article 11, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a resident
of the first-mentioned State.

(4) Enterprises of a Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other Contracting State,
shall not be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of the first-mentioned State are or may be
subjected.

(5) Nothing contained in this Article shall be construed as obliging either Contracting
State to grant to individuals not resident in that State any of the personal allowances,
reliefs and reductions for tax purposes which are granted to individuals so resident or to
its nationals.

(6) The provisions of this Article shall apply to the taxes which are the subject of this
Convention.

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Article 27
Mutual agreement procedure

(1) Where a resident of a Contracting State considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in accordance with the
provisions of this Convention, he may, irrespective of the remedies provided by the
domestic law of those States, present his case to the competent authority of the
Contracting State of which he is a resident.

(2) The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Convention.

(3) The competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or application
of the Convention.

(4) The competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs.

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 Article 28
Exchange of information

(1) The competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Convention or of the domestic laws
of the Contracting States concerning taxes covered by this Convention insofar as the
taxation thereunder is not contrary to this Convention, in particular to prevent fraud and
to facilitate the administration of statutory provisions against legal avoidance. Any
information received by a Contracting State shall be treated as secret and shall be
disclosed only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes covered by this Convention. Such
persons or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial decisions.

(2) In no case shall the provisions of paragraph (1) of this Article be construed so as to
impose on the competent authority of either Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative
practice prevailing in either Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal
course of the administration of either Contracting State;

(c) to supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information the disclosure of
which would be contrary to public policy.

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Article 29
Members of diplomatic or permanent missions and consular posts

Nothing in this Convention shall affect any fiscal privileges accorded to members of
diplomatic or permanent missions or consular posts under the general rules of
international law or under the provisions of special agreements.

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Article 30
Entry into force

(1) Each of the Contracting States shall notify to the other through diplomatic channels
the completion of the procedures required by its law for the bringing into force of this
Convention. This Convention shall enter into force on the date of the later of these
notifications and shall thereupon have effect:
 (a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the Convention enters into force;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the Convention
enters into force;

(b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax on or after 1st January in the calendar year next following that
in which the Convention enters into force.

(2) The Convention between the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of the Republic of Ghana for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
and Capital Gains signed at London on 29th November 1977 shall be superseded by this
Convention and the Arrangement between the Government of the United Kingdom of
Great Britain and Northern Ireland and the Government of the Gold Coast for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income which was made in 1947 shall terminate and cease to have effect in
respect of the taxes to which this Convention applies in accordance with the provisions of
paragraph (1) of this Article.

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Article 31
Termination

(1) This Convention shall remain in force until termination by one of the Contracting
States. Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of any
calendar year. In such event, the Convention shall cease to have effect:

(a) in the United Kingdom:

(i) in respect of income tax and capital gains tax, for any year of assessment
beginning on or after 6th April in the calendar year next following that in
which the notice is given;

(ii) in respect of corporation tax, for any financial year beginning on or after
1st April in the calendar year next following that in which the notice is given;
 (b) in Ghana:

in respect of income tax, capital gains tax, petroleum income tax and minerals
and mining tax for the year of assessment beginning on or after 1st January in
the calendar year next following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto by their respective

Governments, have signed this Convention.

Done in duplicate at Accra, Ghana this 20th day of January 1993.

For the Government of the For the Government of

United Kingdom of the Republic of Ghana:
Great Britain and
Northern Ireland:

Chalker of Wallasey K. Botchwey

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 Chartered Institute of Taxation (Ghana)

Examiners Report

Oil, Gas and other Minerals Taxation

August, 2012

Question 1

This question was the best answered question on the paper with a significant number of candidates
scoring the maximum mark. The question required candidates to identify the two main fiscal petroleum
contractual regimes and explain the main features of each of them. Candidates identify the
Concessionary system (the tax and royalty systems) and Production Sharing Agreement (PSA) system.
However, some candidates were not aware that the Risk Contract system is a form of the Petroleum
Agreement (PSA) systems.

Candidates enumerated some of the main features to include the issues of duration of the exploration
and production periods which are in phases; successive relinquishments of portions of the contract area;
rights and obligations of the contractor; how petroleum is to be valued, how the contractor may recover
costs out of their share of the production, how the remainder of production is to be shared, tax
obligations of the contractor, and when for which payment streams fiscal stability might be granted and
other provisions such as dispute resolutions, confidentiality and transparency.

Question 2

This question requires candidates to state the tax concessions a holder of a mineral right and the
holders employees may be granted in accordance with the Minerals Act 2006, Act 703. The question
was poorly answered. Many candidates failed to state the three tax concessions which are:

1. Exemption from payment of customs import duty in respect of plant, machinery, equipment
and accessories imported specifically and for the mineral operations;
2. Exemptions of staff from the payment of income tax on furnished accommodation at the
mine site;
3. Personal remittance quota for expatriate personnel free from tax imposed by a regulation
for the transfer of money out of the country
Question 3

This question was concerned with the operation of an oil and gas consortium. The first part of the
question required candidates to prepare a Distribution of crude oil report. Candidates failed to
recognize that the GNPCs carried interest and participation interest are part of equity of the Odom
Partners. This fundamental error affected the performance of candidates. Most candidates lost vital
marks as a result.

The second part of the question required candidates to prepare Petroleum Receipts and Distribution
Report I n accordance with the Petroleum Management Act 2011, Act 815. This second part was poorly
answered by most candidates because of the fundamental error committed by candidates in the first
part of the question. The calculations required to prepare the report were not accurate as a result.

Question 4

This question was well answered by most candidates. Candidates scored high marks and overall
performance was above average. The question required candidates to write short notes on terms
relating to revenue and cost streams of Oil and Gas Taxation. These terms are Cost oil, Profit oil,
Signature bonus, Additional oil entitlement, Production bonus, Surface rental and Royalty.

In brief, Cost oil refers to the oil retained by the contractor to recover the cost of exploration,
development, and production. Profit oil is the share of production remaining after the royalty is paid and
has been retained by the contractor. Signature bonuses are paid when the contract becomes effective,
and can be considerable in highly prospective areas. Additional Oil Entitlement is a resource rent tax
designed for the purpose of capturing a progressively larger share of the profit from projects with a high
rate of return. Production reaches specified levels. Surface rental fees are often given in monetary units
per square Kilometer, so that the overall flow to the government declines with each relinquishment.
Royalties are based on the volume or value of petroleum extracted. Royalties may be paid in cash or in
kind; if the latter, specified amounts of oil, gas, or both are delivered to the government.

Most candidates scored the maximum mark for this question.

Question 5

This question, which is in three parts, examined candidates knowledge of stability agreement in respect
of mining.

a. In the first part candidates were required to state the rationale for empowering the
Minister of Lands and mineral Resources to enter into a stability agreement with a
holder of a mining lease. Candidates failed to recognize that the rationale was explicitly
stated in the Mineral and Mining Act 2006, Act 703. The rationale is to ensure that the
 holder of the mining lease will not be adversely affected by a new enactment, order,
instrument that existed at the time of the stability agreement, or other action taken
under these that have the effect or purport to have the effect of imposing obligation
upon the holder or applicant of the mining lease.
b. The second part of the question required candidates to state the tax consequences a holder
of a mining lease enjoyed. Accounting to the law a taxpayer who has a stability agreement
may not be adversely affected by subsequent changes to
- The level of and payment of customs or other duties relating to the entry materials,
goods, equipment and any other inputs necessary to the mining operations or
project,
- The level of and payment of royalties and other taxes specifically mentioned in the
stability agreement

The performance of the second part of the question was on the average.

c. The last was well answered by majority of candidates. Most candidates state the correct
answer being a period not exceeding fifteen years from the date of the stability agreement.

Question 6

This question requires candidates to compute the capital allowance claimable by a mining company.
Candidates performances were below average. Most candidates failed to classify the fixed assets into
the appropriate classes. They also failed to use the correct rates to calculate the capital allowances.
They lack the knowledge of calculating residue carried forward. Candidates who use the rule of ring
fences to compute the capital allowances were not penalized even though the law was less than six
month old as at the time of the examination.
 CHARTERED INSTITUTE OF TAXATION (GHANA)
P.O.BOX OS.1558, OSU ACCRA, P.O.B0X LG 1253, LEGON-ACCRA GHANA
TEL (0303934846)

Studentship No CIT/SR/

EXAMINATION ENTRY FORM

To the Council of the Chartered (For office use only)

Institute of Taxation (Ghana)

I hereby apply to be allowed to present myself for the February/August /20

Examination of the Institute and I herewith enclose GH .
Examination fee, in accordance with the regulations of the Council.

IT IS IMPORTANT THAT ALL PARTICULARS BE GIVEN IN DETAILS

1. Surname: ..
(BLOCK LETTERS)

2. Other names (s) .

(BLOCK LETTERS)

3. Age Date of registration as a student:..

4. Employers Address:...

5. Present nature of taxation and date of commencement

6. If receiving practical training, give particulars including date of commencement

..

..

7. Is this your first attempt, Yes/No ..? If No, state the number of times you have
presented yourself Tel ..

8. Are you taking a refereed paper? Yes/No if yes, state subject ..

1
9. How many times have you written this referred paper? .

10. IMPORTANT: Fill in your name and the address to which the examination Result
should

be posted ....

. And Registration No

E-mail Address:..

The candidates attention is drawn to the following rules:-

No person other than a registered student will be permitted to sit for the Examination of
the Institute.

Candidates who are unable, for some reasons, to attend the examination after having
entered will be permitted to take another examination within a year on payment of half
the fee, or on a subsequent occasion at the discretion of the Council without further fee.

Date: Signature:

The condition precedent to consideration of this application that under no circumstances

can fees be refunded.

EXAMINATION FEES

Technician Level GH150.00 (Per Paper)

Professional Level GH 150.00 (Per Paper)
Final Level 1 GH 200.00 (Per Paper)
Final Level 2 GH 200.00 (Per Paper)

State LEVEL (S) (PAPER to be taken

..

..

2
 CHARTERED INSTITUTE OF TAXATION (GHANA)
P.O.BOX OS.1558, OSU ACCRA, & P.O.B0X LG 1253, LEGON-ACCRA GHANA
TEL (0303934846)
APPLICATION FOR EXEMPTION FROM EXAMINATION

1. Surname:

2. Other Names:..

3. Postal Address:...

4. E-mail:

5. Tel:.

6. Student Registration Number:

7. Exemption Sought

Level Subjects Exemption

Fee GH 150.00 per paper

Total Exemption Fee

1
8. Grounds on which exemption is sought (Attach evidence)

.
..
..
..
..
..
..
..
..
..
..

9. Signature:

10. Date: .....

An Exemption Fee must accompany this application.

Remittances are to be made payable to the Chartered Institute of Taxation (Ghana).

FOR OFFICE USE ONLY

2
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATION
FEBRUARY 2014 EXAMINATIONS
FINAL LEVEL 1
PAPER 7 TAX AUDIT & INVESTIGATIONS
ANSWER ALL QUESTIONS

TIME ALLOWED: THREE HOURS

Question 1
a. The tax audit manual requires analytical procedure to be performed as part of the
initial risk assessment stage of the audit. These procedures, also known as
preliminary analytical review, are usually performed as part of the planning of the
audit.

Required:
(i) Explain, using examples, the reasons for performing analytical procedures as part
of risk assessment; (5marks)
(ii) Discuss the limitations of performing analytical procedures at the planning stage of
the audit. (5 marks)

b. You have been assigned to conduct a tax audit of Patapaa Limited, a large
company, which operates a chain of supermarkets.
The following information was provided during an entrance meeting held with the
management of Patapaa Limited. All the matters outlined in the notes below are
potential information for your coming audit.

Notes from meeting held 29 November 2013:

The company operates in three regions of Ghana namely Greater Accra, Ashanti
and Western.
The Greater Accra region comprises stores branded as Super Mall. This region
makes up half of the companys, sales. These stores sell a wide variety of items,
including food and drink, clothing, household goods, and electrical appliances.
The Ashanti region operation (branded as made in Ghana goods) comprises
traditional goods focusing on food and drink, especially ready meals and other
convenience items.
The company also established property investment and financial services division
at western region which offers loans and low cost real estate services to customers.
During the meeting it came out that, on 31 August 2013, Patapaa Limited received
notice from the Food and Drugs Authority that it was under investigation, along with
three other companies operating supermarket chains, for alleged collusion and
price fixing activities. As at the close of the financial year, the authority had not
concluded its investigation but it has emerged that, if it is found guilty, significant
financial penalties will be imposed on Patapaa Limited. The company is vigorously
defending its case.
1
 To help cash flows, the company raised finance by issuing debentures and other
debt instruments with maturity dates in 2015.

The property market slumped in 2013, and significant losses were made on the sale
of some plots of land which were originally acquired for development potential. The
decision to sell the land was made as it is becoming increasingly difficult for the
company to receive planning permission to build supermarkets on the land. Land is
recognized at cost in the statement of financial position.

Required:
Using the specific information provided in respect of Patapaa Limited; explain the
information that you would require in order to perform analytical procedures during the
planning of the audit. (10 marks)

(Total 20 Marks)

Question 2
a. In the case of a taxable person who supplies both taxable and exempt goods, input
taxes may be incurred on both taxable and exempt supplies.

(i) State and briefly explain the three categories of input tax incurred in partially-
exempt cases. (3 marks)

(i) State what steps you will take to determine the amount of deductible input tax when
performing CV activities in a business which makes both taxable and exempt
supplies. (3 marks)

b. AG Goldrich Flour Mills Limited (TIN: 552M000665) manufactures hard spring and
pastry flour for countrywide distribution and for export. During the month of May,
2013, you were assigned as a Control and Verification officer to audit, in
accordance with the Value Added Tax Act, 1998 (as amended), the company for
the six-month period ended 31st March, 2013. The following data were made
available to you:

Sales in Ghana (Exclusive of VAT & NHIL) GH

Hard-milled wheat flour 7,580,000
Pastry flour 23,200,000
Semolina 4,020,000

Supplies to Establishments Patisserie Kokou Messahn, Cotonou, Benin

Currency CFA
Hard-milled wheat flour 3,568,800.00
Pastry flour 1,252,000.00
Semolina 1,692,000.00

2
(The average rate of exchange was CFA120 to GH1)
Imports/Purchases (Exclusive of VAT & NHIL) made during the period were as follows:
Deliveries from Tema Port (C.I.F. value) GH
Wheat 4,865,000
Milling machinery spare parts 240,000

The rate of import duty on all items procured from other countries was 20%.
Other costs incurred during the period (all exclusive of VAT & NHIL) were as follows:
GH
Maize produced in Ghana 5,500,000
Lubricants for machinery 600,000
2 Cars for official use by the directors 84,000
4 Twin-cabin vehicles for office use 128,000
Computer hardware and software 18,000
Electricity bill (factory) 640,000
Electricity bill (office) 10,800
Office stationery 8,000
Telephone bills 56,500
Clearing agents charges 6,000
Required:
(i) Compute in Ghana cedis (GH) the following for AG Goldrich Flour Mills Limited
in respect of the six-month period ended 31st March, 2012:
a) The total value of standard rate output (2marks)
b) The total value of zero rate output (2 marks)
c) Total output tax (2 marks)
d) The value of exempt input (1 mark)
e) The total value of taxable input (2 marks)
f) Total input tax (2marks)
g) Deductible input tax (1 marks)
h) Non- deductible input tax (1 marks)
i) Net amount payable to the Commissioner-General. (1 mark)

(Total 14 marks)

3
Question 3
You are the tax audit supervisor of MTO of GRA. You have been assigned to tax audit
Nankoli Company limited, a large company, operating in the wholesale and retail industry.
As this is your first assignment in the audit of the company, you need to gain an
understanding of the audit risks facing the company.

You have therefore undertaken the review of the tax file and the financial statement of the
company for the past two years and have obtained the following extract from the
statement of comprehensive income, which are shown below:

2012 2011
GH GH
Total Sales:
Retail Outlets 10,802,455 11,304,452
Wholesale 3,854,521 3,548,450
14,656,976 14,852,902

Cost of Sales 11,548,654 11,106.325

Operating Profit 3,108,322 3,746,577

Administrative and selling expenses 1,325,478 1,048,754
Finance Cost 900,254 845,048

Profit before tax 882,590 1,852,775

Corporate tax 198,543 457,845

Profit after tax 684,007 1,394,930

Additional Notes:
No. of retail stores 30 28

Extract from the meeting with the finance director.

Nankoli Company limited, sells clothing, with a strategy of selling high fashion items
under a brand name Ahoafe Wura. New ranges of clothes are introduced to stores
every quarter. The company relies on a team of highly skilled designers to develop
new fashion ranges. The designers must be able to anticipate and quickly respond
to changes in consumer preferences. There is a high staff turnover in the design
team.

4
 Most sales are made in-store, but there is also a very popular mobile sales which
mobile staff on trucks moves from one business centre to another The company
has accounting software to track sales made by the mobile teams.

Again the company has a phone in facility where customers can place orders. The
system for phone ordering has recently been outsourced. The contract for
outsourcing went out to tender and Nankoli Company limited, awarded the contract
to the company offering the least cost.

A significant advertising campaign promoting Nankoli Company limiteds business

has recently taken place.

The company purchased Efi Joromy brand name five years ago and is recognized
at cost as an intangible asset, which is not amortized. The brand represents 12% of
the total assets recognized on the statement of financial position.

The company owns about thirty distribution centers some of which operate deep
into the night. Security have to be provided and this had been outsourced to Gyata
Security system

Required:
(a) Prepare briefing notes to be used at a planning meeting with head of audit, in which
you evaluate the audit risks (both business and financial) facing Nankoli Company
limited. (12marks)

(b) Using the risk identified in (a) above, indicate the key areas that the audit team
must focus during the field work. (8 marks)
(Total 20 Marks)

Question 4
a. You are conducting the audit of Love of God Company limited and have found out
that the Managing Director of the Company committed a Teeming and Lading
Fraud. The amount involved has however been refunded by the year end. From
the point of view of tax audit, how would you deal with the situation.
(8 Marks)

b. Cut off procedure is one of the most popular audit techniques used in tax audits.
Explain Cut-off Procedures and how they are used in the tax audit of a limited
liability company. (6 marks)

c. Walk through tests is very important in the understanding of a taxpayers accounting

system. Define and explain how it is applied and its relevance in an audit of a
taxpayer. (6 marks)
(Total 20 Marks)
5
Question 5
You are the audit supervisor in charge of objections and appeal in one of the Small
Taxpayers Offices of the Ghana Revenue Authority. Your staff had concluded the field
audit with a report issued to the taxpayer. The taxpayer had objected to the assessment
and had provided the following responses:

Objection 1
We noticed that, the managing directors basic salary was revised which we disagreed.
Please be informed that as a company policy, expatriate staff (including the Managing
Director) is paid by the number of days they worked in a month. In effect, no work no pay.
This issue indeed came up in your previous audit and we provided the necessary
clarification which had been accepted. We are at a loss why now.

Required:
Provide a response to the taxpayers objection to the issue raised in your capacity
as audit supervisor. (8 marks)

Objection 2
Expatriate Staff:
This is in response to the issue concerning the tax audit assessment of our expatriate
staff. We refer to section E (E1-E4) of their respective employment contracts which
defined how the assignees were remunerated. Their net amounts are grossed up and
taxes due duly paid. We therefore disagree with your assessment.

Extract from some sections of the contract agreement is shown below.

Section 4a: Notional Income

Your gross Notional salary would be fixed at US$36,047 on annual basis.

Section 4b: Income abroad.

On the basis of the gross notional income, your income abroad as at the beginning
of January 2013 is determined by the home net method as follows:

a. An income in local currency of GH13,875.00 on an annual basis

b. An Income in hard currency of US$27,897.00 on an annual basis.
This hard currency includes a special allowance of US$10,436.00 on an annual
basis.

6
 Section 4c: Payment of income abroad.
The income abroad referred to in Section 4b. will be made available to you
in the form of
The local spendable amount amounting to GH13,875 an annual basis. This
income will be paid to you as net income by your host company.
A net payment of US$27,897.00 on an annual basis to be paid to you via remittance
to a bank of your choice.
All taxes and social security payments payable on this income will be borne by your
host company.

Required:
As an auditor appointed to review the salary of the expatriates, outline the audit steps to
be followed to arrive at the correct tax liability to be paid.

Note: details of workings are not required. Professional marks will be awarded for the
presentation and clarity of your answer. (12 marks)

(Total 20 Marks)

END OF PAPER
 CHARTERED INSTITUTE OF TAXATION (GHANA)
FEBRUARY 2013 EXAMINATIONS
FINAL LEVEL 1
PAPER 9 INTERNATIONAL TAXATION

TIME: ALLOWED: THREE (3) HOURS

Answer All Questions

Question 1
In January, 2011, Eurocoms SA incorporated G Network Limited in Ghana as a wholly
owned subsidiary. Eurocoms SA is a Swedish based company and had been operating a
branch in Ghana since 2005. The branch business was transferred to G Network Limited
immediately it was incorporated. G Network design and manufacture smart cellular phones.
G Network Limited undertakes research and development activities at its corporate head
quarters in Accra and manufactures the cellular phones at Comtel Limited, its wholly owned
subsidiary, in Shanghai, China. Machinery for the manufacture of the cell phones was
provided by G Network Limited free of charge. G Network Limited allowed Comtel Limited
to use its patent in the manufacturing of the G Network Limiteds cellular phones. The patent
was acquired in January, 2011 for a consideration of 2.5million.

Comtel Ltd. purchases its raw materials from G Network Ltd. and other suppliers in China. G
Network Limited sources the raw materials from Taiwan. G Netwok Ltd. purchases the
finished products from Comtel Ltd. and sold them in Sweden, Ghana and China. G Network
Ltd. runs yearly cellular phone exhibitions in each of these countries. Marketing personnel of
G Network Ltd. frequently travel to Sweden and China to promote the products.

In December, 2012, G Network decided to write-off 2million loan due from Comtel Ltd.
The loan which was advanced to Comtel Limited to be used as a working capital in January,
2011 comprised of outstanding principal of 1.7million and interest thereon of 0.3million.
In 2012, G Network Limited refurbished its head office in Accra which had been used as
Eurocoms SA branch office since 2005 for 0.6million. G Network Limited found the office
not suitable after the refurbishment. They sold the office and rent another office.

Required:

What are the income tax implications for G Network Limited in respect of

a. marketing and selling of the finished products in China, Ghana and Sweden?
b. the use of the machinery by Comtel Limited to manufacture the products?
c. writing-off the outstanding loan and interest owed by Comtel Limited?
d. the refurbishment of its head office?
(20 marks)

Page 1 of 4
Question 2
Munsey Limited is incorporated in Country A and listed on the stock exchange in Country B.
The Board Chairman of the company who owns a substantial minority shares lives in Country
B with three other directors. The company has a manufacturing plant in Country A. The
management decisions for operating the plant are made by two directors resident in Country
A who meet weekly. They, however, consult the other directors in Country B on matters of
exceptional importance.

The board of directors meet once in a quarter at the companys office in Country B. The
Chairman and two other directors attend the board meetings in person and one director
remains at the plant in Country A and participates by telephone.

Country A treats a company as resident if it is incorporated in Country A. Country B treats a

company as tax resident if its central management and control is exercised in Country B.
Under country B laws Munsey Limited is regarded as resident in Country B. The tax treaty
between Country A and Country B is the same as the OECD Model Tax Convention.

Required

In accordance with the OECD Model Convention on Income and Capital, advise Munsey
Limited the country in which it is resident for tax purposes and give reasons for your advice.

(15 marks)

Question 3
a. Explain the merits of relieving double taxation by means of the exemption and credit
methods for taxpayers and tax jurisdictions.
(10 marks)
b. Differentiate between economic double taxation and judical double taxation. Give an
example of each of them
(4 marks)
c. A company resident in Country A, where corporate tax rate is 30%, has a branch in
Country B. The corporate tax rate in Country B is 35%. The branch make a
chargeable income of GH200,000 (two hundred thousand Ghana Cedis) in the 2012
year of tax assessment

Required:

i. Illustrate by calculations how any double tax would be relieved by each of the three
methods of double tax reliefs
(6 marks)
ii. Calculate the effective tax rate if there is no relief; and if each of the three methods of
double tax relief is applied
(4 marks)
(Total: 24 marks)

Page 2 of 4
Question 4
Centrum Limited is a company resident in a country called Condoler. Decuples Limited is a
wholly owned subsidiary of Centrum Limited and is resident in a country called Ducati. The
business of Centrum Limited is the manufacture and distribution of expensive medical
diagnostic equipment. The business in Ducati is undertaken as follows:

Centrum Limited maintains a warehouse in Ducati. Centrum Limited purchases components

for the equipment and stores them in its warehouse. It sells the components to Decuples
Limited which is licensed by Centrum Limited to manufacture the equipment and sell the
whole of its production to Centrum Limited. The completed equipment is stored in the
warehouse by Centrum Limited for sale to customers. Centrum Limited sells the equipment
to customers in Ducati via a website on a server situated in Condoler. The website collects
payment and arranges delivery of the equipment by sending a message to Decuples Limited
which arranges delivery of the equipment from the warehouse to the customer on behalf of
Centrum Limited. Marketing representatives employed by Decuples Limited make visits to
potential customers in Ducati and demonstrate the equipment, but instead of taking orders,
refer the potential customer to the website. Customers who enter the representatives details
on the website qualify for a discount and the representative in question receives an incentive
payment for each such sale. In view of the low risks to Decuples Limited, it charges a
modest, but arms length mark up on the cost of manufacturing and services provided to
Centrum Limited.

The tax treaty between Condoler and Ducati is identical to the OECD Model Tax
Convention.

Required

In accordance with the OECD Model Convention on Income and Capital, advise Centrum
Limited whether it has a permanent establishment in Ducati. Give reasons for your advice.

(15 marks)

Question 5
a. Evaluate the effect of the non discrimination provision contained in Article 24 of the
OECD Model Tax Convention on Income and Capital, which is adopted in all the
Double Tax Agreements Ghana entered into with other countries.
(8 marks)
b. As contained in all the Double Taxation Agreement Ghana entered into with some
countries, Article 25 of the Model Convention on Income and Capital provides for
Mutual Agreement Procedure (MAP). How is the Mutual Agreement Procedure
(MAP) put into effect in practice?
(8 marks)
(Total: 16 marks)

END OF PAPER

Page 3 of 4
Page 4 of 4
 CHARTERED INSTITUTE OF TAXATION (GHANA)
FEBRUARY 2013 EXAMINATIONS
PROFESSIONAL LEVEL
PAPER 7 TAX AUDIT AND INVESTIGATIONS

TIME ALLOWED: THREE (3) HOURS

ANSWER ALL QUESTIONS

QUESTION 1

(a) The concept of directional testing recognizes that it is the purpose of the
audit test which will determine the direction of the tests, that is, do we start
with raw data or do we start with final accounts balance?

State and explain four simple premises upon which directional testing is
based. (4 marks)

(b) The following is the balance sheet of Live Together Enterprise Limited, a
Kasoa based VAT registered hardware merchant.

LIVE TOGETHER ENTERPRISE LIMITED

BALANCE SHEET AS AT MARCH 31, 2011 2012

GH000 GH000
Fix Assets 17,250.00 25,000.00
Depreciation 4,237.50 6,200.00
13,012.50 18,800.00

Current Asset
Stocks 9,000.00 14,694.00
Debtors 3,150.00 4,150.00
Bank 3,320.50 9,200.00
Cash 92.00 _ 56.00
15,562.50 28,100.00
Current Liabilities

Taxation 2,175.00 3,200.00

Creditors 2,400.00 3,400.00
Dividends proposed 375.00 600.00
4,950.00 7,200.00
Net Current Assets 10,612.00 20,900.00
Total Assets 23,625.50 39,700.00
Financed By:
Stated Capital 13,500.00 23,000.00
Income Surplus 5,625.00 9,200.00
Directors Loan 4,500.00 7,500.00
23,625.00 39,700.00
 In addition these extracts were made from the Administrative and
General Expenses;

2011 2012
GH000 GH000

Directors Remuneration 148.20 177.84

Salaries & Wages 120.00 144.84
Rent 12.00 15.00
Bank charges and Interest 53.00 68.50
Business Promotion 560.00 640.00
Audit and Accountancy 10.00 15.00
Vat Paid 1,250.00 1,875.00
Depreciation 1,308.00 1,962.50
Tender Expenses 200.00 320.00

(i) Your firm has been contracted by Ghana Revenue Authority to

carry out tax audit of Live Together for the years ending March 31,
2011 and 2012. You are required to carry out desk audit of above
Balance Sheet and Profit and Loss Accounts extracts and draft a
tax audit report suitable for submission to the Managing Director of
Live Together Enterprises Limited for the attention of the Manager,
Tax audit and Assurance. The report must be submitted to your
manager in a suitable form. (9 marks)

(ii) You are also to state clearly in a memorandum to the Manager, Tax
Audit and Assurance, any preliminary desk audit work you did
before drafting the tax audit report in (i) above. (7 marks)

QUESTION 2

(a) Joe Mpre & Co, a firm of Chartered Accountants and Tax Practitioners
has recruited group of new graduates as audit clerks. As part of their
training, you have been tasked, as audit senior, to brief the new recruits
on the following;

(i) Qualifications for a duty drawback or refund in accordance with

Section 41 of the Customs, Excise and Preventive Service
(Management) Law, 1993 (PNDC L 330). (6 marks)
 (ii) Manufacturers are required by Section 57(3) of the Customs, Excise
and Preventive Service (Management) Law, 1993 (PNDCL 330), to
submit returns in the approved form to the Commissioner General
ten (10) days after the close of every month.

State and explain the contents of the approved form required to be

submitted,to the trainee clerks in your briefing. (3 marks)

(b) Joe Dii Enterprise is an Nsawam based manufacturer of alcoholic

beverages. Joe Dii has been tax audited by Ghana Revenue Authority on
its excise duty returns for the year ending December 31st, 2012.

Mr. Joe Dii is contesting the findings of the audit team from Ghana
Revenue Authority and has been introduced to your firm for assistance.

Mr. Joe Dii has requested your firm to undertake an audit of the excise
duty returns for the twelve months ending December 31, 2012 to confirm
the findings of the Ghana Revenue Authority audit team.

Your firms Manager-Assurance Services has requested you to draft an

audit programme covering the items required to be included in the
approved form in (a)(ii) above for discussion. (11 marks)

QUESTION 3

(a) PBS Limited produces cocoa powder for export with a factory located in
Kumasi. The company employs fifty factory hands and eight
administrative staff including two expatriates.

The companys turnover for the past five years are;

YEAR TURNOVER
GH
2007 8,451,128.00
2008 9,426,491.00
2009 10,188,294.00
2010 12,234,698.00
2011 12,494,523.00

The desk audit of the companys accounts by Ghana Revenue authority

has resulted in overpayments as follows;

YEAR TAX OVERPAID

2009 726,155.83
2010 580,033.14
2011 1,126,726.19
 The Ghana Revenue Authority has contracted your firm to undertake tax
audit of the relevant years to confirm the overpayments.

The Tax Services Manger of your firm has instructed you to draft quality
control procedures suitable for the tax audit of PBS Limited. (10 marks)

(b) During the course of the audit the Managing Director and the Chief
Finance Officer of PBS Limited made a lot of verbal representations of
which you informed your Manager Tax Services.

Your Manager has requested you to obtain a Letter of Representation.

Explain clearly what this letter is and what you expect to find in it.
(10 marks)

QUESTION 4

(a) Governments in recent years have ordered the carrying out of forensic
auditing of various state institutions upon assumption of political power.

(i) Explain clearly your understanding of forensic audit. (2 marks)

(ii) Forensic audit could be proactive or reactive depending on its

application. Explain each application as you understand it.
(4marks)

(iii) There are several forensic audit techniques available to the

investigator or tax auditor.

State and describe four such techniques in forensic investigation.

You are required to present your answers in a form suitable for

presentation at a seminar for Local Government Officials. (9 marks)

(b) During the course of negotiations for takeovers, mergers, acquisitions etc.,
the directors of a company needs to assure potential investors that due
diligence have been carried out in all aspects of their company including
verification of tax liabilities and/or overpayments.

What is due diligence? (5 marks)

QUESTION 5

(a) Mr. Tongo is the Managing director of Tongo Impex Limited, a newly VAT
registered company based in Sunyani, Brong Ahafo Region of Ghana.

You are also a newly recruited tax expert with Abongo and Associates, a
firm of Chartered Accountants and Business Advisors.
 You are to explain in writing to Mr. Tongo in detail what constitutes
DEDUCTIBLE INPUT TAX in accordance with Section 24(1) of the Value
Added Tax Act, 1998 (Act 546). (3 marks)

(b) You are required to design a suitable audit programme for ascertaining
deductible input tax for use by the firm. (12 marks)

(c) State and explain briefly any exemption under Section 24 of the Value
Added Tax Act, 1998 (Act 546). (5 marks)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
FEBRUARY 2013 EXAMINATIONS
PROFESSIONAL LEVEL
PAPER 7 TAX AUDIT AND INVESTIGATIONS
MARKING SCHEME
ANSWER 1
(a) The two simple premises upon which directional testing are based are as
follows:
(i) That errors in the financial statements are either over-or under-
statements. These are either omissions or misstatements of items
included in the accounts.
(ii) That the double entry system provides auditor with a set of links
between asset, liability, revenue and expense accounts. To
Overstate an asset, an income account or a liability must be
overstated (or another asset account or expense account
understated)
(iii) Carrying out a primary test of an asset account balance (eg.
debtors) for overstatement the effect on the reciprocal population
is similarly tested (eg. sales income).

(iv) Conversely to (iii) above, by testing sales income for

understatement, the auditor obtains evidence that other credit
balances are not overstated and debit balances are not
understated (eg. debtors)

(v) Overstatement tests must start with the monetary population in the
account balance (accuracy tests to test that what is included
should be included)
(vi) Understatement tests are tests for omissions. These tests usually
begin with a non-monetary population (eg. when testing sales for
understatement, the population for selection is normally dispatch
notes. (1 mark each for any four correct answers)

(b)(i) MEMORANDUM
FROM: Audit Clerk }
TO: Manager Tax Audit & Assurance }
Date: 07/01/2013 }
SUBJECT: LIVE TOGETHER ENTERPRISE LIMITED } 2 marks for
TIN: XXXX } memorandum
YEAR OF ASSESSMENT - 2012 }
BASIS PERIOD 01/03/2011 30/04/2012 }
 Please find attached the desk audit report of above-mentioned company
for your necessary action.

Thank you.

Signed.

The Managing Director }

Live Together Enterprise Limited }
Kasoa }
}1/ 2 mark
Dear Sir, }
}
AUDIT REPORT }
FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012 }
YEAR OF ASSESSMENT 2012 }
TIN: XXXX }

We are happy for the submission of your companys financial statement for the
year ended March 31, 2012. We have completed examination of the accounts
and wish to bring our observations to your notice.

1. Additions to Fixed Assets

Additions to fixed assets amounted to GH7,750,000.00. Kindly submit

supporting documents attesting to ownership and value. You may also
take note that you are required by the Internal Revenue Act (Act 592) to
inform the Commissioner-General upon acquisition in order to attract
capital allowance.

2. Stocks
Kindly submit stock schedules to indicate stock in trade and consumable
stores.

3. Debtors
Kindly submit schedules of debtors indicating trade debtors and other
debtors.

4. Bank Balance
You are required to respectfully submit your bank statements supporting
all your bank accounts.

5. Creditors
Please furnish us with a schedule of creditors indicating trade creditors
and other creditors.

6. Dividends
Kindly furnish us with evidence of withholding taxes deducted and paid.
7. Addition to Stated Capital
Please indicate sources of funding of this addition.

8. Directors Loan
Kindly furnish us with particulars of the source of additions.

9. Business Promotion/Tender Expenses

Please indicate beneficiaries of these expenses.

10. VAT Paid

The VAT payment is not a chargeable expense and will therefore be
added back to profit in revising your assessments.
(1 mark each for any six correct answers)

Counting on your co-operation. }

}
Thank you. }
} mark
Yours faithfully }
}
Signed. }

(b)(ii) MEMORANDUM }
}
FROM: Audit Clerk }
TO: Manager Tax Audit & Assurance } mark
Date: 08/01/2013 }
SUBJECT: LIVE TOGETHER ENTERPRISE LIMITED }
TIN: XXXX }
DESK AUDIT REPORT }
FINANCIAL STATEMENTS FOR THE YEAR ENDING MARCH 31,
2011 AD 2012

Please find below a report of the desk audit I carried out on Live Together
Enterprise Limited for the years ending March 31, 2011 and 2012.

The tax files were examined to confirm the following;

(1) Whether there is documentary evidence of the fixed assets acquisition on

file (whether the Commissioner-General was informed);

(2) Any information on bank accounts such as account numbers, branches

signatories etc.

(3) Records of all tax payments such as;

(i) Company Tax
(ii) PAYE Tax
 (iv) Withholding Taxes
(v) Dividend Tax
(vi) VAT

(4) Any information on the increase in stated capital such as stamp duty paid
and sources of the finance.

(5) Details of the directors loan who contributed what and sources of the
finance.

(6) Prepare performance indicators covering a period of five years including

2011 and 2012.

(7) Personal details of directors and other principal officers of the company.

(8) Details of any contract tendered and won.

(1 mark each for any six correct answers)

Please, submitted for your necessary action. }

} mark
Thank you. }
}
Signed. }

ANSWER 2(a)

BRIEFING PAPER
(i) Duty Drawback or Refund

Regulations may prescribe that a drawback of the whole or any part of

any duty or tax paid may be granted on goods as may be prescribed,
and the conditions under which the drawback may be allowed. (Section
40). (1 mark)

(a) The payment of money out of duties or excise duties shall be paid
by the Commissioner-General on the proper debenture or other
document certified by the proper officer.

(b) The owner of any goods entitled to drawback shall make and sign a
declaration on the debenture that the conditions under which
drawback is allowed has been fulfilled.

(c) The Commissioner-General may require the owner to produce

satisfactory evidence of the landing out of Ghana or disposal of
any goods exported before certifying the debenture.

(d) All claims for drawback shall be made within a period of twelve
months reckoned from the date of exportation of the relative goods
or the performance of the conditions on which drawback is allowed
as the cash may be.
 (e) All claims for overpayments or refunds of any duty paid shall be
made within six (6) years from the end of the financial year to which
the claim relates.

(f) The Commissioner-General shall return any money which has been
overpaid as duty if the proper document for the overpayment is
certified by the proper officer. (1 mark for any four correct answers)

(ii) Every manufacture shall within ten (10) days after the end of every month
or any longer period that may be prescribed letter to the commissioner-
General in the approved form an account of :

(a) all materials in or received into his factory,

(b) all excisable goods manufactured, delivered, used, removed to or
from another factory or to or from a warehouse lost by evaporation,
leakage or other cause or otherwise disposed of; and
(c) any duties which have become due or have been paid during that
month or other prescribed period on any goods manufactured by
him. (1 mark each)

PREPARED BY: DATE: } mark

. }

ANSWER 2(b)

The items required to be included in the approved form are:

(a) all materials in or received into the factory
(b) all excisable goods manufactured, delivered, used, removed to or from
another factory or to or from a warehouse lost by evaporation, leakage,
or other cause or otherwise disposed of.
(c) any duties which have become due or have been paid during that
month or other prescribed period or any goods manufactured.
(1 mark each)

(a) Audit Programme

(i) check additions and cross-casts of the purchase day book and
purchase returns book.
(ii) check postings from the day books to the nominal ledger accounts
and to the control accounts.
(iii) vouch purchase day books and purchase returns day book to
invoices and credit notes.
(iv) scrutinize the records for large or unusual transactions and vouch
these items checking postings to the accounts.
(v) check invoices and credit notes with the day books, ensuring that
the analysis is correct, and check to creditors ledger.
 (vi) vouch invoices to orders
(vii) agree prices charged on invoices and credit notes to suppliers
pricelists, agreements or the relevant evidence.
(viii) check calculations and additions on invoices and credit notes.
(ix) vouch invoices with goods received records.
(x) Trace goods into stock records.

(b) Audit Programme

(i) obtain production records for each month and for each item.
(ii) check the cast
(iii) Check goods dispatched notes or goods outwards records at the
factory or warehouse.
(iv) Trace goods outwards from invoice to dispatch notes to stock
records.

(c) Audit Programme

(i) agree duty paid to VAT receipt
(ii) trace payment to cash book
(iii) agree duty due or payable to VAT Service excise duty assessment
(v) trace payment to bank statement
(1mark for any eight correct answers)

ANSWER 3(a)

MEMORANDUM

FROM: Audit Senior }

TO: Manager Tax Services }
Date: 09/01/2013 } mark
SUBJECT: QUALITY CONTROL PROCEDURES }
As instructed by you, I wish to submit the following quality control procedures for
your approval, please.

(1) Allocation of Staff

Staff assigned to the audit must have sufficient knowledge and
experience in the audit of cocoa processing companies in Ghana.

(2) Staff Briefing

Staff who would be assigned to the audit should be thoroughly instructed
on the following:

(i) Objectives of the audit i.e. verification of the correctness of the

taxes overpaid.
(ii) Timing required timing of the audit should not interfere with the
taxpayers operations for example.
 (iii) The overall plan of the audit.
(iv) Significant accounting and auditing problems.
(v) Related parties Cocobod and its subsidiaries.
(vi) The need to bring problems and put upon enquiry situations to
superiors during the audit.

(3) Audit completion checklist the checklist must have sections for
completion by staff, supervisor and reporting partner. This will ensure that
no matter is overlooked.

(4) Contentious Matters all problems, special difficulties, potential add-

backs to profit, revision of capital allowance computation, revision of
directors, management and staff salaries, etc. must be identified,
recorded and reported to the reporting partner who may also discuss it
with the other partners.

(5) Documentation all audit work and conclusions reached must be fully
recorded in the working paper supported if need be with original or
photocopies of important documents.

(6) Reviews all audit work must be reviewed by the reporting partner.

(7) Acknowledgment all audit work and review action should be

acknowledged in writing by the performer.

(8) Supervision supervisor should monitor the progress of the audit to

determine whether:
(i) Assistants have the necessary skills and competence to carry out
their assigned tasks.
(ii) Assistants understand the audit directions, and
(vi) The work is carried out in accordance with the overall audit plan
and the audit programme.

(9) Audit Finding audit findings (queries) must be discussed with the
taxpayer and finalized.

(10) Audit Report Preparation of audit report for the attention of the
reporting partner. (1 mark each for any nine correct answers)

Please submitted for your necessary action. }

}
Thank you. } 1/ 2 mark
}
Signed. }

ANSWER 3(b)

(i) A letter of representation is a letter from management to the auditor

confirming in writing opinions conveyed to the auditor orally and it is
obtained on the occasion of each audit.
(ii) The letter should contain only matters which are material and for which
the auditor cannot obtain corroborating evidence.

(iii) The principal items will be matters of which management alone have
knowledge and matters of judgment and opinion.

(iv) (a) the letter should also contain the directors acknowledgment for
their responsibilities for preparing Financial Statements which give a
true and fire view;
(b) a statement that all accounting records have been made
available to the auditors;
(c) all transactions undertaken by the company have been properly
reflected and recorded in the books;
(d) all other records and related information including minutes of all
management and shareholders meetings have been made
available to the auditors.
(e) it is usually dated the same day as the directors approve the
accounts. (2 marks for any five correct answers)

ANSWER 4(a)
(a) Forensic auditing could be described as the application of auditing skills
to situations that have legal consequences. Forensic audit involves the
systematic gathering of evidentiary data through the use of recognized
investigative techniques that can be presented in court of law. (2 marks)

(b) (i) Proactive Forensic Audit:

This is the use of auditing skills to prevent fraud by identifying and rectifying
situations which could lead to frauds being perpetrated. (2 marks)

(ii) Reactive Forensic Audit:

This is the investigation of cases of suspected fraud so as to prove or
disprove the suspicions, and if the suspicions are proven, to identity the
persons involved, support the findings by evidence and to present the
evidence in an acceptable format in any subsequent disciplinary or
criminal proceedings. (2 marks)

(c) (i) Public document Reviews and Background Investigations:

At the onset of an investigation, the forensic specialist may conduct or
engage another specialist to conduct a background investigation of the
business, its owners, employees, related parties, competitions; and any
potential targets of the investigation. The process continues as new
information or new individuals are identified that warrant further
investigation.

(ii) Interviews of Knowledgeable Persons:

The primary purpose of an interview is to gather evidence through facts
and other information supplied by witnesses. With each successive
 interview, the forensic specialist should obtain background information
about the witness, the subject and the target(s) of the investigation.

(iii) Confidential Sources:

In nearly every organization, there are people who are willing to share
information if they can remain anonymous. In a number of cases,
confidential sources provides information through employees hotlines and
anonymous letters. Additionally, former employees may provide valuable
information through letters of resignation and exist interviews.

(iv) Laboratory Analysis of Physical and Electronic Evidence:

In addition to the laboratory analysis of physical evidence such as finger-
point analysis, forged signatures, and fictitious or altered documents,
powerful computer software allows the specialist to perform procedures
such as hard disk imaging, and analysis of financial information and
computer or misuse.

(v) Physical and Electronic surveillance:

Law enforcement agencies routinely conduct physical and electronic
surveillance. Private investigators and other specialist also perform these
techniques under limited circumstances of forensic specialist may
recommend physical or electronic. (2 marks each for any four correct
answers)

ANSWER 4(b)

Due diligence is a term used to describe a wide range of services, with or

without the inclusion of an expression of professional opinion, performed by
professional accountants. Due diligence is work commissioned by a client into
agreed aspects of the accounts, organization and activities of an undertaking.

For example when company X takes over company Y, then it is important that
company X can show that many aspects of the affairs of company Y are in fact
as they understand them.

For example the assets and liabilities exist as stated and are not over-
understated.

Usually due diligence is carried out before negotiations are concluded.

(5 marks)

ANSWER 5(a)
14/01/13 }
}
The Managing Director } mark
Tongo Impex Limited }
Sunyani }

Dear Sir,
EXPLANATION OF DEDUCTIBLE INPUT TAX

Deductible input tax is tax on goods and services purchased in Ghana or goods
and services imported by him and used wholly, excessively and necessarily in
the course of his business.

This is found under Section 24 of the Value Added Tax Act, 1998 (Act546).

We are ready to offer any further explanation you may require.

Thank you. (2 marks)

Yours faithfully }
} mark
Signed. }

5(b) The audit programme required will deal with:

(1) Local taxable supply
(2) Importation
(3) Removal of goods from bonded warehouse
(1 mark each)

The audit programme required are as allows:

(a) Local taxable supply

(i) Ensure that supplier of goods or services is VAT registered
(ii) Supply is covered with VAT invoice or tax invoice issued under
Act 546
(iii) Ensure that the supply is a taxable supply
(iv) Agree VAT paid per the invoice
(1 mark each for any three correct answers)

(b) Imports
(i) Obtain customs entries form covering the goods
(ii) Ensuring that the goods are taxable supply and not exempt
(iii) Agree VAT paid per the customs entries form
(1 mark each)

(c) Removal of Goods From Bonded Warehouse

(i) Obtain customs entries form covering the supply
(ii) Ensure that the supply is not exempt supply
(iii) Agree the amount of tax paid
(iv) Ensure that input tax deduction is not taken more than once
(1 mark each for any three correct answers)

5(c) Exemptions under Section 24 of Act 546 are as follows:

No input tax deduction shall be made on:

(i) Purchases or imports on exempt supplies by the taxable person
(ii) Purchases or imports after the expiration of three (3) years from the
date the deduction accrued.
(iii) Supply or import of motor vehicles or vehicle parts unless the
taxable person is in the business of dealing in motor vehicles or
spare parts.
(iv) Entertainment including restaurant, meals and hotel expenses unless
the taxable person is in the business of providing entertainment.
(v) Taxable supply or import for personal use.
(1 mark each)
 CHARTERD INSTITUTE OF TAXATION (GHANA)
FINAL EXAMINATIONS
FINAL LEVEL 1
PAPER 8 OIL AND GAS AND OTHER MINERALS TAXATION
FEBRUARY 2013

TIME ALLOWED THREE (3) HOURS

INSTRUCTIONS: ANSWER ALL QUESTIONS

Question 1

Following the discovery of petroleum resources in commercial quantities in Ghana,

there weresome concerns in the industry about the role of the Ghana National
Petroleum Corporation (GNPC) acting as both an operator and regulator.
Consequently, the National Petroleum Commission Act, 2011 (Act 821) was
promulgated with the main object of regulating and managing the utilisation of
petroleum resources and co-ordinating the policies in relation to them.

Discuss the functions of the National Petroleum Commission as mandated by the

enabling Act and explain whether the establishment of the NPC has resolved the
concerns of the industry. (20 marks)

Question 2

In recent times, there have been some major tax reforms in the upstream petroleum
industry and the mining industry. As a result of the reform, some attemptshave been
made to harmonise the tax regimes of the upstream petroleum industry and the mining
industry.

You are required to identify and discuss the specific areas where the reforms were
made. Explain also the problems these reformsposed to the mining sector.(20 marks)

Question 3

Vivandi Limited has been engaged in exploration and development of its oil fields for
five (5) years and finally commenced commercial production of crude on 1st January
2011.

An abridged version of the Companys full set of accounts produced for the financial
year 2011 is produced below for your attention:

1
 Description GH (M)
Total income 500
Less: Total costs 420
Net Profit before tax 80

You will find the information below also useful:

The make-up of the Companys income for the year was as follows:

Description GH (M)
a. Income from sale of crude at selling prices 200
b. Sale of crude to affiliates at world market prices per Petroleum 50
Agreement (PA) to which such a person is a party
c. Export without sale at world market prices as per the PA 75
d. Income from assignment of interest in the PA 100
e. Income from sale of qualifying petroleum assets in 2011 75
Total 500

Total cost is made up of the following:

Description GH (M)
a. Rental of equipment for petroleum operations 94
b. Royalties 17
c. Interest paid on total money borrowed for petroleum operations. 48
The Commissioner-General has confirmed that, the interest rate
applied to the loan was in excess of the commercial rate. The
commercial rate is 75% of the interest amount.
d. Bad debts for 2011 46
e. Social security payments that complied fully with the new 35
Pensions Act
f. Sums paid in educating and training Ghanaian nationals abroad 15
in approved technical institutions in line with the PA
g. Domestic and private expenses paid for the Managing Director to 10
ensure he does not leave for other companies in the industry
h. Depreciation of petroleum assets 70
i. Income tax charged in Nigeria in respect of rental of properties in 31
Nigeria. There is no Double Taxation Agreement between Ghana
and Nigeria
j. Cost of repairs to the recreational centre of the Company located 1
at Takoradi where Senior Officers use for recreational activities
k. Sums employed as capital 51
m. Losses incurred prior to the commencement of commercial 2
operations

2
 The following information relates to petroleum capital expenditure prior to the year of
commencement, 2011 (i.e. before commercial production):

Description GH (M)
a. Exploration costs 250
b. Development costs 350
c. Consideration received for sale of proportionate interest in 100
petroleum agreement
d. Sale of qualifying exploration assets after exploration activities 20
ceased
e. Insurance monies received in respect of assets destroyed during 30
exploration and development activities
f. Sums received by reason of reimbursement of cost for sole risk 100
operations

During the year 2011, the following petroleum capital expenditures were incurred:

Description GH (M)
a. Cost of installation of facilities for production 70
b. Further cost of geological and geophysical surveys in the area 3
c. Acquisition of further petroleum information as well as costs 9
relating to surveys to all reservoir
d. Plant, machinery & equipment for erection of drilling rigs 12

You are required to:

I. Determine the chargeable income of Vivandi Limited for the 2011 year of
Assessment.
(24 marks)
II. Identify six items (either incomes or expenses) that you did not allow in your
computations and explain why you did not consider them as deductible for tax
purposes.
(6 marks)

(Total: 30 Marks)
Question 4

a) A foreign company engaged in petroleum exploration, development and production

in Sierra Leone is contemplating entering the upstream petroleum industry in Ghana.
Management of the Company is however not sure of the need for a Petroleum
Agreement in the upstream petroleum industry.

The Company has hired you as a Tax Consultant to advise them on the strategic
importance of the Petroleum Agreement.

State briefly the importance of the Petroleum Agreement? (5 marks)

3
b) In a recent Daily Graphic Publication, it was alleged that certain major contractors,
their affiliatesand sub-contractors in the upstream petroleum industry in Ghana were
not complying with the tax provisions relating to expatriate employees and were
therefore not deducting and remitting Pay As You Earn (PAYE) taxes for their
expatriate employees. Following this publication, the then Commissioner of the
Domestic Tax Revenue Division of the Ghana Revenue Authoritygranted interviews
to the media and explained the position of the Law and the practice by the tax
administration.

To further clear any confusion regarding taxation of foreign national employees

working for contractors and sub-contractors in Ghana, you are being required as a
budding tax professional to discuss the provisions of both the Petroleum Income
Tax Law, 1987 (PNDCL 188) and the Petroleum Agreement regarding taxation of
employment income of foreign nationals working for petroleum contractors in
Ghana.In your discussion, show how the two laws have resolved the issue. (10
marks)

Question 5

Explain the strategic importanceof the following in petroleum operations:

1. Additional oil entitlement;

2. Make up of receipts into Petroleum Holding Fund; and
3. Prohibited use of the Petroleum Holding Fund.
(Total: 15 Marks)

BEST WISHES

4
 CHARTERED INSTITUTE OF TAXATION (GHANA)
FEBRUARY 2013 EXAMINATIONS
PROFESSIONAL LEVEL
PAPER 7 TAX AUDIT AND INVESTIGATIONS

TIME ALLOWED: THREE (3) HOURS

ANSWER ALL QUESTIONS

QUESTION 1

(a) The concept of directional testing recognizes that it is the purpose of the
audit test which will determine the direction of the tests, that is, do we start
with raw data or do we start with final accounts balance?

State and explain four simple premises upon which directional testing is
based. (4 marks)

(b) The following is the balance sheet of Live Together Enterprise Limited, a
Kasoa based VAT registered hardware merchant.

LIVE TOGETHER ENTERPRISE LIMITED

BALANCE SHEET AS AT MARCH 31, 2011 2012

GH000 GH000
Fix Assets 17,250.00 25,000.00
Depreciation 4,237.50 6,200.00
13,012.50 18,800.00

Current Asset
Stocks 9,000.00 14,694.00
Debtors 3,150.00 4,150.00
Bank 3,320.50 9,200.00
Cash 92.00 _ 56.00
15,562.50 28,100.00
Current Liabilities

Taxation 2,175.00 3,200.00

Creditors 2,400.00 3,400.00
Dividends proposed 375.00 600.00
4,950.00 7,200.00
Net Current Assets 10,612.00 20,900.00
Total Assets 23,625.50 39,700.00
Financed By:
Stated Capital 13,500.00 23,000.00
Income Surplus 5,625.00 9,200.00
Directors Loan 4,500.00 7,500.00
23,625.00 39,700.00
 In addition these extracts were made from the Administrative and
General Expenses;

2011 2012
GH000 GH000

Directors Remuneration 148.20 177.84

Salaries & Wages 120.00 144.84
Rent 12.00 15.00
Bank charges and Interest 53.00 68.50
Business Promotion 560.00 640.00
Audit and Accountancy 10.00 15.00
Vat Paid 1,250.00 1,875.00
Depreciation 1,308.00 1,962.50
Tender Expenses 200.00 320.00

(i) Your firm has been contracted by Ghana Revenue Authority to

carry out tax audit of Live Together for the years ending March 31,
2011 and 2012. You are required to carry out desk audit of above
Balance Sheet and Profit and Loss Accounts extracts and draft a
tax audit report suitable for submission to the Managing Director of
Live Together Enterprises Limited for the attention of the Manager,
Tax audit and Assurance. The report must be submitted to your
manager in a suitable form. (9 marks)

(ii) You are also to state clearly in a memorandum to the Manager, Tax
Audit and Assurance, any preliminary desk audit work you did
before drafting the tax audit report in (i) above. (7 marks)

QUESTION 2

(a) Joe Mpre & Co, a firm of Chartered Accountants and Tax Practitioners
has recruited group of new graduates as audit clerks. As part of their
training, you have been tasked, as audit senior, to brief the new recruits
on the following;

(i) Qualifications for a duty drawback or refund in accordance with

Section 41 of the Customs, Excise and Preventive Service
(Management) Law, 1993 (PNDC L 330). (6 marks)
 (ii) Manufacturers are required by Section 57(3) of the Customs, Excise
and Preventive Service (Management) Law, 1993 (PNDCL 330), to
submit returns in the approved form to the Commissioner General
ten (10) days after the close of every month.

State and explain the contents of the approved form required to be

submitted,to the trainee clerks in your briefing. (3 marks)

(b) Joe Dii Enterprise is an Nsawam based manufacturer of alcoholic

beverages. Joe Dii has been tax audited by Ghana Revenue Authority on
its excise duty returns for the year ending December 31st, 2012.

Mr. Joe Dii is contesting the findings of the audit team from Ghana
Revenue Authority and has been introduced to your firm for assistance.

Mr. Joe Dii has requested your firm to undertake an audit of the excise
duty returns for the twelve months ending December 31, 2012 to confirm
the findings of the Ghana Revenue Authority audit team.

Your firms Manager-Assurance Services has requested you to draft an

audit programme covering the items required to be included in the
approved form in (a)(ii) above for discussion. (11 marks)

QUESTION 3

(a) PBS Limited produces cocoa powder for export with a factory located in
Kumasi. The company employs fifty factory hands and eight
administrative staff including two expatriates.

The companys turnover for the past five years are;

YEAR TURNOVER
GH
2007 8,451,128.00
2008 9,426,491.00
2009 10,188,294.00
2010 12,234,698.00
2011 12,494,523.00

The desk audit of the companys accounts by Ghana Revenue authority

has resulted in overpayments as follows;

YEAR TAX OVERPAID

2009 726,155.83
2010 580,033.14
2011 1,126,726.19
 The Ghana Revenue Authority has contracted your firm to undertake tax
audit of the relevant years to confirm the overpayments.

The Tax Services Manger of your firm has instructed you to draft quality
control procedures suitable for the tax audit of PBS Limited. (10 marks)

(b) During the course of the audit the Managing Director and the Chief
Finance Officer of PBS Limited made a lot of verbal representations of
which you informed your Manager Tax Services.

Your Manager has requested you to obtain a Letter of Representation.

Explain clearly what this letter is and what you expect to find in it.
(10 marks)

QUESTION 4

(a) Governments in recent years have ordered the carrying out of forensic
auditing of various state institutions upon assumption of political power.

(i) Explain clearly your understanding of forensic audit. (2 marks)

(ii) Forensic audit could be proactive or reactive depending on its

application. Explain each application as you understand it.
(4marks)

(iii) There are several forensic audit techniques available to the

investigator or tax auditor.

State and describe four such techniques in forensic investigation.

You are required to present your answers in a form suitable for

presentation at a seminar for Local Government Officials. (9 marks)

(b) During the course of negotiations for takeovers, mergers, acquisitions etc.,
the directors of a company needs to assure potential investors that due
diligence have been carried out in all aspects of their company including
verification of tax liabilities and/or overpayments.

What is due diligence? (5 marks)

QUESTION 5

(a) Mr. Tongo is the Managing director of Tongo Impex Limited, a newly VAT
registered company based in Sunyani, Brong Ahafo Region of Ghana.

You are also a newly recruited tax expert with Abongo and Associates, a
firm of Chartered Accountants and Business Advisors.
 You are to explain in writing to Mr. Tongo in detail what constitutes
DEDUCTIBLE INPUT TAX in accordance with Section 24(1) of the Value
Added Tax Act, 1998 (Act 546). (3 marks)

(b) You are required to design a suitable audit programme for ascertaining
deductible input tax for use by the firm. (12 marks)

(c) State and explain briefly any exemption under Section 24 of the Value
Added Tax Act, 1998 (Act 546). (5 marks)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
FEBRUARY 2013 EXAMINATIONS
PROFESSIONAL LEVEL
PAPER 7 TAX AUDIT AND INVESTIGATIONS
MARKING SCHEME
ANSWER 1
(a) The two simple premises upon which directional testing are based are as
follows:
(i) That errors in the financial statements are either over-or under-
statements. These are either omissions or misstatements of items
included in the accounts.
(ii) That the double entry system provides auditor with a set of links
between asset, liability, revenue and expense accounts. To
Overstate an asset, an income account or a liability must be
overstated (or another asset account or expense account
understated)
(iii) Carrying out a primary test of an asset account balance (eg.
debtors) for overstatement the effect on the reciprocal population
is similarly tested (eg. sales income).

(iv) Conversely to (iii) above, by testing sales income for

understatement, the auditor obtains evidence that other credit
balances are not overstated and debit balances are not
understated (eg. debtors)

(v) Overstatement tests must start with the monetary population in the
account balance (accuracy tests to test that what is included
should be included)
(vi) Understatement tests are tests for omissions. These tests usually
begin with a non-monetary population (eg. when testing sales for
understatement, the population for selection is normally dispatch
notes. (1 mark each for any four correct answers)

(b)(i) MEMORANDUM
FROM: Audit Clerk }
TO: Manager Tax Audit & Assurance }
Date: 07/01/2013 }
SUBJECT: LIVE TOGETHER ENTERPRISE LIMITED } 2 marks for
TIN: XXXX } memorandum
YEAR OF ASSESSMENT - 2012 }
BASIS PERIOD 01/03/2011 30/04/2012 }
 Please find attached the desk audit report of above-mentioned company
for your necessary action.

Thank you.

Signed.

The Managing Director }

Live Together Enterprise Limited }
Kasoa }
}1/ 2 mark
Dear Sir, }
}
AUDIT REPORT }
FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012 }
YEAR OF ASSESSMENT 2012 }
TIN: XXXX }

We are happy for the submission of your companys financial statement for the
year ended March 31, 2012. We have completed examination of the accounts
and wish to bring our observations to your notice.

1. Additions to Fixed Assets

Additions to fixed assets amounted to GH7,750,000.00. Kindly submit

supporting documents attesting to ownership and value. You may also
take note that you are required by the Internal Revenue Act (Act 592) to
inform the Commissioner-General upon acquisition in order to attract
capital allowance.

2. Stocks
Kindly submit stock schedules to indicate stock in trade and consumable
stores.

3. Debtors
Kindly submit schedules of debtors indicating trade debtors and other
debtors.

4. Bank Balance
You are required to respectfully submit your bank statements supporting
all your bank accounts.

5. Creditors
Please furnish us with a schedule of creditors indicating trade creditors
and other creditors.

6. Dividends
Kindly furnish us with evidence of withholding taxes deducted and paid.
7. Addition to Stated Capital
Please indicate sources of funding of this addition.

8. Directors Loan
Kindly furnish us with particulars of the source of additions.

9. Business Promotion/Tender Expenses

Please indicate beneficiaries of these expenses.

10. VAT Paid

The VAT payment is not a chargeable expense and will therefore be
added back to profit in revising your assessments.
(1 mark each for any six correct answers)

Counting on your co-operation. }

}
Thank you. }
} mark
Yours faithfully }
}
Signed. }

(b)(ii) MEMORANDUM }
}
FROM: Audit Clerk }
TO: Manager Tax Audit & Assurance } mark
Date: 08/01/2013 }
SUBJECT: LIVE TOGETHER ENTERPRISE LIMITED }
TIN: XXXX }
DESK AUDIT REPORT }
FINANCIAL STATEMENTS FOR THE YEAR ENDING MARCH 31,
2011 AD 2012

Please find below a report of the desk audit I carried out on Live Together
Enterprise Limited for the years ending March 31, 2011 and 2012.

The tax files were examined to confirm the following;

(1) Whether there is documentary evidence of the fixed assets acquisition on

file (whether the Commissioner-General was informed);

(2) Any information on bank accounts such as account numbers, branches

signatories etc.

(3) Records of all tax payments such as;

(i) Company Tax
(ii) PAYE Tax
 (iv) Withholding Taxes
(v) Dividend Tax
(vi) VAT

(4) Any information on the increase in stated capital such as stamp duty paid
and sources of the finance.

(5) Details of the directors loan who contributed what and sources of the
finance.

(6) Prepare performance indicators covering a period of five years including

2011 and 2012.

(7) Personal details of directors and other principal officers of the company.

(8) Details of any contract tendered and won.

(1 mark each for any six correct answers)

Please, submitted for your necessary action. }

} mark
Thank you. }
}
Signed. }

ANSWER 2(a)

BRIEFING PAPER
(i) Duty Drawback or Refund

Regulations may prescribe that a drawback of the whole or any part of

any duty or tax paid may be granted on goods as may be prescribed,
and the conditions under which the drawback may be allowed. (Section
40). (1 mark)

(a) The payment of money out of duties or excise duties shall be paid
by the Commissioner-General on the proper debenture or other
document certified by the proper officer.

(b) The owner of any goods entitled to drawback shall make and sign a
declaration on the debenture that the conditions under which
drawback is allowed has been fulfilled.

(c) The Commissioner-General may require the owner to produce

satisfactory evidence of the landing out of Ghana or disposal of
any goods exported before certifying the debenture.

(d) All claims for drawback shall be made within a period of twelve
months reckoned from the date of exportation of the relative goods
or the performance of the conditions on which drawback is allowed
as the cash may be.
 (e) All claims for overpayments or refunds of any duty paid shall be
made within six (6) years from the end of the financial year to which
the claim relates.

(f) The Commissioner-General shall return any money which has been
overpaid as duty if the proper document for the overpayment is
certified by the proper officer. (1 mark for any four correct answers)

(ii) Every manufacture shall within ten (10) days after the end of every month
or any longer period that may be prescribed letter to the commissioner-
General in the approved form an account of :

(a) all materials in or received into his factory,

(b) all excisable goods manufactured, delivered, used, removed to or
from another factory or to or from a warehouse lost by evaporation,
leakage or other cause or otherwise disposed of; and
(c) any duties which have become due or have been paid during that
month or other prescribed period on any goods manufactured by
him. (1 mark each)

PREPARED BY: DATE: } mark

. }

ANSWER 2(b)

The items required to be included in the approved form are:

(a) all materials in or received into the factory
(b) all excisable goods manufactured, delivered, used, removed to or from
another factory or to or from a warehouse lost by evaporation, leakage,
or other cause or otherwise disposed of.
(c) any duties which have become due or have been paid during that
month or other prescribed period or any goods manufactured.
(1 mark each)

(a) Audit Programme

(i) check additions and cross-casts of the purchase day book and
purchase returns book.
(ii) check postings from the day books to the nominal ledger accounts
and to the control accounts.
(iii) vouch purchase day books and purchase returns day book to
invoices and credit notes.
(iv) scrutinize the records for large or unusual transactions and vouch
these items checking postings to the accounts.
(v) check invoices and credit notes with the day books, ensuring that
the analysis is correct, and check to creditors ledger.
 (vi) vouch invoices to orders
(vii) agree prices charged on invoices and credit notes to suppliers
pricelists, agreements or the relevant evidence.
(viii) check calculations and additions on invoices and credit notes.
(ix) vouch invoices with goods received records.
(x) Trace goods into stock records.

(b) Audit Programme

(i) obtain production records for each month and for each item.
(ii) check the cast
(iii) Check goods dispatched notes or goods outwards records at the
factory or warehouse.
(iv) Trace goods outwards from invoice to dispatch notes to stock
records.

(c) Audit Programme

(i) agree duty paid to VAT receipt
(ii) trace payment to cash book
(iii) agree duty due or payable to VAT Service excise duty assessment
(v) trace payment to bank statement
(1mark for any eight correct answers)

ANSWER 3(a)

MEMORANDUM

FROM: Audit Senior }

TO: Manager Tax Services }
Date: 09/01/2013 } mark
SUBJECT: QUALITY CONTROL PROCEDURES }
As instructed by you, I wish to submit the following quality control procedures for
your approval, please.

(1) Allocation of Staff

Staff assigned to the audit must have sufficient knowledge and
experience in the audit of cocoa processing companies in Ghana.

(2) Staff Briefing

Staff who would be assigned to the audit should be thoroughly instructed
on the following:

(i) Objectives of the audit i.e. verification of the correctness of the

taxes overpaid.
(ii) Timing required timing of the audit should not interfere with the
taxpayers operations for example.
 (iii) The overall plan of the audit.
(iv) Significant accounting and auditing problems.
(v) Related parties Cocobod and its subsidiaries.
(vi) The need to bring problems and put upon enquiry situations to
superiors during the audit.

(3) Audit completion checklist the checklist must have sections for
completion by staff, supervisor and reporting partner. This will ensure that
no matter is overlooked.

(4) Contentious Matters all problems, special difficulties, potential add-

backs to profit, revision of capital allowance computation, revision of
directors, management and staff salaries, etc. must be identified,
recorded and reported to the reporting partner who may also discuss it
with the other partners.

(5) Documentation all audit work and conclusions reached must be fully
recorded in the working paper supported if need be with original or
photocopies of important documents.

(6) Reviews all audit work must be reviewed by the reporting partner.

(7) Acknowledgment all audit work and review action should be

acknowledged in writing by the performer.

(8) Supervision supervisor should monitor the progress of the audit to

determine whether:
(i) Assistants have the necessary skills and competence to carry out
their assigned tasks.
(ii) Assistants understand the audit directions, and
(vi) The work is carried out in accordance with the overall audit plan
and the audit programme.

(9) Audit Finding audit findings (queries) must be discussed with the
taxpayer and finalized.

(10) Audit Report Preparation of audit report for the attention of the
reporting partner. (1 mark each for any nine correct answers)

Please submitted for your necessary action. }

}
Thank you. } 1/ 2 mark
}
Signed. }

ANSWER 3(b)

(i) A letter of representation is a letter from management to the auditor

confirming in writing opinions conveyed to the auditor orally and it is
obtained on the occasion of each audit.
(ii) The letter should contain only matters which are material and for which
the auditor cannot obtain corroborating evidence.

(iii) The principal items will be matters of which management alone have
knowledge and matters of judgment and opinion.

(iv) (a) the letter should also contain the directors acknowledgment for
their responsibilities for preparing Financial Statements which give a
true and fire view;
(b) a statement that all accounting records have been made
available to the auditors;
(c) all transactions undertaken by the company have been properly
reflected and recorded in the books;
(d) all other records and related information including minutes of all
management and shareholders meetings have been made
available to the auditors.
(e) it is usually dated the same day as the directors approve the
accounts. (2 marks for any five correct answers)

ANSWER 4(a)
(a) Forensic auditing could be described as the application of auditing skills
to situations that have legal consequences. Forensic audit involves the
systematic gathering of evidentiary data through the use of recognized
investigative techniques that can be presented in court of law. (2 marks)

(b) (i) Proactive Forensic Audit:

This is the use of auditing skills to prevent fraud by identifying and rectifying
situations which could lead to frauds being perpetrated. (2 marks)

(ii) Reactive Forensic Audit:

This is the investigation of cases of suspected fraud so as to prove or
disprove the suspicions, and if the suspicions are proven, to identity the
persons involved, support the findings by evidence and to present the
evidence in an acceptable format in any subsequent disciplinary or
criminal proceedings. (2 marks)

(c) (i) Public document Reviews and Background Investigations:

At the onset of an investigation, the forensic specialist may conduct or
engage another specialist to conduct a background investigation of the
business, its owners, employees, related parties, competitions; and any
potential targets of the investigation. The process continues as new
information or new individuals are identified that warrant further
investigation.

(ii) Interviews of Knowledgeable Persons:

The primary purpose of an interview is to gather evidence through facts
and other information supplied by witnesses. With each successive
 interview, the forensic specialist should obtain background information
about the witness, the subject and the target(s) of the investigation.

(iii) Confidential Sources:

In nearly every organization, there are people who are willing to share
information if they can remain anonymous. In a number of cases,
confidential sources provides information through employees hotlines and
anonymous letters. Additionally, former employees may provide valuable
information through letters of resignation and exist interviews.

(iv) Laboratory Analysis of Physical and Electronic Evidence:

In addition to the laboratory analysis of physical evidence such as finger-
point analysis, forged signatures, and fictitious or altered documents,
powerful computer software allows the specialist to perform procedures
such as hard disk imaging, and analysis of financial information and
computer or misuse.

(v) Physical and Electronic surveillance:

Law enforcement agencies routinely conduct physical and electronic
surveillance. Private investigators and other specialist also perform these
techniques under limited circumstances of forensic specialist may
recommend physical or electronic. (2 marks each for any four correct
answers)

ANSWER 4(b)

Due diligence is a term used to describe a wide range of services, with or

without the inclusion of an expression of professional opinion, performed by
professional accountants. Due diligence is work commissioned by a client into
agreed aspects of the accounts, organization and activities of an undertaking.

For example when company X takes over company Y, then it is important that
company X can show that many aspects of the affairs of company Y are in fact
as they understand them.

For example the assets and liabilities exist as stated and are not over-
understated.

Usually due diligence is carried out before negotiations are concluded.

(5 marks)

ANSWER 5(a)
14/01/13 }
}
The Managing Director } mark
Tongo Impex Limited }
Sunyani }

Dear Sir,
EXPLANATION OF DEDUCTIBLE INPUT TAX

Deductible input tax is tax on goods and services purchased in Ghana or goods
and services imported by him and used wholly, excessively and necessarily in
the course of his business.

This is found under Section 24 of the Value Added Tax Act, 1998 (Act546).

We are ready to offer any further explanation you may require.

Thank you. (2 marks)

Yours faithfully }
} mark
Signed. }

5(b) The audit programme required will deal with:

(1) Local taxable supply
(2) Importation
(3) Removal of goods from bonded warehouse
(1 mark each)

The audit programme required are as allows:

(a) Local taxable supply

(i) Ensure that supplier of goods or services is VAT registered
(ii) Supply is covered with VAT invoice or tax invoice issued under
Act 546
(iii) Ensure that the supply is a taxable supply
(iv) Agree VAT paid per the invoice
(1 mark each for any three correct answers)

(b) Imports
(i) Obtain customs entries form covering the goods
(ii) Ensuring that the goods are taxable supply and not exempt
(iii) Agree VAT paid per the customs entries form
(1 mark each)

(c) Removal of Goods From Bonded Warehouse

(i) Obtain customs entries form covering the supply
(ii) Ensure that the supply is not exempt supply
(iii) Agree the amount of tax paid
(iv) Ensure that input tax deduction is not taken more than once
(1 mark each for any three correct answers)

5(c) Exemptions under Section 24 of Act 546 are as follows:

No input tax deduction shall be made on:

(i) Purchases or imports on exempt supplies by the taxable person
(ii) Purchases or imports after the expiration of three (3) years from the
date the deduction accrued.
(iii) Supply or import of motor vehicles or vehicle parts unless the
taxable person is in the business of dealing in motor vehicles or
spare parts.
(iv) Entertainment including restaurant, meals and hotel expenses unless
the taxable person is in the business of providing entertainment.
(v) Taxable supply or import for personal use.
(1 mark each)
 CHARETERED INSTITUTE OF TAXATION (GHANA)

FEBRUARY 2013 EXAMINATIONS

FINAL LEVEL 1 PAPER 8 OIL AND OTHER MINERALS TAXATION

RECOMMENDED PASS MARKS 50%

EXAMINERS REPORT

INTRODUCTION

All the question in this paper were compulsory and candidates were expected to answer or attempt all
the question.

QUESTION 1

This question was a twenty (20) marks question that required a discussion of the functions of the
Petroleum Commission (PC) in view of the apparent concerns of players in the industry of the dual role
of the Ghana National Petroleum Corporation (GNPC) as both an operator and a regular of the industry.
It also requested candidates to express their view as to whether or not the establishment of the PC had
resolved the industry concerns.

Expected approach to answering the question

It was expected that candidates approach the question logically by discussing:

1. GNPC as an operator;
2. GNPC as a regular;
3. Identifying the problem or issues associated with GNPC playing the dual role;
4. The need to separate the operator role by establishing the PC. In other words, why establish the
PC; and
5. Whether or not the establishment of the PC has resolved the issues.

On this question, five (5) candidates representing 11% achieved the pass mark of half of the total of
twenty (20) marks available.

Reasons why most of the candidates did not achieve the pass mark are enumerated as follows:

1. Failure of candidates to approach the question in a logical manner;

2. Candidates did not appreciate clearly the roles of GNPC and its effects on the industry;
3. Most candidates failed to discuss why the PC was established and the specific roles of the PC;
4. Most candidates failed to appreciate how the PC has legally resolved the issues posed by GNPC
regarding their dual role (i.e. as operator and regulator).

General Comments:
 Of the five (5) questions for this examination, this question was poorly answered compared to the
rest.

Candidates answered this question in a vague manner rather than addressing the question on hand.

To achieve a pass mark, candidates needed to have a reasonable knowledge of the regulatory of the
GNPC and the PC and their interrelationships.

QUESTION 2

Question two (2) was also a twenty (20) marks question that required candidates to identify and
discuss the specific areas where tax reforms were made in the upstream petroleum industry. The
question also required candidates the challenges/problems the reforms posed to the mining sector.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Give an introductory background to the reforms in the extractive industry (i.e. upstream
petroleum and mining industry);
2. Identify and discuss the specific areas of the reforms; and
3. Discuss the challenges/problems posed to the mining sector

On this question 19 candidates representing 42% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Candidates failed to provide an introductory background, which would have highlighted the
main objectives of the reform. (i.e. Harmonisation of the Tax regime in the extractive industry);
2. Most candidates could not relate sufficiently to the reforms that were introduced recently in
the extractive industry and therefore were unaware of the developments in the industry.
Candidates therefore gave answers that were generic in the tax environment;
3. Most candidates provided answers that related mostly to the upstream petroleum sector and
neglected the mining sector;
4. In certain instances, candidates mentioned only the new rates applicable to the industry without
making references to the provisions of the Act to which the changes related;
5. In addressing the problems posed by the reform, most candidates explained the reforms rather
than explaining the problems it posed.

General Comments:

This question was reasonably well answered compared to question one (1).

To achieve a pass in this question, candidates needed to be aware of the tax reforms that are being
introduced in the industry and the challenges such reforms pose to the players of the industry.
Question 3

The first part of question three (3) was computational in nature with twenty (20) marks and required
candidates to determine the Chargeable Income of an entity in the upstream petroleum industry. The
second part of six (6) marks was a follow-up theory aspect of the question and required candidates to
identify either incomes or expenses that they did not allow in their computations and explain they did
not allow such income or expenses.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Set put and answer the question in accordance with the requirements of the Petroleum Income
Tax Law, 1987 (PNDCL 188) (PITL); and
2. Identify the six (6) items and provide comments in accordance with section 3 (1) of the PITL.

On this question 26 candidates representing 58% achieved the pass mark.

Reason why some candidates did not pass this paper include:

1. Candidates failed to follow the format for determining chargeable income of an upstream
petroleum company as provided for in the PITL and instead used the approach for determining
chargeable income under the Internal Revenue Act, 2000 (Act 592) as amended;
2. Some candidates failed to explain the basis for not allowing certain incomes and expenses in
determining chargeable income.

General Comments:

This question was fairly well attempted with 58% pass. This is due to the fact that candidates prefer
computation questions to written or theory questions.

It is also important to mention that candidates need to appreciate the requirements of PITL when
computing the chargeable income.

Question 4

Question 4 was made of two parts namely (a) and (b). Part (a) which was for five (5) marks sought to
examine candidates understanding of the strategic importance of a Petroleum Agreement.
Part (b), was for 10 marks and tested both a technical and current hot tax issue in Ghana regarding
taxation of foreign national employees working for contracts, sub-contractors and affiliates in
Ghana.

It required candidates to discuss the various provisions in the PITL and the Petroleum Agreement
regarding the issues as well as providing a reasoned conclusion on the tax implication of the
employees.

Expected approach to answering the question

It was expected that candidates approached the questions as follows:

1. For part (a), mention specifically Article 12 (1) and highlight some of the contents on Article 12
of the PA relating to the fiscal concessions as well as the importance of the PA:, and
2. In terms of part (b), discuss section 28 of the PITL relating to foreign national employees and
Article 12.8 of the PA and provide a reasoned conclusion.

On this question 18 candidates representing 40% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Part (a) which was a five (5) marks question was fairly well answered.
2. However, candidates had challenges in answering part (b) partly due to their inadequate
knowledge and understanding of the PITL;
3. Even though most candidates knew the 30 days provision in the PA relating to foreign national
employees, they failed to appreciate how this related to the provision of section 28 of the PITL
and therefore could not link their answers in a provision of the PITL and the PA, hence arriving
at an inappropriate conclusion.

General Comments:

Candidates did not really discuss the provisions of the PITL and PA relating to the issue but just went
ahead to mention the 30 day or less rules affecting the foreign national employees. To achieve a
reasonable pass mark, candidates need to know the law and be able to apply the law.

Question 5

Question five (5) is a fifteen (15) marks question that requires candidates to explain the strategic
importance of the following three terms used in petroleum operations. The terms are Additional Oil
Entitlement; Petroleum Holding Fund; and Prohibited use of Petroleum holding fund. Each term carries
five (5) marks.

Expected approach to answering the question

It was expected that candidates approach the question as follows:

 1. Mention and explain the key elements of each if the terms; and
2. Explain the strategic importance of each term.

On this question 35 candidates representing 78% achieved the pass mark.

Reasons why a few candidates still did not pass this paper include:

1. Most candidates explained the additional oil entitlement satisfactorily. However, they had few
challenges with what constituted the receipts of the Petroleum Holding Fund and the prohibited
use of the Petroleum Holding Fund;
2. In terms of the Petroleum Holding Fund, candidates discussed other funds under the Petroleum
Revenue Management Act, 2011 (Act 815) instead of discussing the receipts and the make-up of
the Petroleum Holding Fund, and;
3. On the use the Prohibited use of the Petroleum Holding Fund, a few candidates failed to achieve
a pass mark by not identifying the prohibitions on the use of the fund.

Overall comments on the questions and recommendations

Generally, candidates made little reference to the substantive laws/Acts relating to the questions
asked thus demonstrating to the examiner that they did not really appreciate the laws that affected
the areas being examined.

Candidates need to really read and understand the Acts relating to the industry to ensure good
performance at the examinations.

Examiner: Isaac Nyame (FCIT)

 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
FEBRUARY, 2015 EXAMINATION
FINAL 1: PAPER 7 TAX AUDIT & INVESTIGATIONS

TIME ALLOWED: THREE (3) HOURS

ATTEMPT ALL QUESTIONS

Question 1

After the successful completion of your Professional Accountancy studies and having
obtained your Advance Professional Certificate in Taxation, you have recently been
employed by Ghana Revenue Authority as tax auditor. Four months into your job, you
have been assigned to lead the tax audit team to undertake an audit of Mankata
Breweries Limited for the year ended 30 June, 2013 and 2014. Before you commence
the audit, your district manager has called for a pre-audit briefing meeting to be
attended by you and the audit manager.

At the meeting, the district manager expressed a lot of anxiety on the quality of work
being undertaken in the office. He informs you and the audit manager that he has
received reliable information that, there is an increase in the number of objections and
appeal cases because of inappropriate audit assessment and reports being issued by
Ghana Revenue Authority. He is worried that if the audit unit does not improve and
adopt modern audit procedures, the authority could end up facing litigation and possible
court action on the audit being done, an undesirable event. He has asked you and the
manager for suggestions on what needs to be done to avoid such an eventuality.

Before the audit manager responds, you quickly chip in and inform the two that, you
have a suggestion as to the approach the office should adopt in carrying out its work.
You advise that Ghana Revenue Authority should adopt a risk based approach on all
its tax audits. You further explain that there are benefits to the Ghana Revenue
Authority in using the audit risk model in the planning stages of the audit. The audit
manager also emphasizes that, the concept is now the modern way being adopted
globally to conduct an audit due to its importance.

The district manager seems relieved on hearing the suggestions made by you and the
audit manager. He has requested you to put your ideas in writing and leave the report
on his desk for him to study further.

Required:
(a) Write a memo to the district manager explaining briefly, what you mean by the
term a risk-based approach to a tax audit. (4 marks)

(b) In your memo to the district manager, explain three benefits each to the
taxpayer and the Ghana Revenue Authority when adopting a risk based
approach on all its tax audits. (6 marks)

(c). As part of your answer to (a) above, identify three audit risk each from both
taxpayers and tax administrators perspective. (5marks)

(d). Identify the inherent risks that may be found in Mankata Breweries Limited
which will need to be discussed by the audit team before embarking on the audit.
(5 marks)

QUESTION 2
You are a member of a team assigned to conduct a tax audit of Moyongo Engineering
Services limited. As part of the audit, your team leader has asked you to confirm the
additions and accounting disclosure of the clients computers acquired during the year.

Your audit supervisor has instructed you to apply both testing all the transactions and
the use of sampling. You selected all the additions during the year and vouched to the
suppliers sales invoices in order to determine both the assertions of existence and
ownership of the computers.
Required:

a) Explain FOUR circumstances that are appropriate for testing all the
transactions. (4 marks)

b) Explain the factors to be considered before using statistical sampling. (6

marks)

c) Explain the steps to be followed if the audit sampling has not provided a
reasonable basis for conclusion about the population that has been tested.
(5 marks)

d) State the consequences of determining the assertions of existence and

ownership through the inspection of document. (5 marks)

QUESTION 3
Eazy Way limited operates a business conglomerate in Accra and other parts of Ghana.
The company currently employs 350 workers working in the various units of the
company, of which 250 are permanent employees. You are the audit supervisor at
Large Taxpayer Office of Ghana Revenue Authority and are currently reviewing the
P.A.Y.E returns and other attached schedules of Eazy Way limited, in preparation for
the payroll field audit

A visit to the company and the initial interview with the Human Resources Manager of
the company revealed that, permanent employees work a 40 standard hours per week
as specified in their employment contract. However, when there is a shortage of staff
especially during the peak season, staff can be requested by management to work
additional shifts as overtime. This can either be paid on a monthly basis or taken as
days off. Employees record any overtime worked and days taken off on weekly
overtime sheets which are sent to the payroll department. The standard hours per
employee are automatically set up in the system and the overtime sheets are entered
by clerks into the payroll package, which automatically calculates the gross and net pay
along with relevant deductions. Non permanent employees are paid on a monthly basis
by bank transfer for their contracted weekly hours and for any overtime worked in the
previous month. If employees choose to be paid for overtime, authorization is required
by department heads of any overtime in excess of 30% of standard hours but most
often being done by accounts clerks. If employees choose instead to take days off, the
payroll clerks should check back to the overtime worked report. The overtime worked
report, which details any overtime recorded by employees, is run by the payroll
department weekly and emailed to department heads for authorization. The payroll
department asks department heads to only report if there are any errors recorded.
Department heads are required to arrange for overtime sheets to be authorized by an
alternative responsible official if they are away on annual leave; however, there are
instances where this arrangement has not occurred. The payroll package produces a
list of payments per employee; this links into the bank system to produce a list of
automatic payments. The finance director reviews the total list of bank transfers and
compares this to the total amount to be paid per the payroll records; if any issues arise
then the automatic bank transfer can be manually changed by the finance director.

Required:
a) List FOUR control objectives of a wages system. (4 marks)

b.) Identify and explain THREE deficiencies in respect of the payroll system of
Eazy Way Limited: (6 marks)

c.) Describe substantive procedures you should perform at the field payroll audit
to confirm the completeness and accuracy of Eazy Way Limiteds P.A.Y.E returns.
6 marks

Eazy Way Limited deducts employment taxes from its employees wages on a monthly
basis and pays these to the Large Taxpayer Office in the following month. At the year
end the financial statements will contain an accrual for income tax payable on
employment income. You will be in charge of auditing this accrual.
Required:
(d) Describe the audit procedures required in respect of the year end accrual for
tax payable on employment income. (4 marks)

QUESTION 4

a.) You are reviewing the file of audit team that has just completed field work. One of
the concerns raised by you concerns the consistency of accounting principle and that of
comparability of accounting information with previous years.

You are required as an auditor to distinguish between changes that affect

consistency and those that may affect comparability but not consistency. Give an
example of each. (6marks)

b. You have received a letter from Wangara Hotel Group concerning incident that took
place on 27th October, 2014. On that date, there was a burglary at the Groups
warehouse where inventory is stored prior to dispatch to various units of the Hotel.
CCTV filmed the thieves loading a lorry belonging to the Group with boxes containing
goods. The last inventory count took place on 31 August 2014.

The Group has insurance cover in place and the taxpayer had written to request an
issue audit to determine the amount to be claimed in respect of the burglary. Since the
insurance does not cover all the cost of assets, some of the losses need to be claimed
as expenses as a result of thefts.

Required:
In respect of the theft and the associated insurance claim:
(i) Identify and explain the matters to be considered, and the steps to be taken in
planning the issue audit; and (6marks)
(ii) Recommend the procedures to be performed in determining the amount of the
claim. 8marks

QUESTION. 5
Returns on Excise Duty Payable shall be submitted to the Commissioner-General in the
approved Form1 by each manufacturer within ten days of the close of each month or
any longer period that may be prescribed except where other provision is made by law
for periodical returns. (Section 57 (3) of Customs, Excise and Preventive Service
(Management) Law, 1993).

Required to:
a. State four items that must be shown in the Excise Duty Return Form 1

b, You have been asked to lead a team to conduct an Excise Duty audit of ABL.

In the course of your examination of ABLs manufacturing activities, the following

information had been provided concerning the operational activities of the company
during the year under review:

1. Imports and Production data:

a) Ethyl alcohol 96% imported during the year was 150,000 drums (Each
drums contains 300-litre volume)
b) Each finished product per bottle contains 0.75 litre volume
c) Number of bottles per carton of finished products is 12
d) Opening stock of ethyl alcohol: 25,000 drums
e) Closing stock of ethyl alcohol: 30,000 drums

f) Opening stock of finished products: 35,000 cartons

g) Actual stock per reconciliation: 410,280 cartons
h) Alcohol content of finished products: 40%
2. Sale & Deliveries:
i. Output delivered for export to Burkina Faso in October, 2014: 6,080,000
cartons
ii. Output delivered for sale in Ghana: 4,077,200 cartons
iii. Ex-factory price per carton: GH30

3. Other information
a) Rate of Excise Duty on finished products: 25%.
b) Upfront Excise Duty per drum paid at Tema port: GH185
c) Raw materials were used on a first in, first out basis.

Ghana Revenue Authority has accepted ABLs provision of 5% for losses in processing
and storage due to spillage, evaporation and breakage. Output below or above this
accepted provision is subject to investigation, and the relevant statutory provisions in
sections 58 and 59 of PNDCL 330 (1993) are applied accordingly.

Required:
i. On the basis of ethyl alcohol used, what should be the standard output of
cartons of spirits made by ABL during the twelve-month period?
(2 marks)
ii. Did ABL qualify for excise duty drawback? If you think it did, show how
much. (2 marks)
iii. What is the total amount of excise duty payable by ABL on manufacturing
activities during the year? (2 marks)
iv. What is the total amount of excise duty paid by ABL on manufacturing
activities during the year? (1 mark)
v. What is the amount of excise duty under-paid by ABL during the year?
(2 mark)
vi. What is the penalty, if any, payable on stocks not accounted for by ABL?
(2 marks)
(Total: 11 marks)
 CHARTERED INSTITUTE OF TAXATION, GHANA
FINAL LEVEL 1 PAPER 8 - OIL AND GAS EXAMINATION PAPER
FEBRUARY 2015

Q1. Gold Ltd. is a mining company operating in the Terra mining area in Ghana for the past
twenty years. It has disposed of 25% of its exploration and production rights in the Terra mining area
for a sum of GH50,000,000 in 2014. In the same year Gold Ltd acquire 10% exploration and
production rights in the Sunshine mining area for GH25,000,000.

The highlights of 2014 revenue and expenditure disclosed in tax returns filed by Gold Ltd. Include the
following:

Revenue GH
Consideration received from sale of exploration and production rights 50,000,000
Gross income from its operations in 2014 200,000,000
Gross Dividend from a resident company in which it has 35% voting rights 50,000
Total Revenue 250,050,000

Expenses include the following:

Operating Cost 70,000,000
Depreciation 10,000,000
Exploration and production rights (Sunshine mining area) 25,000,000
Administrative Expenses 5,000,000

Profit before tax 40,000,000

The written down values of classes of assets brought forward from 2013 are as follows:
Class 1 assets 2,000,000
Class 2 assets 4,500,000
Class 3 Assets 5,000,000
Class 4 Assets 600,000

Identify the tax types that Gold Ltd will be liable to pay in 2014 and also compute the liability for
each tax type. State the assumptions underlying your calculations.

Additional Information

The capital allowance rates for the classes of assets are as follows:

Class 1 40% on reducing balance basis

Class 2 30% on reducing balance basis
Class 3 20% on straight line basis
Class 4 20% on reducing balance basis

Gold Ltd. claimed GHC1,000,000 as capital allowances for class 3 assets in 2013.

TAX RATES
Corporate - 25% or 35%
Capital Gains Tax 15%
Gift Tax 15%
Branch Profit 10%
Withholding Tax Rates
Royalty 5%
Dividends and Interest - 10%
Natural Resource Payments 10%
Technical Services Fee 15%
Management Fee 20%

Q2. Explain briefly the following and state their tax treatment under the relevant tax laws of
Ghana.

(a) Ring Fencing;

(b) Finance Lease; and
(c) Thin Capitilisation

Q3 (a) Special Carried Interest Allowance is an allowable deduction under the Petroleum Income
Tax Law, 1987 (PNDC Law 188). Please define or explain what is meant by the Special Carried
Interest Allowance.

(b) Under what circumstances can an assessment be regarded as final and conclusive under
the provisions of the Petroleum Income Tax Law, 1987 (PNDC Law 188).

(c) Explain the tax treatment of proceeds realised from the sale of an asset in the year of
commencement and after the year of commencement as provided under PNDC Law 188.
Please note that the sale of an asset here does not refer to assignment of interest in a
petroleum agreement.

Q4 Under the Petroleum Revenue Management Act, 2011 (Act 815) the Ghana Revenue
Authority has been mandated to assess, collect and account for petroleum revenue. Please
mention and write short notes on what constitutes petroleum revenue under Act 815.

Q5 Each Petroleum Agreement provides for the establishment of a Joint Management

Committee. Outline the provisions of a petroleum agreement relating to a Joint
Management Committee.
 MARKING SCHEME

Q2 (a) Ring Fencing This refers to the segregation of the operations of a company into
separate income streams for regulatory reasons or for tax purposes. Cost from one
operation is not allowed to be deducted from the income of another operation.

Under the Petroleum Income Tax Law, 1987 (PNDC Law 188), the chargeable of a
person engaged in petroleum operations is required to be determined for each
petroleum agreement. That is the contract area of a petroleum agreement is ring
fenced for tax purposes. This means that cost from one contract area cannot be
deducted from the revenue of another contract area belonging to the same person.
Under the Internal Revenue Act, 2000 (Act 592) the income from a mining area is
ring fenced for tax purposes. That is expenses incurred in one mining area cannot be
deducted from the revenue of another mining area belonging to the same person.
(5 marks)

(b) Finance Lease This is a commercial arrangement under which a lessor leases an asset to
a lessee. The lessee pays rentals for the use of the asset. The lessor recovers a large part of
or all the cost of the asset from the lease rentals paid. Under finance lease arrangements the
lessee has the option to acquire ownership of the asset.

Under the Internal Revenue Act, 2000 (Act 592), a lease is a finance lease where

(a) the lease agreement provides for transfer of ownership following the end of the lease
term, or the lessee has an option to purchase the asset after expiry of the lease term for
a fixed or an agreed price, or
(b) the lease term exceeds seventy-five percent of the useful life of the leased asset; or
(c) the estimated residual value of the asset after expiry of the lease term is less than
twenty percent of its market value at the commencement of the lease; or
(d) the present value of the minimum lease payments equals or exceeds ninety percent of
the market value of the asset at the commencement of the lease term; or
(e) the leased asset is custom-made for the lessee and after expiry of the leased term it will
not be usable by anyone other than the lessee.

The lease rental payable by the lessee is treated as an expense. The lessor is not entitled to
capital allowance in respect of the asset. The lessor may deduct a capital amount
determined in accordance with guidance issued by the Commissioner-General from the
income from the lease rental to arrive at the taxable profit. (10 marks)
 (c )Thin Capitalisation A company is typically financed ( or capitalised) through a mixture
of debt and equity. Thin capitalisation refers to a situation where a company is financed
through a relatively high level of debt compared to equity. Thinly capitalised companies are
sometimes referred to as Highly leveraged or highly geared.

The way a company is financed has significant effect on the amount of profit it reports
for tax purposes. Interest payable or paid on debt is allowed as deduction to arrive at
the taxable profit of a company. Thus the higher the level of debt , the higher the
interest deducted and consequently the lower the taxable profit.

Countries therefore put in place rules that set limits on interest that can be deducted in
calculating the taxable profit of any person. The limit on the deductible interest is set by
reference to the ratio of interest bearing debt and equity. That is debt equity ratio.
Where debt exceeds the debt equity ratio, the interest on the excess debt is not allowed
as deduction in calculating the taxable profit.

Under the Internal Revenue Act, 2000 (Act 592), the debt equity ratio is two is to one.
(2:1) (5 marks)

TOTAL MARK 20

Q3 (a) Special Carried Interest Allowance:

Definition The gross income derived from the sale or export without sale of petroleum
transferred to a contractor from what would otherwise be the entitlement of the
Corporation where a petroleum agreement has provided for the advance of sums of money
to the Corporation by a contractor in respect of the Corporations participating interest and
for the reimbursement of the advances from the Corporations entitlement to the
production.

Explanation: The SPCI is gross income realised from the sale of the Corporations petroleum
that was surrendered to the Contractor to settle cash calls paid by the Contractor on behalf
of the Corporation in respect of its participating interest. The SPCI is required to be deducted
from the gross income of the Contractor because the Contractor in compliance with the
accounting principle of full disclosure would have included the sale of the Corporations oil in
its turnover and since this a payment of a loan by the Corporation to the Contractor it has to
be deducted, otherwise the Contractor will pay tax on its sum of money advanced to the
Corporation.

3 MARKS

(b) Final and Conclusive Assessment

Under section 22 of PNDC Law 188, an assessment becomes final and conclusive where:
 (i) a valid objection has not been lodged against an assessment. An objection is valid
where it is a written notice stating the precise grounds of the objection, supported
by a projection of the chargeable income and the tax liability, and made within thirty
days of the service of notice of the assessment or within any extended period
granted by the Commissioner-General;
(ii) the tax payable has been agreed to after an objection;
(iii) the notice of refusal has been issued to the taxpayer;
(iv) the tax payable has been determined by a competent court of jurisdiction on appeal;
(v) an appeal against an assessment to a competent court of jurisdiction has been
withdrawn.

(10 MARKS)

(c) Tax treatment of Proceed from sale of Fixed Assets

Under the Schedule to PNDC Law 188 proceeds from the sale of an asset before or in
the year of commencement is required to be deducted from the petroleum capital
expenditure before granting capital allowances in respect of the year of
commencement. The proceeds of the sale of an asset in a year after the year of
commencement is required to be divided into five and the quotient shall be added
to the gross income of the person in that year and in each of the four successive
years.

(2 MARKS)

TOTAL MARK 15

Q4 Petroleum Revenue

Under the Petroleum Revenue Act, 2011 (Act 815) petroleum revenue includes

(i) Royalty in cash or in equivalent barrels of oil or equivalent units of gas;

(ii) Corporate income tax payable by upstream and midstream operators;
(iii) Participating Interest;
(iv) Additional Oil Entitlements;
(v) Dividend from the National Oil Company;
(vi) Investment income derived from accumulated petroleum funds;
(vii) Surface Rentals;
(viii) Capital Gains Tax derived from the sale of ownership of exploration, development
and production rights;
(ix) Any other revenue determined by the Minister to constitute petroleum revenue
derived from upstream and midstream petroleum operations.

(10 MARKS)

Royalty A payment for the right to take oil or gas from the land or the sea. It is levied as a
percentage of the gross value of oil and gas won, irrespective of profitability.
Corporate Income Tax This is the tax payable on income derived from sale of oil and gas
produced. Tax rate agreed in petroleum agreement is 35%.

Participating Interest This includes Initial Interest and Additional Participating Interest

Initial Interest GNPC on behalf of the State is entitled to hold 10% interest in any
petroleum operations in respect of which GNPC does not pay exploration and development
cost but contributes towards production expenses. This is partially a Carried Interest. By
virtue of this interest GNPC is entitled to 10% of any distribution of petroleum or revenue to
interest holders in any petroleum operation.

Additional Participating Interest This is interest that is acquired in any petroleum

operations by GNPC on behalf of the State after the discovery of oil and gas in commercial
quantities. GNPC does not pay the exploration cost but contributes towards development
and production costs. This is also a partially Carried Interest. GNPC is entitled to additional
take in any distribution of oil or gas to interest holders, by virtue of this additional interest.

Additional Oil Entitlement AOE is in the nature of an additional profit tax based on the
rate of return achieved. The AOE is meant to ensure that the State shares in excess profit
accruing to Contractors. The State is entitled to additional oil, if the Contractor achieves a
specified after tax real rate of return.

Example of AOE Structure

Real ROR AOE-Rate

Up to 12.5% 0%

>12.5% - 17.5% 10%

>17.5% - 22.5% 15%

Dividend payable by the national oil company for Governments equity interest in
petroleum operations

Investment Income The PRMA provides for the investment of Ghana Petroleum Funds
(Stabilisation and Heritage) in financial instruments. Interest accruing from such investment
constitutes petroleum revenue

Surface Rental Contractors are obliged to pay surface rentals for blocks assigned to them
for petroleum operations. The rates are charged per square kilometre

Capital Gains Tax Gains from the realisation of an asset is taxable under the capital gains
tax provisions of the Internal Revenue Act 2000 (Act 592) as amended by the Internal
Revenue Amendment Act, 2013, Act 871.

Any other revenue determined by the Minister to constitute petroleum revenue.

(15 MARKS)

TOTAL MARK 25
Q5 Joint Management Committee

The Joint Management Committee (JMC) is required to be established by the petroleum

agreement to ensure that parties to the petroleum agreement can cooperate at all times in
petroleum operations. (2 marks)

Composition- Four representatives of GNPC and four representatives of the Contractor. The
PA provides for alternate for each member who assumes automatically the rights and
obligations of absentee member. GNPC is responsible for designating chairperson of the
JMC. (2 MARKS)

Meetings of JMC At least twice yearly and can be convene by GNPC or the Contractor. Six
members present shall constitute a quorum. Contractor in consultation with GNPC shall be
responsible for preparing the agenda for the meeting and also for keeping records and
decisions of the JMC. Venue of meeting is Accra, Dublin or London. (2 MARKS)

Decisions of the JMC require unanimity but decisions for budget and day to day operational
matters shall be approved by the Contractors representatives. Decisions can be taken
without holding meeting if members notify their consent to specified matters. Experts can
be invited to assist in the discussion of technical or other matters that require expert advice.

(2 MARKS)

Sub-committees The JMC can establish sub-committees to assist in the performance of its
functions: Technical Sub-committee, Auditing Sub-committee, Accounting Sub-committee.

(2 MARKS)

Functions-

Oversight of Exploration Activities- The JMC is responsible for review of work programmes
and budget for all exploration activities. Review of appraisal programmes after discovery of
petroleum. Review of annual production schedules. JMC approves lifting schedules. Review
all Contractors report on petroleum operations.

Other Functions - JMC shall approve insurance programme and the programmes submitted
for training and technological transfer and their associated budgets. (2 MARKS)

TOTAL MARK 15
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
FEBRUARY 2015
PAPER 9- International taxation
Marking Scheme

Question 1

Foremost, Mr. Billy Fry would not be liable to tax in Ghana assuming he left Ghana immediately
he finished his assignment on 31st October, 2014 because his remuneration would have fallen
within the exception to the general rule that remuneration income is sourced and taxed in the
country where the services are performed and he is paid by a non resident of Ghana and not by
the branch in Accra. (2 marks)

However, Mr. Billy Fry will be liable to tax in Ghana even if he left Accra on the 31st October,
2014 because his salary was invoiced and charged to the branch in Ghana. The exception to
the general rule will not apply when the salary was on charged to the branch in Accra. The
branch will be allowed to deduct the amount from corporate income if the expense is wholly,
necessary and exclusively incurred as in section 13 of Act 592, Internal Revenue Act 2000 as
amended. (6 marks)

Finally, Mr. Billy Fry is liable to Ghana tax because Paragraph 5 of the commentary to Article 15
of Double Tax Agreements states that number of days of physical presence is the test for
determining an individuals residence for tax purposes and therefore days spend on holidays
are included. As he has stayed in Ghana for longer than the 183 days, the exception of Article
15 (2) no longer applies. (10 marks)

Question 2

The time limit allowed to qualify for exemption from tax in the United Kingdom is 2 years for
teachers invited by the UK Government or its political subdivision or local authority or by a
university. (2 marks)

Besides, the research must be in public interest to qualify for the exemption. (2 marks)

In this case the research in wireless technology is considered to be in public interest but
Professor Anagli spent more than the two years stated in the Double Taxation Agreement. For
spending three years on the research he will be liable to tax in the United Kingdom for his
services at the Oxford University for all the three years. (6 marks)

However, Professor anagli could invoke Article 4 (2) of the Double Taxation Agreement and
elect to be taxed by Ghana tax authorities if he could prove that his habitual abode, place of vital
interest and all his economic and family ties are in church in this case, his three years income
will be taxable in Ghana. (3 marks)
Question 3

Transfer Pricing Report on

Western Minerals Limited

1. Transfer Pricing Risk Analysis

The following issues may trigger transfer pricing audit

Western Minerals Limited reported results for 5 years are negative.

The sale of unrefined gold by Western Mineral Limited to its related enterprise, God
Resources International of South Africa.

( mark for each risk identified 1 mark)

2. Controlled Transactions

The sale of unrefined gold by Western Mineral Limited to its related enterprise, Gold
Resources International of South Africa.

Refining of unrefined gold purchased by Gold Resources International from Western

Mineral Limited.

Sale of the groups refined gold on the spot market and forward exchanges by Gold
Resources International.

Uncontrolled Transactions

Purchase of unrefined gold from unrelated gold mining companies in South America

Refining of unrefined gold purchased by Gold Resource International from unrelated

mining companies in South America.

Sale of gold from independent sources on the spot market and forward exchanges
by Gold Resources in International.

(1/2 mark for each controlled or uncontrolled transaction identified = 3 marks)

3. Comparability Analysis

Western Mineral Limited Gold Resources International

Characteristics of Product or Unrefined gold Refined gold

Services

Functional Analysis

I. Functional performed Mining gold Refining of unrefined

gold

Sale of refined gold on

the spot market and
forward exchanges

II. Assets employed Gold mining machinery

Gold refinery machinery

III. Risks assumed

Other Risk: Credit risk?
Other Risks: Credit risk?
Foreign Exchange risk?
Foreign Exchange risks?
Political risk

Contractual Terms ? Contract for forward exchanges

Economic Circumstances ? ?

Business Strategies ? ?

(1 mark for each comparability factor identified up to maximum on 8 = 8 marks)

4. Choice of Method and Tested Party

The three traditional methods of transfer pricing are appropriates and ranked as follows:

There are unrelated gold mining companies in South America who sells unrefined gold to Gold
Resources International. Therefore, the Comparable Uncontrolled price (cup) method of
determining the arms length price for the sale of unrefined gold by Western Mineral Limited to
Gold Resources International may be appropriate when the conditions underlying the transactions
between the South America companies and Gold Resources International are comparable to the
transactions between Western Resources Limited and Gold Resources International. (3 marks)

If the situation is as such that the CUP method may not be appropriate, then the cost plus might
be considered. The cost plus may only be considered in the arms length of mining the gold and
the arms length gross profit mark up could be ascertained. The tested party in this situation
would be Western Minerals Limited on Ghana.
 When the circumstances are such that both the CUP and Cost Plus methods are not appropriate
then the Resale Price margin method may be considered. The use of the Resale Price margin
method may only be appropriate in this circumstance if there are independent gold refining
companies with similar business models whose margins could be used as comparables. The
tested party would be Gold Resources International. (3 marks)

5. How to Obtain Comparables

The use of commercial databases as follows:

For CUP Method data from other independent full service operators with similar business
models. Also, the annual financial corporate returns of Gold Resources International and its
South American clients. (1 mark)

For Cost plus Method determine arms length cost of gold mining by Western Minerals Limited
and apply the gross profit mark up of independent gold mining Companies in Ghana. (1 mark)

For Resale Price Margin Method comparable margins earned by gold refinery and marketing
companies with similar models as Gold resources International. (1 mark)

(Total: 24 marks)

Question 4

a. Section 111 of Act 592 defines the status of Double Taxation Agreements. With the exception of
the Specific Anti-Avoidance (Section 69, 70 and 71) and General Anti-Avoidance Rules (Section
112) in Act 592 the terms of Double Taxation Agreement ratified by parliament shall prevail over
Act 592. (6 marks)

b. The Vienna Convention on the Law of treaties (VCLT) codifies international customary law. The
Convention is used interpreting treaties even for states that have not ratified it. Article 31 (1) of
the VCLT contains three principles within which international treaties should be interpreted.
These are as follows:

I. A treaty shall be interpreted in good faith

II. The parties are to be presumed to have the intention that appears from the ordinary meaning of
the terms used by them (textual approach)

III. The ordinary meaning of a term has to be determined in the context of the treaty and in the light
of its object and purpose. (3 marks for each point stated and explained = 9 marks)
Question 5

a.

Determination of Permanent establishment

Casting Europe

In accordance with the definition of permanent establishment in Section 167 Act 592, Casting Europe will
be a permanent establishment in Ghana if it has a place in Ghana where it carries on business through
an agent, other than a general agent of independent status acting in the ordinary course of business.

(2 marks)

Sixty employees of Casting Europe work in dedicated offices in Ghana. These employees are the agents
as stipulated in the definition. There seems little doubt, therefore, that it has a fixed place at its disposal.
There is little doubt, also, that Casting Europe conducts business through that fixed place in Ghana.
There is thus a very good argument that Casting Europe has a fixed place of business permanent
establishment in Ghana and that it conducts business activities in the branch. (2 marks)

The argument that Casting Europes activities are preparatory and auxiliary can be analyzed if Ghana
has Double Taxation Agreement with Liechtenstein. Preparatory and auxiliary is an exception to the
general definition of a Permanent Establishment laid down in Paragraph 1 of the OECD Models Tax
Convention. According to the convention, even if the activity is carried on through a fixed place of
business, as long as it is Preparatory and auxiliary, the place does not constitute a Permanent
Establishment. Ghana has no Double Taxation Agreement with Liechtenstein. As such the preparatory an
auxiliary argument might not hold. Notwithstanding, the activities performed at the Ghana branch cannot
be described as preparatory and auxiliary. Besides, providing logistic management function, the branch
staff negotiates and agreed on key terms of sales contracts with customers. This means sales are
actually being effected from the branch in Ghana. (2 marks)

Casting South Africa

Casting South Africa does not appear to have any physical presence in Ghana- there are no employees
of the company in Ghana. It looks unlikely, then that Casting South Africa has a fixed place of business
permanent establishment in Ghana. (1 marks)

However, there is the need to consider whether there is a dependent agent permanent establishment of
Casting South Africa. This will be the case if:

A person acts on behalf of Casting South Africa and has, and habitually exercises, an authority to
conclude contracts in the name Of Casting South Africa

Add that person is not an independent agent.

In case, there are indications that employees of the branch of Casting Europe conduct a significant
amount of sales activity on behalf of Casting South Africa and this may well constitute the requisite level
of authority to conclude contracts. It is demonstrated that the terms of sales agreements are effectively
agreed by the employees of Casting Europe with customers, and that these terms are routinely approved
by Casting South Africa, then there is a good argument that Casting Europe has, and habitually
exercises, an authority to conclude contracts in the name of Casting South Africa. (4 marks)
The final test is to determine whether the employees of Casting Europe are independent agents. This
seems unlikely if they carry out this agency function only on behalf of Casting South Africa. (1 mark)

b.

Determination of Residence

Casting Europe

Section 161, Act 592 provides that a company is tax resident in Ghana if it is

a. incorporated under the laws of Ghana. Or

b. has its management and control exercised in Ghana at any time during the year of assessment.
(3 marks)

As there is no treaty between Ghana and Liechtenstein treaty considerations are not relevant. However
Ghanas domestic legislation states the term management and control which is construed to mean
effective management in Article 4 of the OECD Model Tax Convention and its commentary.

In this case, three of the five directors including the Chief Executive Officer of Casting Europe live in
Ghana and carry out their duties in Ghana. Whether this is sufficient to effective manage Casting
Europe from Ghana is a matter of fact. In addition the commentary provides that the following factors
should be taken into account to determine where an entity has its place of effective management.

I. Where the Board of Directors usually meets:

In this case the Board meetings are carried out by video conference with some directors calling
from the Liechtenstein and some from Ghana. The evidence here is, therefore, not conclusive
and cannot be relied upon. (3 marks)

II. Where the Chief Executive Officer and other senior executives usually carry on their activities and
where the senior day-to-day management of Casting Europe is carried on:

The Chief Executive Officer and other two directors live in Ghana and they have never been to
Liechtenstein. It is clear that the activities they carry out are done in Ghana. However, the Chief
Financial Officer and the Company Secretary live in the Liechtenstein and have never been to
Ghana so carry out their activities in Liechtenstein. Casting Europe claims that the running of the
company is carried out by the Chief Financial Officer. However, the fact that these two individuals
are the Chief Financial Officer and Company Secretary is not sufficient to demonstrate that the
company is tax resident there. In fact, it is unlikely that these officers would effectively manage
the company. The Executive Officer who is located in Ghana directs the activities carried out by
the branch staff and there are no Casting Europe employees in Liechtenstein apart from the Chief
Officer and Company Secretary. There are therefore strong grounds for arguing that the day to
day senior management of the company takes place in Ghana. (4 marks)

III. Where the companys Headquarters are located. Which countrys law governs the legal status of
the company? The company is resident clearly incorporated in and governed by Liechtenstein law
which indicates it is resident in the Liechtenstein. However, it could be argued that its
headquarters are in Ghana as it has no offices in the Liechtenstein. (2 marks)

Casting South Africa

There is no evidence that Casting South Africa is effectively managed from Ghana.(1 mark)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
PROFESSIONAL EXAMINATIONS
FEBRUARY, 2015 EXAMINATION
FINAL 1: PAPER 9 INTERNATIONAL TAXATION

TIME ALLOWED: THREE (3) HOURS

ATTEMPT ALL QUESTIONS

Question 1

Starkest Limited is a United Kingdom company. The company sent Mr. Billy Fry to work
in its branch office in Accra, Ghana for five months, from 1st June, 2014 to 31st October,
2014. During that time, Starkest Limited paid 20% of his salary to his Swiss bank
accounts, and the other 80% is paid to him in Ghana. He is provided with an apartment
in Accra arranged by Starkest Limited. His salary was invoiced and charged to the
branch in Accra.

On completion of his assignment on 31st October, 2014 in Ghana, Mr. Billy Fry took his
annual leave during which he stayed on in Accra to spend all his holidays. He left Accra
on the 18th December, 2014 to London to resume his duties.

Required

What are the Ghana tax implications of the activities of Mr. Billy Fry and his employers?
(18 Marks)
Question 2

Professional Anagli is a distinguished professor of wireless technology at the Kwame

Nkrumah University of Science and Technology in Kumasi. He received an invitation
from Oxford University in England to conduct research in wireless communication in
2010 for two years. He was paid for the two years he conducted the research by the
Oxford University. After the initial two years of research, Professor Anagli was asked to
stay on by the Oxford University for further one year of research. The extra one year
was funded by Edacs Electronics PLC, an electronics giant.

On the completion of the research project he published a book on his research entitled
Wireless Communications industry. He earns considerable amount of royalties from the
sale of his book.

Required

What is the implication of Professor Anaglis activities at the Oxford University and the
subsequent book publishing, within the context of Ghana/United Kingdom Double
Taxation Agreement?
(18 marks)
Question 3

Western Minerals Limited, a Ghanaian resident company, and Gold Resources

International, a South African resident company, are 100% owned by Mineral
Investments, a multinational company resident in Mauritius. Western Minerals Limited
mines gold in the Western and Ashanti regions of Ghana. Gold Resources International
refines gold at its gold refinery in Johannesburg, South Africa. Western Minerals Limited
sells the unrefined gold mined in Ghana to Gold Resources International. Gold
Resources International refined the gold and trades the refined gold on the spot markets
and forward exchanges. Besides, Gold resources International buys unrefined gold from
other unrelated gold mining companies in South America.

Western Minerals Limited have reported losses for the last five years and, therefore,
paid no corporate tax to Ghana Revenue Authority for those of tax assessment. With
the promulgation of the Transfer Pricing Regulation. L.I. 2188, the management of
Western Minerals Limited decided to engage a Transfer Pricing Specialist to advise
them on how to determine the transfer price of the unrefined gold they sell to Gold
Resources International.

As a transfer pricing specialist you have been engaged by Western Minerals Limited to
advise them on transfer pricing issues. The term of your engagement requires that you
prepare a preliminary transfer pricing report on how to determine the transfer price of
the unrefined gold the company sells to Gold Resources International. This preliminary
report must be submitted to the management of Western Minerals Limited within one
week of your engagement.

Required
Prepare the preliminary transfer pricing report on how to determine the transfer price of
the unrefined gold Western Minerals Limited sells to Gold Resources International.

(24 marks)
Question 4
The interpretation of international treaties such as Double Taxation Agreements is
specifically governed by the Vienna Convention on the Law of Treaties of 23rd May,
1969. The Convention provides for the status of international agreements in relation to
domestic laws. The article 31 (1) of the Convention contains three basic principles that
provide the framework for interpreting international treaties such as Double Taxation
Agreements.

Required

a. What is the status of Double Taxation Agreements that Ghana has with other
countries in relation to the Internal Revenue Act 2000, Act 592?

b. State and explain the three basic principles within which international treaties
such as Double Taxation Agreements should be interpreted? (9 marks)
Question 5
Casting International is a multinational enterprise that develops, manufactures and sells
electronic product. The multinational head office, Casting International PLC, is in
London. All the subsidiaries are 100% owned by Casting International PLC.

The electronic products are manufactured in China by Casting Asia. There are three
regional logistics management subsidiaries around the world including Casting Europe
in Liechtenstein. There is a sales centre and supply-chain management company,
Casting South Africa in Pretoria, South Africa.

Ghana Revenue Authority receives information that Casting Europe is operating a

branch office in Accra. As a response to a query, the branch office claimed that they
arrange for delivery of goods to customers on behalf of Casting South Africa. As such,
their activities are preparatory and auxiliary within the Ghana /South Africa Double
Taxation Agreement. Casting Europe has no office on Liechtenstein. The Chief
Financial Officer and the company secretary of Casting Europe who lives in
Liechtenstein work from their own private residence and videoconference in for board
meetings from their homes.

All exchanges of information among the directors are done by emails, except the
videoconference meetings. The directors have never met physically in Liechtenstein or
in Ghana. The branch office management claimed that the Chief Financial Officer run
the day to day affairs of the branch. However, the Ghana Revenue Authority found out
that the Chief Executive Officer of Casting Europe makes all the key decisions for the
day to day running of the business and updates the other Directors on those decisions
during the videoconferences.

In Ghana, three directors of Casting Europe including the Chief Executive Officer have
their own offices in the same building with the other branch staff. They use the branch
offices office equipment. Sixty people work in the branch office in Ghana. There is
neither an office nor an employee in Casting Europe, Liechtenstein, except the two
Directors, the company secretary and the Chief Financial Officer. The branch staff
negotiates with customers on issues such as reduction of price and schedules for
payment.

When the customer is ready to make a purchase, he/she is asked to phone the call-
centre in South Africa to confirm. Casting South Africa then issues the relevant invoices
for the customer to authenticate and return to Casting South Africa. Casting South
Africa then instructs the branch in Accra to supply the products to the customer. They
key terms of the sales contracts are agreed between the branch staff and customers.
The branch also designs advertisement and directs the advertising campaigns.

Required
Determine whether

a. Casting Europe and Casting South Africa has permanent establishment in

Ghana. (12 marks)

b. Casting Europe and Casting South Africa are resident companies in Ghana for
tax purposes. Provide reasons for your answer. (13 marks)
 CHARETERED INSTITUTE OF TAXATION (GHANA)

FEBRUARY 2013 EXAMINATIONS

FINAL LEVEL 1 PAPER 8 OIL AND OTHER MINERALS TAXATION

RECOMMENDED PASS MARKS 50%

EXAMINERS REPORT

INTRODUCTION

All the question in this paper were compulsory and candidates were expected to answer or attempt all
the question.

QUESTION 1

This question was a twenty (20) marks question that required a discussion of the functions of the
Petroleum Commission (PC) in view of the apparent concerns of players in the industry of the dual role
of the Ghana National Petroleum Corporation (GNPC) as both an operator and a regular of the industry.
It also requested candidates to express their view as to whether or not the establishment of the PC had
resolved the industry concerns.

Expected approach to answering the question

It was expected that candidates approach the question logically by discussing:

1. GNPC as an operator;
2. GNPC as a regular;
3. Identifying the problem or issues associated with GNPC playing the dual role;
4. The need to separate the operator role by establishing the PC. In other words, why establish the
PC; and
5. Whether or not the establishment of the PC has resolved the issues.

On this question, five (5) candidates representing 11% achieved the pass mark of half of the total of
twenty (20) marks available.

Reasons why most of the candidates did not achieve the pass mark are enumerated as follows:

1. Failure of candidates to approach the question in a logical manner;

2. Candidates did not appreciate clearly the roles of GNPC and its effects on the industry;
3. Most candidates failed to discuss why the PC was established and the specific roles of the PC;
4. Most candidates failed to appreciate how the PC has legally resolved the issues posed by GNPC
regarding their dual role (i.e. as operator and regulator).

General Comments:
 Of the five (5) questions for this examination, this question was poorly answered compared to the
rest.

Candidates answered this question in a vague manner rather than addressing the question on hand.

To achieve a pass mark, candidates needed to have a reasonable knowledge of the regulatory of the
GNPC and the PC and their interrelationships.

QUESTION 2

Question two (2) was also a twenty (20) marks question that required candidates to identify and
discuss the specific areas where tax reforms were made in the upstream petroleum industry. The
question also required candidates the challenges/problems the reforms posed to the mining sector.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Give an introductory background to the reforms in the extractive industry (i.e. upstream
petroleum and mining industry);
2. Identify and discuss the specific areas of the reforms; and
3. Discuss the challenges/problems posed to the mining sector

On this question 19 candidates representing 42% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Candidates failed to provide an introductory background, which would have highlighted the
main objectives of the reform. (i.e. Harmonisation of the Tax regime in the extractive industry);
2. Most candidates could not relate sufficiently to the reforms that were introduced recently in
the extractive industry and therefore were unaware of the developments in the industry.
Candidates therefore gave answers that were generic in the tax environment;
3. Most candidates provided answers that related mostly to the upstream petroleum sector and
neglected the mining sector;
4. In certain instances, candidates mentioned only the new rates applicable to the industry without
making references to the provisions of the Act to which the changes related;
5. In addressing the problems posed by the reform, most candidates explained the reforms rather
than explaining the problems it posed.

General Comments:

This question was reasonably well answered compared to question one (1).

To achieve a pass in this question, candidates needed to be aware of the tax reforms that are being
introduced in the industry and the challenges such reforms pose to the players of the industry.
Question 3

The first part of question three (3) was computational in nature with twenty (20) marks and required
candidates to determine the Chargeable Income of an entity in the upstream petroleum industry. The
second part of six (6) marks was a follow-up theory aspect of the question and required candidates to
identify either incomes or expenses that they did not allow in their computations and explain they did
not allow such income or expenses.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Set put and answer the question in accordance with the requirements of the Petroleum Income
Tax Law, 1987 (PNDCL 188) (PITL); and
2. Identify the six (6) items and provide comments in accordance with section 3 (1) of the PITL.

On this question 26 candidates representing 58% achieved the pass mark.

Reason why some candidates did not pass this paper include:

1. Candidates failed to follow the format for determining chargeable income of an upstream
petroleum company as provided for in the PITL and instead used the approach for determining
chargeable income under the Internal Revenue Act, 2000 (Act 592) as amended;
2. Some candidates failed to explain the basis for not allowing certain incomes and expenses in
determining chargeable income.

General Comments:

This question was fairly well attempted with 58% pass. This is due to the fact that candidates prefer
computation questions to written or theory questions.

It is also important to mention that candidates need to appreciate the requirements of PITL when
computing the chargeable income.

Question 4

Question 4 was made of two parts namely (a) and (b). Part (a) which was for five (5) marks sought to
examine candidates understanding of the strategic importance of a Petroleum Agreement.
Part (b), was for 10 marks and tested both a technical and current hot tax issue in Ghana regarding
taxation of foreign national employees working for contracts, sub-contractors and affiliates in
Ghana.

It required candidates to discuss the various provisions in the PITL and the Petroleum Agreement
regarding the issues as well as providing a reasoned conclusion on the tax implication of the
employees.

Expected approach to answering the question

It was expected that candidates approached the questions as follows:

1. For part (a), mention specifically Article 12 (1) and highlight some of the contents on Article 12
of the PA relating to the fiscal concessions as well as the importance of the PA:, and
2. In terms of part (b), discuss section 28 of the PITL relating to foreign national employees and
Article 12.8 of the PA and provide a reasoned conclusion.

On this question 18 candidates representing 40% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Part (a) which was a five (5) marks question was fairly well answered.
2. However, candidates had challenges in answering part (b) partly due to their inadequate
knowledge and understanding of the PITL;
3. Even though most candidates knew the 30 days provision in the PA relating to foreign national
employees, they failed to appreciate how this related to the provision of section 28 of the PITL
and therefore could not link their answers in a provision of the PITL and the PA, hence arriving
at an inappropriate conclusion.

General Comments:

Candidates did not really discuss the provisions of the PITL and PA relating to the issue but just went
ahead to mention the 30 day or less rules affecting the foreign national employees. To achieve a
reasonable pass mark, candidates need to know the law and be able to apply the law.

Question 5

Question five (5) is a fifteen (15) marks question that requires candidates to explain the strategic
importance of the following three terms used in petroleum operations. The terms are Additional Oil
Entitlement; Petroleum Holding Fund; and Prohibited use of Petroleum holding fund. Each term carries
five (5) marks.

Expected approach to answering the question

It was expected that candidates approach the question as follows:

 1. Mention and explain the key elements of each if the terms; and
2. Explain the strategic importance of each term.

On this question 35 candidates representing 78% achieved the pass mark.

Reasons why a few candidates still did not pass this paper include:

1. Most candidates explained the additional oil entitlement satisfactorily. However, they had few
challenges with what constituted the receipts of the Petroleum Holding Fund and the prohibited
use of the Petroleum Holding Fund;
2. In terms of the Petroleum Holding Fund, candidates discussed other funds under the Petroleum
Revenue Management Act, 2011 (Act 815) instead of discussing the receipts and the make-up of
the Petroleum Holding Fund, and;
3. On the use the Prohibited use of the Petroleum Holding Fund, a few candidates failed to achieve
a pass mark by not identifying the prohibitions on the use of the fund.

Overall comments on the questions and recommendations

Generally, candidates made little reference to the substantive laws/Acts relating to the questions
asked thus demonstrating to the examiner that they did not really appreciate the laws that affected
the areas being examined.

Candidates need to really read and understand the Acts relating to the industry to ensure good
performance at the examinations.

Examiner: Isaac Nyame (FCIT)

 CHARETERED INSTITUTE OF TAXATION (GHANA)

FEBRUARY 2013 EXAMINATIONS

FINAL LEVEL 1 PAPER 8 OIL AND OTHER MINERALS TAXATION

RECOMMENDED PASS MARKS 50%

EXAMINERS REPORT

INTRODUCTION

All the question in this paper were compulsory and candidates were expected to answer or attempt all
the question.

QUESTION 1

This question was a twenty (20) marks question that required a discussion of the functions of the
Petroleum Commission (PC) in view of the apparent concerns of players in the industry of the dual role
of the Ghana National Petroleum Corporation (GNPC) as both an operator and a regular of the industry.
It also requested candidates to express their view as to whether or not the establishment of the PC had
resolved the industry concerns.

Expected approach to answering the question

It was expected that candidates approach the question logically by discussing:

1. GNPC as an operator;
2. GNPC as a regular;
3. Identifying the problem or issues associated with GNPC playing the dual role;
4. The need to separate the operator role by establishing the PC. In other words, why establish the
PC; and
5. Whether or not the establishment of the PC has resolved the issues.

On this question, five (5) candidates representing 11% achieved the pass mark of half of the total of
twenty (20) marks available.

Reasons why most of the candidates did not achieve the pass mark are enumerated as follows:

1. Failure of candidates to approach the question in a logical manner;

2. Candidates did not appreciate clearly the roles of GNPC and its effects on the industry;
3. Most candidates failed to discuss why the PC was established and the specific roles of the PC;
4. Most candidates failed to appreciate how the PC has legally resolved the issues posed by GNPC
regarding their dual role (i.e. as operator and regulator).

General Comments:
 Of the five (5) questions for this examination, this question was poorly answered compared to the
rest.

Candidates answered this question in a vague manner rather than addressing the question on hand.

To achieve a pass mark, candidates needed to have a reasonable knowledge of the regulatory of the
GNPC and the PC and their interrelationships.

QUESTION 2

Question two (2) was also a twenty (20) marks question that required candidates to identify and
discuss the specific areas where tax reforms were made in the upstream petroleum industry. The
question also required candidates the challenges/problems the reforms posed to the mining sector.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Give an introductory background to the reforms in the extractive industry (i.e. upstream
petroleum and mining industry);
2. Identify and discuss the specific areas of the reforms; and
3. Discuss the challenges/problems posed to the mining sector

On this question 19 candidates representing 42% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Candidates failed to provide an introductory background, which would have highlighted the
main objectives of the reform. (i.e. Harmonisation of the Tax regime in the extractive industry);
2. Most candidates could not relate sufficiently to the reforms that were introduced recently in
the extractive industry and therefore were unaware of the developments in the industry.
Candidates therefore gave answers that were generic in the tax environment;
3. Most candidates provided answers that related mostly to the upstream petroleum sector and
neglected the mining sector;
4. In certain instances, candidates mentioned only the new rates applicable to the industry without
making references to the provisions of the Act to which the changes related;
5. In addressing the problems posed by the reform, most candidates explained the reforms rather
than explaining the problems it posed.

General Comments:

This question was reasonably well answered compared to question one (1).

To achieve a pass in this question, candidates needed to be aware of the tax reforms that are being
introduced in the industry and the challenges such reforms pose to the players of the industry.
Question 3

The first part of question three (3) was computational in nature with twenty (20) marks and required
candidates to determine the Chargeable Income of an entity in the upstream petroleum industry. The
second part of six (6) marks was a follow-up theory aspect of the question and required candidates to
identify either incomes or expenses that they did not allow in their computations and explain they did
not allow such income or expenses.

Expected approach to answering the question

It was expected that candidates approached the question as follows:

1. Set put and answer the question in accordance with the requirements of the Petroleum Income
Tax Law, 1987 (PNDCL 188) (PITL); and
2. Identify the six (6) items and provide comments in accordance with section 3 (1) of the PITL.

On this question 26 candidates representing 58% achieved the pass mark.

Reason why some candidates did not pass this paper include:

1. Candidates failed to follow the format for determining chargeable income of an upstream
petroleum company as provided for in the PITL and instead used the approach for determining
chargeable income under the Internal Revenue Act, 2000 (Act 592) as amended;
2. Some candidates failed to explain the basis for not allowing certain incomes and expenses in
determining chargeable income.

General Comments:

This question was fairly well attempted with 58% pass. This is due to the fact that candidates prefer
computation questions to written or theory questions.

It is also important to mention that candidates need to appreciate the requirements of PITL when
computing the chargeable income.

Question 4

Question 4 was made of two parts namely (a) and (b). Part (a) which was for five (5) marks sought to
examine candidates understanding of the strategic importance of a Petroleum Agreement.
Part (b), was for 10 marks and tested both a technical and current hot tax issue in Ghana regarding
taxation of foreign national employees working for contracts, sub-contractors and affiliates in
Ghana.

It required candidates to discuss the various provisions in the PITL and the Petroleum Agreement
regarding the issues as well as providing a reasoned conclusion on the tax implication of the
employees.

Expected approach to answering the question

It was expected that candidates approached the questions as follows:

1. For part (a), mention specifically Article 12 (1) and highlight some of the contents on Article 12
of the PA relating to the fiscal concessions as well as the importance of the PA:, and
2. In terms of part (b), discuss section 28 of the PITL relating to foreign national employees and
Article 12.8 of the PA and provide a reasoned conclusion.

On this question 18 candidates representing 40% achieved the pass mark.

Reasons why some candidates did not pass this paper include:

1. Part (a) which was a five (5) marks question was fairly well answered.
2. However, candidates had challenges in answering part (b) partly due to their inadequate
knowledge and understanding of the PITL;
3. Even though most candidates knew the 30 days provision in the PA relating to foreign national
employees, they failed to appreciate how this related to the provision of section 28 of the PITL
and therefore could not link their answers in a provision of the PITL and the PA, hence arriving
at an inappropriate conclusion.

General Comments:

Candidates did not really discuss the provisions of the PITL and PA relating to the issue but just went
ahead to mention the 30 day or less rules affecting the foreign national employees. To achieve a
reasonable pass mark, candidates need to know the law and be able to apply the law.

Question 5

Question five (5) is a fifteen (15) marks question that requires candidates to explain the strategic
importance of the following three terms used in petroleum operations. The terms are Additional Oil
Entitlement; Petroleum Holding Fund; and Prohibited use of Petroleum holding fund. Each term carries
five (5) marks.

Expected approach to answering the question

It was expected that candidates approach the question as follows:

 1. Mention and explain the key elements of each if the terms; and
2. Explain the strategic importance of each term.

On this question 35 candidates representing 78% achieved the pass mark.

Reasons why a few candidates still did not pass this paper include:

1. Most candidates explained the additional oil entitlement satisfactorily. However, they had few
challenges with what constituted the receipts of the Petroleum Holding Fund and the prohibited
use of the Petroleum Holding Fund;
2. In terms of the Petroleum Holding Fund, candidates discussed other funds under the Petroleum
Revenue Management Act, 2011 (Act 815) instead of discussing the receipts and the make-up of
the Petroleum Holding Fund, and;
3. On the use the Prohibited use of the Petroleum Holding Fund, a few candidates failed to achieve
a pass mark by not identifying the prohibitions on the use of the fund.

Overall comments on the questions and recommendations

Generally, candidates made little reference to the substantive laws/Acts relating to the questions
asked thus demonstrating to the examiner that they did not really appreciate the laws that affected
the areas being examined.

Candidates need to really read and understand the Acts relating to the industry to ensure good
performance at the examinations.

Examiner: Isaac Nyame (FCIT)

 CHARTERED INSTITUTE OF TAXATION (GHANA)
SPECIAL MEMBERSHIP INDUCTION SEMINAR
30th May, 2015
Venue: Coconut Groove Regency Hotel, Accra
Key to Technical Case Scenario for Discussion

Case Scenario 1

Transfer Pricing Report on

Sunrise Pleasure Beach Limited

1. Transfer Pricing Risk Analysis

The following issues may trigger transfer pricing audit
Sunrise Pleasure Beach Limited reported results for 5 years are negative.
The use of Sunrise Pleasure Beach Limiteds related enterprise, Sunrise Marketing
Limited in the Cayman Island, a low tax jurisdiction, to source for business for a fee.

(1 mark for each risk identified and analyzed = 2 marks)

2. Controlled Transactions
Sunrise Pleasure Beach Limiteds related company, Sunrise Marketing Limited, in the
Cayman Island
I. advertises the full service resorts in targeted foreign markets,
II. accepts bookings for the resorts
III. concludes contracts for stay at the resorts
IV. receives payments from clients and
V. pays fees to Sunrise Beach Limited in Ghana for their resort operations

(1 mark for each controlled transactions identified = 5 marks)

3. Uncontrolled Transactions
I. Travellers who directly patronise the resort without channelling bookings through a
third party
II. Operational activity costs for running the full service resorts in Ghana as a result of
dealings with independent parties

(1 mark for each uncontrolled transactions identified = 2 marks)

4. Comparability Analysis
Characteristics of Product or
Service
Functional Analysis
I. Functions performed
II. Assets employed
III. Risks assumed
Contractual Terms
Economic Circumstances
Business Strategies
(1 mark for each comparability factor identified = 5 marks)
(1 mark for each point analysed (maximum of 5 points) =5 marks)
Sunrise Pleasure Beach Sunrise Marketing Limited
Limited
Full service resorts Intangible service:
Facilitation services
i. Operates full Advertise full service resorts
service resorts in foreign markets
ii. Finance?
Accepts bookings for the
resorts
Concludes contracts for stay
at the resorts
Receiving payments for
clients
All the full service resort ?
facilities
Market risks risks that
Business risks risk that
travellers do not patronise
travellers do not book through
the resorts
the central booking system
Other Risks: Credit risks? but rather direct or other
means
Foreign Exchange risks?
Other risks: Credit risks?
? ?
? ?
? ?
 (Total: 10 marks)

5. Choice of Method and Tested Party

If there are other independent operators with similar business models, then the CUP
method may be appropriate. Consideration may be given to internal comparable in
this circumstance since some independent travellers patronise the fully service resorts
without recourse to third party bookings
(3 marks)
If the situation is as such that the CUP method may not be appropriate, then the Cost
Plus might be considered. The Cost Plus may only be considered if the arms length
cost of the service provided and the arms length gross profit mark up could be
ascertained. There are independent operators in the resort industry in Ghana. They
can form the basis for the comparability analysis to determine the arms length cost of
purchases and arms length gross profit margin. The tested party in this situation
would be Sunrise Pleasure Beach Limited in Ghana.
(3 marks)
When the circumstances are such that both the CUP and Cost Plus methods are not
appropriate then the Resale Price margin method may be considered. The use of the
Resale Price margin method may only be appropriate in this circumstance if there are
independent central booking companies whose margins could be used as
comparables. The tested party would then be the Sunrise Marketing Limited in the
Cayman Island.
(3 marks)

6. How to Obtain Comparables

The use of commercial databases as follows:
For CUP Method other independent full service operators with similar business
models: From the annual financial corporate returns of local independent companies
with similar business model
(2marks)
For Cost plus Method determine arms length cost of operating the full resort
service and apply the gross profit mark up of independent full resort service providers
(2 marks)
For Resale Price Margin - comparable margins earned by independent central
booking companies
(2 marks)

Case Scenario 2

Foremost, Mr. Billy Fry would not be liable to tax in Ghana assuming he left Ghana
immediately he finished his assignment on 31st October, 2014 because his remuneration
would have fallen within the exception to the general rule that remuneration income is
sourced and taxed in the country where the services are performed and he is paid by a non
resident of Ghana and not by the branch in Accra.

(2 marks)
However, Mr. Billy Fry will be liable to tax in Ghana even if he left Accra on the 31st
October, 2014 because his salary was invoiced and charged to the branch in Ghana. The
exception to the general rule will not apply when the salary was on charged to the branch in
Accra. The branch will be allowed to deduct the amount from corporate income if the
expense is wholly, necessarily and exclusively incurred as in section 13 of Act 592, Internal
Revenue Act 2000 as amended.

(6 marks)

Finally, Mr. Billy Fry is liable to Ghana tax because Paragraph 5 of the OECD commentary
to Article 15 of Double Tax Agreements states that number of days of physical presence is
the test for determining an individuals residence for tax purposes and therefore days spent on
holidays are included. As she has stayed in Ghana for longer than the 183 days, the exception
of Article 15 (2) no longer applies.

(10 marks)

Case Scenario 3
The time limit allowed to qualify for exemption from tax in the United Kingdom is 2 years
for teachers invited by the UK Government or its political subdivision or local authority or by
a university.
(2 marks)

Besides, the research must be in public interest to qualify for the exemption.
(2 marks)

In this case the research in wireless technology is considered to be in public interest but
Professor Anagli spent more than the two years stated in the Double Taxation Agreement.
For spending three years on the research he will be liable to tax in the United Kingdom for
his services at the Oxford University for all the three years.
(6 marks)

However, if Professor Anagli can provide proof that his place of vital interest is still in Ghana
and that all his economic and family ties are in Ghana then he could be considered as a
resident of Ghana for tax purposes. In this case, his three years income will be taxable in
Ghana.
(3 marks)

On the issue of publishing a book on his research and earning royalties from the sale of such
book, Professor Anagli will be liable to tax on the royalties by the Ghana Revenue Authority
if it is proved that his place of vital interest is still in Ghana and that all his economic and
family ties are in Ghana. On the other hand, he will be liable to tax in UK for the royalties for
the period he is considered a resident of UK.
(5 marks)
CHARTERED INSTITUTE OF TAXATION
(GHANA)

Examination Scheme and Syllabus

August, 2011

2
 Our Vision

To be the premier international professional body of choice

Our Mission
To promote the advancement of taxation practice through excellence, integrity and
transparency whilst diligently offering the best professional service to the state and the
public

3
 Our Objectives

1. To deal with all matters concerning taxation and take such action with respect thereto
as may be considered expedient.

2. To promote the study of the administration and practice of taxation and the principles
of economic and political science in relation to taxation and public finance in
connection therewith.

3. To hold examinations and to grant certificates to persons who have satisfied the
examiners and the Council of the Institute as to their knowledge of and ability in the
subject of taxation.

4. To facilitate the exchange of information and views on taxation and the creation of a
well-informed public opinion on the subject.

5. To provide opportunities for the acquisition and dissemination of useful information

concerning taxation and, in particular, to sponsor research into taxation as well as
publishing or assisting in the publication of the proceedings of the Institute and of
books, articles and papers on the subject of taxation.

6. To ensure that high standards of professional etiquette and practice are maintained
among members of the Institute.

4
STUDENT REGISTRATION

In order to be registered as a student for the professional examinations of the Institute one must
be at least 18 years old and have the following minimum academic qualifications.

1. A first degree from a recognized tertiary institution

2. Taxation Technician Certificate of the Institute
3. Higher National Diploma from a recognized tertiary institution
4. Basic Professional Certificate in Taxation of the Ghana Revenue Authority
5. Any other qualification, in the opinion of the Council, is equivalent to any of the above

Students have ten years to complete the final examinations of the Institute from the date of
their registration as a student.

5
THE STRUCTURE OF THE EXAMINATION
The Institutes professional examinations syllabus is examined at 3 Levels i.e. Professional
Level, Final 1 and Final 2. Students may attempt any number of papers in the Professional
Level and Final Level 1. However, the Professional Level must be completed or exemption
obtained before the Final Level 1 is attempted and the Final Level 1 must be completed or
exemption obtained before the Final Level 2 is attempted.

All the 3 papers at the Final Level 2 must be sat and passed at the same examination session. A
student may, however, be referred in one paper at the Final Level 2 if he obtains a minimum of
40% in that paper and passes the other two papers.

Pass mark for every paper is 50%.

Professional Level
This level consists of:

1. Public Sector Economics and Finance

2. Income Taxation
3. Accounting and Finance
4. Indirect Taxation
5. Revenue and Business Law
6. Strategy and Governance

At this level the syllabus concentrates mainly on the theories and techniques which underlie
practical issues to be examined at later levels.

Final Level 1
The Final Level 1 consists of:

7. Tax Audit and Investigations

8. Oil, Gas and Other Minerals Taxation
9. International Taxation

This level develops analytical skills and intends to equip the student with knowledge of key
subjects necessary to the Chartered Tax Practitioner.

Final Level 2
The Final Level 2 consists of:
10. Strategic Tax Planning
11. Advanced Taxation Practice
12. Tax Practice Administration & Ethics

6
At the final levels students are required to demonstrate not only that they have grasped the
requisite skills, techniques and knowledge, but also, that they can apply them in practical
context.

At these levels the student is to establish proof of competence to practise as a professional

Chartered Tax Practitioner and be able to occupy managerial and strategic positions in
commerce, industry, public sector and public practice.

The Final level 2 is not subjected to exemption, no matter the prior qualification the student
might have acquired.

At the final levels the subjects are structured in such a way that emphasis is given to practical
issues, criticism of current developments in taxation and handling of tax planning and
administration issues. By completing this level, the student should be fully equipped to play
tax advisory role as a top flight professional.

The examination at this level will require candidates to submit answers in the form of
Memorandum, Report, Briefing Paper, Discussion Paper and other forms of business
communication.

The Examination Timetable

The Institutes professional examinations are held twice a year in February and August. The
examination lasts for 6 days starting from the first Monday of the month.

The examination timetable is as follows:

Levels/Days Monday Tuesday Wednesday Thursday Friday Monday

Professional Paper 1 Paper 2 Paper 3 Paper 4 Paper 5 Paper 6
Final 1 Paper 7 Paper 8 Paper 9
Final 2 Paper 10 Paper 11 Paper 12

Every paper starts at 10:00 am.

7
THE SYLLABUS

PROFESSIONAL LEVEL
Paper 1 Public Sector Economics & Finance 9

Paper 2 Income Taxation 11

Paper 3 Accounting & Finance 13

Paper 4 Indirect Taxation 15

Paper 5 Revenue and Business Law 17

Paper 6 Strategy and Governance 19

FINAL LEVEL 1
Paper 7 Tax Audit & Investigations 21

Paper 8 Oil, Gas & Other Minerals Taxation 23

Paper 9 International Taxation 26

LEVEL 3 (FINAL)
Paper 10 Strategic Tax Planning 29

Paper 11 Advanced Taxation Practice 31

Paper 12 Tax Practice Administration & Ethics 33

8
PROFESSIONAL LEVEL - PAPER 1

PUBLIC SECTOR ECONOMICS & FINANCE

OBJECTIVE

To test the candidates ability to:

a) Understand the principles of government finance, sources of public revenue, objects of

public expenditures, problems of fiscal administration, and application of fiscal policies
in stabilizing the national economy.

b) Apply the principles, concepts, theories and techniques of public sector economics and
finance to current economic as well as financial issues and problems.

THE SYLLABUS

The Role and Size of the Public Sector

Views of Government
The Constitutional Mandate for Public Finance
Welfare Economics: Pareto Optimality and the Efficiency of Competitive Markets
Consumer and Producer Surpluses

Public Expenditure Policy

Causes of Market Failure
Externalities
Public Goods and Private Goods
Resource Allocation Mechanism of Public Goods
Government Failure
Public Choice Theory
Public Expenditure Analysis and Growth

Public Resource Mobilisation

The role of Taxation in the National Economy
Attributes of a Good Tax System
Kinds of Taxes
Major Criteria for a Good Tax Structure

9
 Categories of Equity
Tax Incidence Analysis
Theory of Income and Consumption Taxation
Taxation and Work Effort
Taxation, Savings and Risk-Taking
Alternative Sources of Revenue to Government

Tax Policy
Optimal Design of Direct and Indirect Taxation
Tax Evasion and Avoidance
Tax Structure
Tax Reform
Fiscal Policy Analysis
Keynesian Perspective on Fiscal Policy
Fiscal Policy with a Deflationary Gap
Fiscal Policy with an Inflationary Gap
Supply-Side View on Fiscal Policy
Policy Lags

Public Debt Analysis

Domestic Borrowing
Foreign Borrowing/External Indebtedness
Debt Service Capacity
The Debt Burden and Inter-Generational Equity
Effect of Domestic Debt on Capital Formation

Intergovernmental Fiscal Relations

Fiscal Disparity
The Theory of Grants

10
PROFESSIONAL LEVEL PAPER 2

INCOME TAXATION

OBJECTIVE

To test students ability to:

a) Understand the principles of income tax
b) Prepare tax returns and compute income taxes
c) Understand the Internal Revenue Act and Regulations and apply them to practical
issues.

THE SYLLABUS

1. Imposition of Tax

The imposition of income tax on the income of resident or non-resident persons

from business, employment and investment accruing in, derived from, brought into
or received in Ghana.

Distinction between chargeable and assessable income. Calculation of chargeable

and assessable income.

Deduction allowed and not allowed. Meaning of Wholly, exclusively and

necessarily incurred. Distinction between Capital expenditure and Revenue
expenditure. Exempt income. Industry concessions. Treatment of losses.
Donations.

Provisional and self-assessments.

Capital allowances, other reliefs.

2. Taxation of Employment Income

The definition of employment income. Primary, consecutive primary and

secondary employments.

Tax reliefs; tax relief cards. Substantiated retirement contributions. Returns by

employer. Deemed employee assessments. Returns of income of individual with
two or more employments.

11
 Withholding of tax by employers; PAYE System; Calculation of employees
employment tax liability.
The meaning and treatment of qualifying cash payments. Perquisites of office.
The treatment of retirement fund savings and contribution to a retirement fund..

3. Taxation of Individuals, Partnerships and Partners

Principle of taxation for individuals, partnerships and partners

Ascertainment and computation of chargeable and assessable income
Reliefs and reductions. Capital allowances
Partnership obligations
Reduction of income for life insurance premiums paid.

4. Taxation of Companies, Shareholders, Bodies of Persons and Owners

Principles of taxation for companies

Ascertainment and computation of chargeable and assessable income
Taxation of insurance companies; short-term insurance business; reserve for
unexpired risks; rules relating to Life Insurance business.
Introduction to taxation of petroleum and mining companies
Taxation of all other companies such as banks, non-banking financial
institutions, manufacturing companies, trading companies and other service
companies
Capital allowances and rules relating to leases. Other reliefs.

5. Taxation of Capital Gain

The definition, ascertainment and computation of capital gain

The meaning of cost base
Realization of asset; chargeable asset
Exemptions from capital gain tax
Computation of capital gain tax.

6. Taxation of Gifts
The definition and ascertainment of taxable gifts
The valuation of taxable gifts
Computation of gift tax
Exemptions from gift tax.

12
PROFESSIONAL LEVEL PAPER 3

ACCOUNTING & FINANCE

OBJECTIVE

To test the candidates ability to:

a) Apply accounting principles, concepts and techniques to financial accounting practices

b) Prepare and interpret financial accounting reports and apply the principles of taxation to
them

c) Understand the significance and limitations of the financial statements and their tax
implications

d) Manage financial resources and appraise investment opportunities of an organization.

THE SYLLABUS

1. Preparation of financial statements for

Partnerships including
- Amalgamation of firms
- Dissolution of partnerships
- Admission of a new partner and the consequences of death of a partner
- Conversion of partnership into Limited Liability Company

Limited liability companies within the companies code and the regulatory frameworks
including
- Simple consolidated accounts of group of companies
- Joint ventures
- Associated businesses

2. Interpretation of financial statements

- Identification of users of financial statements and be conversant with the uses of the
information within
- Objectives of financial statements
- Analyse and interpret financial statements by ratio analysis or other methods for
performance.

3. Valuation of business and income measurement

13
- The preparation and presentation of accounts and reports relating to offer for sale,
rights issue and profit forecast
- Methods of valuing the whole undertaking; majority and minority holdings as a going
concern, for purposes of a merger; or total or partial liquidation
- The theory of accounting in relation to income measurement; capital maintenance
- Problems of profit measurement and alternative approaches.

4. Accounting for specialized transactions

- Hire purchase and Leases
- Branch accounts
- Foreign currency transactions

5. Financial Management
- The nature, purpose, and scope of financial management.
- Sources of finance. Equity and Debt Finance; Venture Capital; Capital Markets; Issue
of Shares; Rights Issues; Bonus Issues; Reduction of Capital. Stock Market Ratios and
Stock Market Analysis
- Gearing: Impact of gearing on business. Relevance of gearing to investors
- Working Capital management. Main components of working capital; Methods for the
control of investment in cash, trade debtors and stock
- Investment Appraisal. Appraising techniques; Lease or buy decisions. Sale and
leaseback decisions
- The effect of taxation and inflation on investment decisions
- Preparation of forecast financial statements and interpret their significance
- Methods of dealing with risks and uncertainties in financial management.

14
 PROFESSIONAL LEVEL PAPER 4

INDIRECT TAXATION

OBJECTIVE

To test the students ability to

a) Understand the principles of indirect taxes

b) Prepare tax returns and compute indirect taxes
c) Understand indirect tax laws and regulations and apply them to practical issues.

THE SYLLABUS

Introduction

Sources of indirect taxes to government

The incidence and impact of indirect taxation
Bases of indirect taxation
The principle of no consumption no duty payment
The principle of payment of duty once on goods
Determination of quantity in containers, packages and space

Value Added Tax

Jurisdictional Principles of VAT: destination based taxation and origin based taxation
The effects of cross border transactions on taxation of goods and services
Concepts of consumption: determination of place of consumption

Taxable persons and taxable value

Definition of a taxable person
Registration and De-registration of taxable persons
Definition of a taxable value: meaning of consideration
Determination of taxable value for gifts, for own use and for supply of goods
The meaning of tax point: activities that create tax points

Taxable Supply
Definition and concept of taxable supply
Gifts or loans of goods and services
The leasing or letting of goods on hire
Goods for personal use or consumption by the taxable person or any other person
The sale, transfer assignment or licensing of patents, copyrights trademarks, computer software
and other intellectual properties

15
Export of non-traditional products
Place of supply rules
Supply of goods and services: Mixed supplies; supply by agents; supply by partnerships;
supplies by members of a group; Taxable supply; Exempt and Zero-rated supplies; relief
supply; time and place of supply rules
Valuation of taxable supply;
The definition of imported service or exported service: tax treatment of imported service; The
Reverse charge mechanism
Concept of consumption: determination of place of consumption

VAT accounting and records

VAT accounting for Input and Output Tax
VAT Refund procedure
Special VAT schemes: computer generated invoice, VAT Relief Purchase order, upfront relief
of import VAT and retail schemes
The tax treatment of Bad debts
VAT accounting for acquisitions and disposals of capital goods
The treatment of Import VAT

Communication Service Tax

Meaning of Communication
Person liable to Communication Service Tax
Computation and tax accounting for communication service tax

Customs, Excise, Duties, Controls and Special Taxes

Export and Import Controls and Regulations
Customs warehousing: bonds and securities; assessment of rent at state and government
warehouse
Methods of delivery of goods
Relief of goods from import duties
Valuation of goods for custom purposes in accordance with World Trade Organisation concept
and Customs Law
Deferment arrangements
Origin rules: Documentary proof of origin
Personal import reliefs
Prohibited and restricted goods
Returned goods
Tariff classification
Preventive controls and regulations
The Postal Traffic: legal basis; authorized post; declaration; parcel post depots; purpose of
custom control; functions and responsibilities of post office officials
Free Zones: definition; types of free zones; controls at free zones
Passengers, Exporters and Importers rights and obligations under Customs Laws and
Regulations
The drawback regime
Excise Manufacturing: the principles of excise control; the excise field; computation and
accounting of Excise on manufacturing; protection of the excise tax; right of access
Smuggling and powers of the custom officers

16
PROFESSIONAL LEVEL 1 PAPER 5

REVENUE AND BUSINESS LAW

OBJECTIVE

To test the students ability to:

a) Understand the principles underlying the existence of companies

b) Understand the management, administration and finances of companies
c) Understand the management and administration of partnerships and joint ventures
d) Understand financial laws and their application to practical issues.

THE SYLLABUS

REVENUE LAW
The structure and philosophy of Ghana taxation
Tax policy and tax reform
Tax jurisdictions; international dimension
Income; concepts of income; income from employment, business and capital; statutory
extension to income base; deductions- general and specific deductions-substantiation
Tax avoidance and evasion
Introduction to income taxation
General principles of capital gains tax; rates and payment of tax; exemption and reliefs;

COMPANY LAW
Nature and Types of Companies formed under the code. Formation and Registration:
Regulations; Promoters
Corporate personality; limited and unlimited liability
Corporate entity theory; Doctrines of Ultra Vires and lifting the veil of incorporation
Incorporation procedures and restriction on choice of name
Statutory books, records and returns. Register of shares, charges, directors, and shareholdings.
Pre-incorporation contracts

Equity and Loan Capital

Flotation; Methods of raising capital; Prospectus; Shares; Classification of shares; Class rights;
Transfer, purchase and redemption of shares.
Secured and unsecured tenders; Floating and Fixed Debentures; Priorities
Maintenance and alteration of capital; Dividends

Directors, Secretaries and Auditors

Appointment, qualification, disqualification and removal
Powers of Directors, Secretary and Auditor; Directors and Secretaries as agents

17
Duties and rights of directors, secretary and auditor
Limitations upon management to make contracts
Meetings and proceedings at meetings
Division of power between the board of directors and general meetings

Corporate Information
Accounting disclosure requirements and exemptions
Reports and Returns: Role of the Registrar of Companies.

Shareholders
Majority control and the rights of minorities
Role of appointing directors, attending meetings and passing resolutions
Limitation of minority shareholders
Matters requiring shareholders approval

Liquidation and Capital Reorganization

Voluntary and compulsory liquidation
Appointments, rights and duties of liquidators and receivers
Investigation of officers conduct: Civil and Criminal remedies
Proof of debt
Protection of investors and creditors
Re-organization: Dissolution; Reconstruction; Amalgamation; Arrangements and Takeovers.

PARTNERSHIP LAW
Nature of partnership
Formation of partnership agreement
Relationship between partnership agreements and rules applicable in the absence of a
partnership agreement
Cessation of membership of firm; Admission of partner (s)
Winding up and dissolution of partnerships
Joint ventures

FINANCIAL LAWS
Banking Law
The requirements for licensing banks; Statutory obligations for operating a bank; The
maintenance of a reserve fund. Provisions in respect of declaration or payment of dividend:
Granting facilities; The Supervisory and Control roles of Bank of Ghana; Objects and the
functions of Bank of Ghana.

Insurance Law
The objects and functions of the National Insurance Commission; Statutory obligation of
Insurers: Registration of insurers, insurance brokers, adjusters, chief agents and agent.
Appeals, suspension and cancellation of registration

Other Financial Law

Non-banking financial law; Security Industry Law; Ghana Stock Exchange Law; Investment
Code

18
PROFESSIONAL LEVEL PAPER 6

STRATEGY AND GOVERNANCE

OBJECTIVE

To test the candidates ability to:

a) Explore in broader and specific context the managerial functions and strategic
directions of an organization
b) Understand and appreciate current corporate governance issues and developments.

THE SYLLABUS

1. Strategic Management
- Nature of Strategic decisions. Strategic management process. Mission. Goal.
Objectives
- Strategic Analysis of nations, businesses and organizations. External and
internal analysis. SWOT; PEST; 7Ps; Competitors cost analysis; Generic
Competitive Strategies. Tools for strategic analysis; Structural analysis
(Porters forces model); Boston Consulting Group matrix (BCG); Porters
Value Chain; Product Life Cycle.
- Strategic Development Routes and achievement of Strategic Fits. Internal and
External growth strategies. No change strategies. International strategies.
Strategies for declining Businesses. Exit Strategies.
- Evaluation of Strategies. Nature of strategic evaluation. Evaluation criteria.
Assessment of the strategic logic of options. Use of BCG Matrix; Life Cycle
analysis; Life Cycle Portfolio Matrix.
- Strategic Plan formulation and implementation. Organizational Culture.
Teams and team management. Strategic change. Change and innovation
management.

2. Strategic Operations and services Management

- Design of Strategic Operation System. Estimation of resources and time to
accomplish work. Cost of services required
- Operation planning and control. Resource allocation. Time management
- Just-in-time techniques
- Total Quality Management; Techniques of quality control and quality
assurance; Quality Circles
- The role and purpose of marketing. Identifying marketing opportunities and
competitive advantage. The impact of globalization on the market and
operations.

19
3. Strategic Human Resource Management
- The importance and nature of human resource management
- Human resource planning
- Selection, recruitment and placement
- Performance evaluation. Job evaluation, staff appraisal and performance
measurement
- Formulating an effective compensation mechanism
- Training and developing human resource
- The legal framework of human resource management.

4. Corporate Governance
- The rationale and nature of Corporate Governance
- Composition of the Board of Directors
- Functions of the Board of Directors
- Role of Executive and non-Executive Directors
- Best Practices of Corporate Governance in Ghana and elsewhere, e.g. the King
Report of South Africa, the Combined Code of UK, and OECD Principles
- Board Committees
- The role of shareholders and other stakeholders in the practice of good
corporate governance
- The implementation and reporting of corporate governance policy.
Stakeholders/shareholders expectations; and statutory requirements. Internal
reporting mechanism.
- Controls. Developing and implementing control systems. Nature of Internal
Controls. The purpose and functions of the Internal Audit Act and Financial
Administration Act.
- Ethics and ethical responsibilities of directors. Social responsibility.
Managing ethical behaviour.

20
FINAL LEVEL 1 - PAPER 7

TAX AUDIT AND INVESTIGATION

OBJECTIVE

To test students ability to apply auditing and investigation principles and procedures to obtain
information for taxation practice and other purposes

THE SYLLABUS

1. The Framework of Auditing

The concept of accountability; Auditing principles, concepts, methods and

techniques. The concept of independence; the professional and legal environment;
Legal rules; professional guidelines and ethical aspects of auditing.

2. Duties and Responsibilities of the Auditor

The responsibilities of the auditor for misstatements and forming opinions on

financial statements; The auditors duties to primary clients and third parties.
Auditors liability

3. Audit Planning

Evaluation of the client: Objectives and scope of the audit: Audit risk areas.
Engagement letter; Developing the audit plan to achieve the desired goals. Audit
files and working papers; Work programmes; Job Costing budgets; Audit
committees.

4. Audit Practices and Procedures

Audit evidence collection: Sources and methods of collecting audit evidence.

Selecting the appropriate audit procedures; Audit tests. Compliance and substantive
test; Statistical and other sampling approaches to audit testing; Observation and
directional testing; Cut-off tests; Third Party confirmations; Management
representations; Evaluating internal controls. Systems audits; evaluating the
management information systems; Computer-based systems; Computer assisted
audit techniques

21
5. Audit Engagements and Investigations

Tax compliance risk management: desk audit; issue oriented audit; comprehensive
audit; case selection methodologies; data mining; rule based and automated risk
scoring systems; tax returns; information from third parties; previous case histories;
generic taxpayer/business sector profiles; screening or use of data analyzing
techniques for case selection; other statistical analyzing techniques

Terms of Reference; Responsibilities to third parties; Investigation and audit for tax
purposes; Investigation and tax audit under Ghana Revenue Authority legislations.
Investigative Techniques; Leads; Revenue inquiry and investigations; Taxpayer
questionnaires; Information gathering techniques; Determination of customs regime
relating to application of Harmonized Codes; Analysis of financial statements (eg
production records) to determine the reliability of financial and other records for tax
purposes Management Audits

6. Audit Review and Report

Evaluating and analyzing the reliability, relevance and sufficiency of audit evidence;
forming audit opinions. The form and contents of audit reports; Tax audit and
investigation reporting

22
FINAL LEVEL 1 - PAPER 8

OIL, GAS AND OTHER MINERALS TAXATION

OBJECTIVE
a. To understand the basic principles, theories and techniques of petroleum economics
b. To be conversant with the regulatory framework of the oil, gas and other minerals
sectors
c. To understand the fiscal regime of the oil, gas and other mineral industry
d. To apply (a.) to (c.) above to solve real time tax problems

THE SYLLABUS

Introduction

Ownership of petroleum resources, minerals; acquisition of petroleum and mineral rights; The
rationale for having unique tax regime for the extractive industry; the aims and objectives of
the state and investors to venture into the extractive industry; the pre-emption right of the
Republic of Ghana; the pre-license phase; reconnaissance phase; prospecting phase; rights
acquisition/contracting phase; exploration phase; evaluation and appraisal phase; development
phase; production phase; decommissioning phase; surrender of mineral rights; suspension and
cancellation of mineral rights, mining lease or restricted mining lease; surface rights and
compensation; power of the Minerals Commission; functions of the Inspectorate of Mines

Fundamentals of Petroleum Economics

Petroleum micro economics: theory of the firm in the petroleum sector; revenue concepts
cash flow and revenue; cash flow versus profits; fixed costs versus variable cost; marginal
costs; how costs, revenues and profits vary with output

Petroleum macro economics: supply and demand; impact of energy on economic growth; the
effects of fiscal and monetary policy on the petroleum sector; the impacts of international
organizations such as OPEC on the petroleum sector

The regulatory framework of Oil and Gas industry

The role and functions of the national petroleum regulatory authority

The Petroleum Exploration and Production rule and regulations
The Petroleum Agreements: scope and interests of the parties; contract area and period of
exploration; exploration programme; relinquishment; joint management committee; obligations
and right of contracting parties; sharing of crude oil; measurement and pricing of crude oil;
foreign exchange transactions; provisions for natural gas; information and reports; inspection,

23
safety and environmental protection; accounting and auditing; title to and control of goods and
equipment; purchasing and procurement; employment and training; force majeure; term and
termination; consultation, arbitration and independent expert assignment; corporate guarantee

The Fiscal Regime of Oil and Gas industry

The Fiscal System: concessionary or royalty or tax system versus production sharing system;
joint venture arrangement; marginal field operation or sole risk; service contract; carried
interest/paying interest; surface rentals; signature bonus; ring fence rules; corporate tax and
other reliefs
Tax-deductible and treatment of all phases of oil and gas operations
Revenue and cost streams: cost oil; profit oil; royalty; petroleum income tax; withholding tax;
additional oil entitlements; upstream versus downstream operations

The Petroleum Holding Fund: payment in lieu of cash; receipts; prohibitions; carried and
participation interests; transparency and accountability of receipts; reconciliation of the fund;
benchmark revenue; annual budget funding amount; disbursement from the fund; transfers into
the consolidated fund

The Ghana Petroleum Fund: management and investment of the fund; reports on the fund; The
Ghana Stabilization Fund; The Ghana Heritage Fund; objects and constituent of the funds;
withdrawals from the funds; composition and functions of the Investment Advisory Committee
Public Interest Accountability Committee: composition; objects and functions

The Fiscal Regime of Other Minerals

The tax treatment of preliminary costs; the tax consequences a company entering into a Farm-
in/Farm-out Agreement that allows another company to earn an interest in companys
tenements by incurring exploration costs

The tax consequences of deciding to move on from the exploration and development phase and
commence mining operations

Financing the purchase of equipment by way of lease, rather than loan; determining the
estimated life of a mine and selling, or scrapping (or demolishing) mining plant & equipment;
the relationship between tax and accounting depreciation

Differences between royalties and resource rental tax

The Mining Lease: terms for the granting of the mining lease; change of control; objection to
new or increased control; contraventions by the controller; restrictions and sale of shares;
special share of the Republic of Ghana; government participation in mining lease; programme
for mining operations; Merger and enlargement of mineral rights; Stability agreements;

24
Application fee; Annual ground rent; Annual mineral rights fee; The computation of mineral
royalties; Corporate tax computation of mining entities

25
FINAL LEVEL 1 - PAPER 9

INTERNATIONAL TAXATION

OBJECTIVE

a. To understand the principles, theories and techniques of international taxation

b. To understand the interaction of the Ghanaian tax system with other tax jurisdictions
c. To apply the principles, theories and techniques of international taxation to practical
situations
d. To solve unstructured problems which draw on the interaction of the Ghanaian tax
system with other tax jurisdictions

THE SYLLABUS

Introduction to international taxation

The definition of international taxation
The evolution of International taxation
The importance of international taxation: policy objectives
Primary and secondary sources of international tax
Primary and secondary rights of countries to charge tax:
Taxing rights of countries and constraints on countries taxing rights
International tax planning and forms of business organizations
The challenges of E-Commerce on international taxation

Jurisdiction to tax
The meaning of residence: in person am jurisdiction
Definition of residence in relation to a natural person; the physical presence test
Definition of residence in relation to persons other than natural persons: place of effective
management
Trading with versus trading in a country
Branch versus subsidiary
Residence versus source: residence system; source system; mixed system
Dual residency and changes of residency
Tax havens and the issue of preferential tax regimes

Taxation of non-residents
Taxation of non residents on domestic source of income (inbound) and on foreign source of
income (outbound)
Taxation of income of non residents derived from, brought in, accrued in Ghana
Source rules for income and expenditure

26
Taxation of business, employment and investment incomes: the concept of permanent
establishment and attribution of profits
Departures: tax claims and exit tax mechanisms
Methods of collecting tax from non residents
Ring fencing activities for tax purposes

Taxation of International transactions

Globalization, multinationals and tax base allocation
The arms length principle: connected persons; transfer pricing adjustment; elimination of
double taxation: the arms length range
Principles of comparability: factors for the determination of comparables; functional and risk
analysis
Information and documentation: transfer pricing policy; organization structure; nature of
business/industry; market and economic conditions; controlled transactions; transfer pricing
methods applied; assumptions and strategies; cost contribution arrangements; advance price
arrangements
Intra group service; service arrangements; deduction of expenditure paid for intra-group
service
Transfer pricing methodologies: Comparable Uncontrolled Price; Resale Price; Cost Plus;
Profit Split; Transactional Net Margin; Other methods of transfer pricing; Application of
transfer pricing methods
Adjustments to reported income and prevention of double taxation; Adjustment to profit;
corresponding adjustments;
Intellectual Property: patents, trademarks, trade names, designs or models, know-how and trade
secrets, literary and artistic property rights; importance of intangible property; transactions
involving intellectual property; establishing arms length royalty; OECD guidance on valuation
of royalty; Transfer of Intellectual Property
Cost Contribution Arrangements and Cost Sharing Arrangements: definition; scope; rationale;
elements; participants; contributions and balancing payments; basis for allocation; ownership
of resulting intangibles
Resolving and avoiding disputes; international tax disputes; origin of transfer pricing disputes;
dispute resolution process; resolving disputes arising from transfer pricing audits; Mutual
Agreement Procedure (MAP)

Thin capitalization or earning stripping: the arms length concept of thin capitalization; the
aims and objectives of thin capitalization rules; application of the safe harbor ratio; prohibition
of, or restriction on, back to back construction in respect of securitization and/or guarantee.

Organisation of Transfer Pricing audit function in revenue establishments: challenges;

centralized versus localised structure

Double taxation
Forms of double taxation: judicial double taxation and economic double taxation
The rationale and objectives of tax treaties
Meaning of person; company; enterprise of a Contracting State; enterprise of the other
Contracting State; international traffic; competent authority; national; pension fund;
resident of a Contracting State. Determination of permanent establishment
Taxation of income as per bilateral and multilateral tax conventions

27
Methods of preventing double taxation
Consequences of methods of double taxation
Double taxation relief: exemption system and credit system
Tax treaties: OECD Model; United Nations Model; Other Models
Tax treaty shopping; Tax sparing

Other Issues in international taxation

Global challenges and global innovations in international taxation
Labour mobility and income tax competition
Corporate tax competition: the economics of taxing cross border savings income
Money laundering issues: every financial transaction leaves a paper trail
Tax effects in the valuation of multinational corporations
Comparative taxation: different approaches by other jurisdictions to basic principles and
techniques in international taxation
The ethics of tax evasion in international taxation

28
FINAL LEVEL 1 - PAPER 10

STRATEGIC TAX PLANNING

OBJECTIVE

To test candidates understanding and use of the tax laws in the application and solution to real
time business tax problems

THE SYLLABUS

Strategic Tax Planning

The Decision Making Process

Taxation and Present Value Analysis
Basic Principles of Tax Planning
Entity Variable, Time Period Variable, Jurisdiction Variable, Character Variable
Other Factors Affecting Tax Planning
Legislative and Judicial Restriction, Uncertainty

Tax Strategies for New Business

Organizational Strategies
Organizational Forms for Business Entities
Basic Tax Consequences of Entity Choice
Corporate Formation, Partnership Formation, Single Proprietor Formation
Other Strategies for Transferring Property to Controlled Entities
Sale or Lease of Property to Controlled Entities
Employee Compensation Strategies
Proprietor Compensation, Employee Compensation, Fringe Benefits
Deferred Compensation, Equity Based Compensation, Employee Stock Plans/Options
And Partnership Interest as Payment for Services

Taxation and Business Operating Strategies

Profit Measurements and Reporting

The Entitys Accounting Year, Tax Accounting Methods
Differences (permanent and temporary) Between Book Profit and Taxable Profit

29
Accounting for Income Taxes: Deferred Tax Assets and Liabilities, Corporate Tax Payment
Requirements

Tax Incentive Provisions

Tax Incentives and After-Tax Business Value, Criticisms of Tax Incentives and
Restrictions on their Benefits
Profit and Loss Allocations by Partnership Entities
Partnership Tax Assessment
Distributions to Business Owners
Corporate Distributions, Partnership Distributions, Sole Proprietor Distributions
Anti-Avoidance Schemes

Strategies for Business Growth and Expansion

Multiple-Entity Business Structures

Business Reasons for Multiple Entity Structures
International Business Expansion
Jurisdictional Issues for Multinational Businesses, Double Tax Treaties
Foreign Tax Credit, Sourcing of Income and Deductions, Transfer Pricing

Taxation and Business Capital Transactions

Disposition of Equity Interest in Business Entities

Sales and Exchanges of Corporate Stock, Stock Redemptions, Tax Effects of Stock
Disposition on the Stock Market
Corporate Acquisitions, Mergers and Divisions
Overview of Corporate Acquisitions Assets or Stock? Purchase of Targets Assets
Limitation on use of Targets Tax Attributes, Corporate Divisions Spin-Offs,
Split-Offs and Split-Ups

30
FINAL LEVEL 2 - PAPER 11

ADVANCED TAXATION PRACTICE

OBJECTIVE

To test candidates ability to:

a) Display an awareness of the impact of all major taxes on transaction of Individuals,
Partnerships and Companies.
b) Appreciate the importance of taxation in personal and business financial planning and
decision making.
c) Solve unstructured problems which draw on the interaction of taxes.
d) Demonstrate the skills expected of the Chartered Tax Practitioner

THE SYLLABUS

The ascertainment and computation of income and income tax payable by individuals,
corporate entities, partnerships, trusts and other unincorporated businesses

The computation of reliefs and capital allowances

Taxation of employment income; Tax treatment of Retirement Savings and Life

Insurance Premiums

Application of the correct rates of import duties, value added tax, special tax, excise
duties, and other prevailing taxes on exports, imports and locally produced goods.
Determination of the correct classification of goods and true value of goods

Computation of Mineral Royalties

Taxation of Petroleum, Minerals and Mining entities
.
The application of the principles in respect of cessation of trade on liquidation or
reconstruction or amalgamation

Taxation of Insurance business; Short-term insurance and life insurance

Ascertainment of Capital Gain and Computation of Capital Gain Tax; Valuation and
Taxation of taxable gifts

Application of provisional and self-assessment rules and their relationship to business

financial decisions

31
Application of Tax Accounting principles and Taxation rules for determining income
Cash basis accounting; Accrual basis accounting; Prepayments; Claim of right; Long-
term Contracts; Trading stock; Debt obligations; Jointly owned investments; Indirect
payments and benefits; Recouped expenditure.

The treatment of the following issues in taxation

Hedging
Distribution by corporate entities
Roll-over reliefs
Collateral benefits
Profit or dividend stripping

The general application of statutes and case law decisions to practical problems
.

32
FINAL LEVEL 2 - PAPER 12

TAX PRACTICE ADMINISTRATION & ETHICS

OBJECTIVE

To ensure that students acquire in-depth knowledge of tax administration procedures and
develop a thorough knowledge and understanding of tax compliance issues and be conversant
with the implications of non-compliance.

THE SYLLABUS

The Structure and Functions of Revenue Agencies

The structure and functions of the Ghana Revenue Authority

The powers of the Commissioner General of the Ghana Revenue Board
Delegation of duties and powers of the Commissioner General
The definition of Commissioner General in administration of taxes
Functions of custom administration: revenue and non revenue functions; agency duties; duties
of customs officer; duties of excise officer; duties of preventive officer; reasons for
prohibitions and restrictions on imports and exports

The Tax Compliance Process

Assessment and filing of return procedures relating to Income Tax, Capital Gains Tax, Gift
Tax, other taxes and levies
The assessment procedures of Customs, Excise, Export, and Import Duties, and Special Taxes
and Value Added Tax
Goods-in-transit procedures
Preparation of Customs Entry Forms
The import entry and export entry making processes
Valuation for customs purposes
Import entry declaration and procedures for clearing goods
The conditions and procedure for duty drawback
The entry procedure for free zones goods
Custom warehousing, bonds and securities
The preparation of returns for communication service tax and payments
The due dates for filing returns and payment of Income tax, VAT, Duties, Special Taxes
Preparation of VAT Returns and payments
The documentation requirement of imported service
.

33
Collection Procedures: Collection of Tax by attachment and garnishment; Tax as a debt to
Internal Revenue Service, Customs, Excise, and Preventive Service and Value Added Tax;
Duties of receivers. Recovery of tax from agents: Appointment of agents for the collection of
taxes.
The procedure for remissions, refunds and set-off of taxes

Objections and appeals procedure: the process of resolving disputes

The procedure for imposing interests and penalties
How to deal with tax offences
Offences and Penalties for non compliance of transfer pricing rules and regulations
Tax forms and notices: Procedure for serving notices and other documents; Documents
containing mistakes.
The process and conditions for obtaining and issuing Tax Clearance Certificate Tax
Identification Number (TIN)
Preparation of tax schedules and tax returns for compliance purposes
The meaning and interpretation of terms specifically used in the authoritative sources of
revenue law.

The Tax Consultancy Process

Managing the phases of the consulting process:
The relationship building phase of the process: entry and contracting stages; the information
phase; the action phase; the feedback and terminating procedure of the tax consultancy process.
The authoritative sources of Revenue law:
Statutory law, administrative interpretation, judicial interpretations, and tax treaties;
Secondary sources, tax periodicals, tax services and tax manuals:
Tax research: the elements of tax research; the process of conducting tax research

Professional, Legal Rules and Practice Guidelines

Legal rules: ownership of documents; retention of records and time limits; information requests
from revenue agencies; requests from other parties; data protection:

Professional standards and guidelines issued by the profession both in Ghana and international:
practice governance and management; client services; complaints; dispute resolution between
clients and practitioner; dispute resolution between practitioner and third parties; training and
continuous professional development:
The professional responsibilities of members in employment:

The ethical aspects of taxation practice: managing ethical behaviour in tax practice

34
EXEMPTION POLICY
1. No exemption is available at the Final Examination Levels.

2. Exemptions are at the discretion of Council.

3. Holders of the Taxation Technician Certificate are exempted from

Paper 1 Public Sector Economics & Finance

2 Income Taxation
4 Indirect Taxation

4. Members of the following professional bodies may be exempted from the professional
level examinations.

Ghana Bar Association

Institute of Chartered Accountants (Ghana)
Chartered Association of Certified Accountants (ACCA) of UK
Institute of Chartered Management Accountants (ICMA) of UK
Chartered Institute of Public Finance & Accountancy (CIPFA) UK

5. Exemption for all other qualifications will be on subject to subject basis provided
evidence is adduced that the student attained the level of knowledge and the standard
required.

6. Exemption is not available for an incomplete qualification

7. Fee is charged per paper exempted

35
TRANSITIONAL ARRANGEMENTS

1. Students who completed the old Level 1 examination are to start from the Professional
Level of the New Scheme.

2. Students who partly completed the old Level 1 will be automatically registered as a student
for and exempt from the Taxation Certificate Examination on subject to subject basis. Such
students will be de registered as students of the professional examination scheme

3. Students who partly completed the old Level 2 examinations will have their passes credited
at the new professional level on subject to subject basis

4. Students who completed the old Level 2 examination are to sit the following papers in the
Final Levels of the new syllabus to complete:

Paper 7 Tax Audit and Investigations

Paper 10 Strategic Tax Planning
Paper 11 Advanced Taxation Practice
Paper 12 Tax Administration

5. Students who have referred papers at the old Level 3 will have to write the referred papers
as follows:

Old Scheme New Scheme

Paper 13 Advanced Taxation Practice Paper 11 Advanced Taxation Practice
14 Tax Audit & Special Investigations 7 Tax Audit & Investigations
15 Tax Administration 12 Tax Practice Admin & Ethics
16 Strategic Tax Planning 10 Strategic Tax Planning

Students must sit and pass the referred paper before or during the February, 2013 examination
session. Students who fail to sit and pass their referred paper before or during the February,
2013 examination session are to start the examination scheme from the new Final Level 1.

6. The new examination scheme and syllabus take effect from August, 2011 and will be
examined for the first time at the February 2012 examinations.

36
CHARTERED INSTITUTE OF TAXATION (GHANA)

MARKING SCHEME

INTERNATIONAL TAXATION (FEB 2013)

PAPER 9

QUESTION 1

a.

The marketing and sale of cellular phones in China, Ghana and Sweden result in profit/loss to G Network
Limited and as such are liable to corporate taxation in Ghana. Ghana has taxing rights to the marketing
and sales activities if the marketing and sales activities are affected by G Network Limited to customers
in other countries. Ghana is trading with those countries.

(5 marks)

b.

G Network limited is not entitled to capital allowance on the machinery because it does not use the
machinery in the manufacture of the cellular phones, The reason for G Network to give machinery free
of charge to Comtel Limited to undertake manufacturing activities is between the two companies and
must be ignored by the tax authorities in Ghana. Therefore, such expenditure does not meet the criteria
for deduction under section 13 of Act 592 or for capital allowance. If the machinery is leased then the
leased cost may be allowed. The case did not state that the asset was leased then the leased cost may
be allowed. The case did not state that the asset was leased to Comtel Limited. Also as the patent was
used by Comtel Limited the acquisition cost is not deductible by G Network Limited.

(5 marks)

c.

G Network Limited has to prove to the satisfaction of the tax authorities that the debt has been bad.
This usually involves showing the recovery actions taken. In respect of the principal portion of the loan it
is necessary to consider the circumstances under which the loan was granted for thin capitalization and
transfer pricing purposes.

(5 marks)

d.

G Network limited activity of refurbishing an office which it did not occupy and selling that office will
attract capital gains tax. The refurbishment cost cannot be a deductible expenditure under section 13 of
Act 592.
(5 marks)

Question 2

Under Article 4 of the Model Tax Convention on Income and on Capital, a person who, under the laws of
a jurisdiction is liable by reason of residence or place of management is regarded as resident in that
jurisdiction for tax purposes. However, where a company is a resident of two contracting states the tie-
breaker rule shall apply. In that rule, the company shall be deemed to be a resident only of the state in
which the company has its place of effective management.

This problem requires the interpretation and application of Article 4(3) of the OECD Model.

The commentary to Article 4 provides that the following factors should be taken into account to
determine where an entity has its place of effective management.

Where the Board of Directors usually meets:

In this case the Board meetings are held in Country B and attend by all the directors except one who
stays in country A and participates by telephone. The evidence here is therefore not conclusive.

Where the senior executives usually carry on their activities and where the senior day-to-day
management of company is carried on:

The companys business activity, manufacturing, is carried on in Country A where two directors live.
These two directors make the management decisions for operating the manufacturing plant and consult
other directors on exceptional importance matters. This conclusive indicated that this condition is
fulfilled.

Where the companys Headquarters are located and which countrys law governs the legal status of the
company? The company is clearly governed by Country A law because it is incorporated there.

From the foregoing the company is registered in Country A for tax purposes.

(18 marks)

Questions 3

a.

The credit system gives credit for foreign income against the home country tax liability on that income.
The exemption system means that the home country does not tax income which has already been taxed
abroad. Under the exemption method, the jurisdiction to tax rests exclusively with the country of
source. The exemption method completely eliminates residence source international double taxation
because only one jurisdiction, the source country is imposing tax.
Under the credit method resident taxpayers are treated equally from the perspective of the total
domestic and foreign tax liability, except if foreign taxes exceed domestic taxes.

The choice of the systems of double taxation relief can determine the extent to which a country is able
to preserve its tax base. Although simpler to operate than the credit system, use of a basic exemption
system is likely to lead to a countrys residents transferring their mobile capital to tax havens.

It is considered good practice for a country to adopt a method of double tax relief which ensures both
capital export neutrality and capital import neutrality. If these conditions prevail then the working of the
economy is relatively unaffected by the issue of double taxation.

(10 marks)

Economic double taxation is abroad term that covers any situation where an amount of income is taxed
twice. For example, it occurs when a single country taxes the same income twice, as in the case of
taxation of corporate profits. These are subject to corporation tax and when the post-tax profits are
distributed to shareholders in the form of dividends, the shareholders are subject to income tax in part
or in full on the dividend shareholders are subject to income tax in part or in full on the dividend they
receive. Another example would be a worker whose wages are subject to income tax. When the worker
spends the (post-income tax) wages, he may be subject to consumption with international double
taxation, which is a narrower, legal form, technically known as juridical double taxation.

Juridical double taxation occurs where more than one country attempts to tax the same income.

(4 marks)

No relief Deduction Exemption Credit

(000) (000) (000) (000)

Country B branch 200 200 200 200

profits

Country B tax @ 35% 70 70 70 70

Net after-tax profits 130 130 130 130

Country A tax on 60 -- -- 60

200,000 @ 30%

Country A tax on 140 -- 39 -- --

@ 30%

Credit for Country B -- -- -- (70)

tax

Total tax paid 130 109 70 60

Effective tax 65% 54.5% 35% 30%

Rate (total tax/profits

Before tax)

(6 marks for the correct computations)

(4 marks for the correct computation of Effective Tax Rate)

Question 4

Centrum Limited will have a permanent established in Ducati if:

I t has its disposal a place that is fixed (i.e. must be established at a distinct place with a certain
degree of permanence), and
It carries on its business through that fixed place, and
Is not within the scope of the exceptions at Article 5(4) i.e. carrying on only activities which are
preparatory or auxiliary.

There is also evidence that business is conducted through such a fixed place. However, there are
exceptions to the fixed place rule. According to the exception rule, even if the activity is carried on
through a fixed place of business, as long as it is preparatory and auxiliary, the place does not
constitute a Permanent Establishment.

In such cases we need to established what the companys business actually is, and then consider
whether the activities conducted through the fixed place are auxiliary and preparatory in relation to
that business. In this case, the business of Centrum Limited is the manufacture and distribution of
expensive medical diagnostic equipment. It seems that it is this business which is, at least in part,
conducted through that fixed place in Ducati. However, Centrum Limited does not have any employee in
Ducati and that it conducts business activities at the fixed place that are not auxiliary and preparatory in
relation to that business.

Article 5(5) of the Model Tax Convention on Income and on Capital considers an agent acting on behalf
of an enterprise in the other state and has habitually exercises an authority to conclude contracts in the
name of the enterprise as d dependent agent. As such that enterprise is deemed to have a permanent
establishment in the state the dependent agent acts. Decuples Limited employees perform all the
marketing and sales functions for Centrum Limited. By referring customers to websites to place orders
with a sales representative are not working for Decuples Limited. Decuples Limited, therefore, fits into
the provision of Article 5 (5) and be considered as a dependent agent of Centrum Limited. Therefore,
Centrum Limited is deemed to have a permanent establishment in Ducati.

(18 marks)

Question 5

Non discrimination Article 24 of the Model Convention on Income and on Capital prohibits the
contracting State from imposing tax burdens on citizens or residents of the other Contracting State that
are less favourable than imposed on their own citizens or residents. The article applies to permanent
establishments of the Contracting States. Non discriminations refers to distinguishing between persons
adversely on the grounds that are unreasonable, irrelevant or arbitrarily.

The article requires countries to allow the deduction of amounts paid by residents of the treaty partner
on the same basis as amounts paid to residents of the first country. It affords the protection against
discrimination indirectly because the beneficiaries of the legal protection are domestic enterprises. It
also ensures that enterprises whose capital is owned or controlled by residents of the treaty partner
must be treated no less favourably than domestically owned for controlled enterprises.

(10 marks)

A resident of a contracting state who believes that the action of one or both contracting states will
cause or caused him or her to pay a tax not in accordance with the treaty may appeal to the competent
authority of the state of which he or she is a resident. The competent authority will determine whether
the taxpayers complain is justified and, if so, will attempt to provide an appropriate remedy. If the
competent authority cannot resolve the dispute, he may try to resolve it through consultation with the
competent authority of the other contracting state.

The Article 26, Mutual Agreement Procedure, contemplates that competent authorities will attempt to
resolve matters referred to them, they are not required to reach agreement even if the results is that
the taxpayer is subject to double taxation. Even though a taxpayer can make its case to the competent
authority of its country of residence, the taxpayer is not allowed to participate directly in the
consultative procedure of between the competent authorities of the contracting states.

(10 marks)
 The Institute of Chartered Accountants (Ghana)

Conference on Oil and Gas

Thursday, 27th October 2011

Presented By:
Abdallah Ali-Nakyea
FCIT, FCCE, FICB, FIIA, MTP(SA), CA(GH), LLB (Hons), BL, MPhil (Econs)
 Table of Contents
Details
1 Objectives
2 Legal Framework for Taxation & Overview of
Revenue Types
3 Ascertainment of Chargeable Incomes under PITL &
Deductions
4 Withholding taxsub contractors, employees etc
5 Overview IRA relating to upstream Oil and Gas
Operations
6 Review of Petroleum Agreements
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011 2
 Table of Contents-contd
Details
7 Areas of inconsistencies between PITL & IRA and
way forward
8 Overview of Internal Revenue (Amendment) (No.
4) Bill
9 Value Added Tax Considerations

10 CEPS related Issues

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011 3
 Objectives

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Objectives

Enable participants appreciate the general principles of

direct & indirect taxes relating to petroleum activities;
Discuss with participants key tax legislations impacting
upstream petroleum operations and compliance
obligations of taxpayers;
Share with participants any strategic tax knowledge and tax
risks of the industry; and
Discuss with participants tax risk management issues
under the various laws and the way forward.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation &
Overview of Revenue Types

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation of Oil & Gas in Ghana

Source Framework
Primary source The Constitution of Ghana (Art.
174)
Direct Tax The Ghana National Petroleum
Regimes Corporation Law, 1983 (PNDCL 64)
Petroleum (Exploration and
Production) Law, 1984 (PNDCL 84)-
(PEPL);
Petroleum Income Tax Law, 1987
(PNDCL 188)-(PITL);
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation of Oil & Gas in Ghana (contd)
Source Framework
Direct Tax The Internal Revenue Act, 2000
Regimes (contd) (Act 592)-(IRA); and Regulations
as amended; and
The Petroleum Agreements-
(PA).
Indirect Tax The Value Added Tax Act, 1998 (Act
Regime 546) as amended-(VATA) and
Regulations
Indirect Tax The Customs, Excise and Preventive
Regime Service (Management) Law, 1993
(PNDCL 330) as amended-(CEPS
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference

LAW). Thursday, 27 October 2011

 Overview of Revenue Types

These include:
Royalty
Carried interest
Additional interest
Petroleum income tax
Additional oil entitlement
Surface rentals
Other rentals
Technology allowance; and
Training allowance
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Royalty
Payment for the right to take oil or gas from the land or
sea
Levied as a percentage of the gross value of oil or gas
won (produced), irrespective of profitability
Rate ranges from 4% to 12.5% but depends on each
contractors PA ( 5%, 7.5%, 10% etc)
Carried Interest
Participating (or carried) interest entitles GNPC to 10%
of any distribution of petroleum or revenue to interest
holders in any petroleum operation for which GNPC
does not pay exploration and production expenses
GNPC does this on behalf of the state

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Additional interest
After discovery of petroleum in commercial quantities,
GNPC on behalf of the State would be required to pay an
agreed percentage of the development and production cost
to acquire additional interest in any petroleum operations.
This entitles GNPC to additional interest in any distribution
of petroleum or revenue to interest holders
Petroleum income tax
Petroleum Income Tax is essentially the tax payable on the
income derived from oil and gas production. It includes the
corporate tax, withholding tax of subcontractors and
employment tax.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Additional Oil Entitlement (AOE)
The AOE is an additional profit tax based on the rate of
return achieved. The State is entitled to additional oil, if
the Contractor achieves a specified after tax real rate of
return. The Contractors rate of return is calculated on its
net cash flow in accordance with a formula specified in
the Petroleum Agreement. The AOE is meant to ensure
that the State shares in excess profit accruing to
Contractors

Applies where contractors actual IRR>Target rate of

return used to evaluate the profitability of venture during
negotiations
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Surface Rental
Contractors are obliged to pay surface rentals for blocks
assigned to them for petroleum operations
Surface rentals payable to the state are as follows:

Phase of Operation Surface Rental Per

Annum
Initial Exploration Period US$30 per sq. km
1st Extension Period US$50 per sq. km
2nd Extension Period US$75 per sq. km
Development and US$100 per sq.km
Production Area
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Other Rentals
These consist of:
Government property
Public lands
Specific services provided by public enterprises (at not
more than commercial rates)
Technology Allowance
A onetime payment by the Contractor to assist GNPC procure
plants, equipment and machinery required for petroleum
operations.
Training Allowance
Annual payment by Contractor to support GNPC in human
resource capacity building

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Specific Legal Framework

Petroleum income tax regimes include:

Petroleum Income Tax Law, 1987 (PNDCL 188);

Internal Revenue Act, 2000 (Act 592);

Petroleum Agreements;

Amendment No. (4) Bill

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable
Income & Deductions

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income-Basis of Taxation
Article 12.1 of the Petroleum Agreement (PA) stipulates the
following:
No tax, duty, fee or other impost shall be imposed by the
State or any Political Subdivision on a Contractor, its
Subcontractors or its Affiliates in respect of activities
related to Petroleum Operations and to the sale and export
of Petroleum other than as provided in the Article.
Art.12.2 makes reference to the PITL for taxation purposes
and says:
A contractor shall be subject to Income Tax in accordance
with the PITL levied at the rate specified by the PA. The
company tax rate of the PITL is 50%. Most PAs have
agreed 35%.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
S.1 of P.N.D.C.L. 188 stipulates:
A person carrying on petroleum operations shall pay tax
for each year of assessment on his chargeable income
calculated in the manner prescribed by the PITL
Chargeable income is calculated by deducting from the
gross income for the year amounts specified in S.3 of
PITL;
Gross income means income from the sale at selling
prices actually realised or export without sale as per PA
In the case of a sale to an affiliate or an export without
sale at world market prices as provided for under the
specific PA to which such person is a party (See PA 11.7)

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Gross Income is defined under S. 38 of P.N.D.C.L. 188 as
the income derived from the sale or export without sale
of petroleum and income incidental thereto.
Income derived from assignment of interest in any
petroleum agreement is not included in Gross Income
Note also income from sale of assets used in petroleum
operations under schedule 3 paragraph 6. Divide by 5
years and add to gross income
Gross income excludes income as per paragraph 5 and 7.
Some matters to consider:
See next slide.............

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Matters to consider!!
What about other incidental incomes as can be seen
below?
Interest income e.g. (i) interest on money deposited in a
current account in the ordinary course of business (ii)
Interest arising from investment decisions such as
treasury bills, fixed deposits etc
PITL does not address other incomes BUT does not also
make us helpless, why?
Because of S.39 (5) Repeals of PITL .............So can we
depend on this?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Because of S.39 (Repeals).............
S.39 (5) says-Except as specifically provided in this Law (PITL)
or under legislative instruments made under S.41, the
general laws of Ghana relating to tax administration,
jurisdiction to impose tax and to try offences in respect of
tax matters, shall continue to apply to the matters provided
for in this Law.
S.41 referred to above relating to legislative instrument has
this to say:
Where the Secretary/Minister deems fit, he may by Legislative
Instrument (L.I) exempt a contractor from the operation of
any general law or provisions thereof relating to taxation
other than this Law.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable Income Deductions
S.6The cardinal principle
Expenses must meet the deductibility test as follows:
All outgoings and expenses must be wholly, exclusively
and necessarily incurred by such person for the
purpose of petroleum operations for the year of
assessment. These include:
Rentals
Royalties
Interest, fees or charges upon any money borrowed by
an operator, BUT the Commissioner must be satisfied
that such interest, fees or charges were payable on
capital employed for purpose of petroleum operations
.....
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Expenses in respect of repairs of premises, plant and
machinery or fixtures employed for the purposes of
petroleum operations
Debts directly incurred in the conduct of petroleum
operations proved to have become bad or doubtful under
certain conditions
Contributions to a pension fund or provident fund
approved by the Commissioner under certain provisos
Sums expended in educating or training of citizens and
nationals of Ghana in an approved educational and
technical institutions et al
Special Carried Interest Allowance Income from sale of
petroleum transferred by GNPC to the Contractor to settle
moneys advanced by the Contractor in respect of GNPCs
participation interest;

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Such other deductions as may be prescribed by any rule
made under the Secretary/Minister (in charge of Revenue)
..
S.3 (7) says. The Minister may by legislative
instrument prescribe rules and the method for calculating or
estimating the deductions allowed or prescribed under S. 3
(i.e. deductions).
Tax losses of prior year after commencement of operations
are legitimate deductions
Loss carry forward in petroleum operations are indefinite
(unlimited)
Losses deducted prior to the coming into force of this Law
(PITL) cannot be deducted

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Capital allowance computed and allocated in a manner set
forth in the provisions of the schedule to the PITL
So what about the provisions set forth under the
Internal Revenue Act, 2000 (Act 592) relating to
petroleum operations?. We will review this aspect
later..
Take a look at capital allowance in much detail below.
Schedule 3 of PITL has detailed provisions relating to capital
allowances (CAs)
CA shall be deducted from the gross income in each year of
assessment and in subsequent years of assessment
CA in the year of commencement is calculated by dividing
the sum of petroleum capital expenditure incurred in the
year of commencement and the capital expenditure incurred
in previous years by five (i.e. 20%)

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Amount so calculated shall be deducted in the year of
commencement and in each of the immediately succeeding
four years
CA for the year of commencement shall cease to subsist
where it has been deducted in five (5) successive years
including the year of commencement
Annual CA is calculated by dividing the total CA incurred in
that year by five(5) and the amount so calculated shall be
deducted in the year and the subsequent four (4) years
Annual CA shall cease after five (5) years
CA for any year shall be the sum of annual CA for that year +
CAs calculated for capital expenditure for years before
commencement and in the year of commencement

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
For purposes of calculating CA for the year of commencement
and prior years, capital expenditure shall be determined as
follows:
Deduct from capital expenditure consideration paid by any person
in acquiring an interest or proportionate part in a petroleum
agreement and in the assets held in connection therewith
Deduct the proceeds of sale of an asset on which petroleum capital
expenditure has been incurred other than under bullet one above
Deduct any insurance moneys, compensations as damages paid in
respect of loss or destruction of any such asset
Deduct sums received as reimbursement of costs and premiums
thereon in respect of sole risk operations conducted in accordance
with the terms of a PA

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Deduct any other amounts received in connection with
petroleum operations in or before the year of commencement
In the case of sale of asset after year of commencement, the
following shall apply:
The proceeds of such sale, or in the case of an asset lost or
destroyed, any insurance moneys, compensation or damages
received shall be divided by five and the resulting amount
shall in the year of sale and in each of the immediately
succeeding four years be added to the gross income of such
person from petroleum operations for the purpose of
calculating his chargeable income

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Any sums received after the year of commencement as
reimbursement of cost and premium to a sole risk party
under the sole risk terms of a joint operating agreement
shall be treated as proceeds from the sale of an asset and shall
be divided by five and the resulting amount shall in that year
and in each of the following four years be added to the gross
income of such person from petroleum operations for the
purpose of calculating his chargeable income
The above provisions shall not apply to the assignment of
an interest in a PA any proportionate part thereof or to any
other asset assigned therewith

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Assignment of Interest
Where a petroleum operator assigns his interest in a PA or a
proportionate part and his interest in the assets held with
regards to the PA and the proportionate part, this will
impact capital allowances as follows:
Capital allowances to which the assignor would have been
entitled will be reduced for that year and subsequent years
by a proportion corresponding to the proportion of the
interest of the assignor in the PA which has been so
assigned
CAs to which the assignee would be entitled in that year
and subsequent years will be increased by an amount equal
to the amount by which the assignors CA has been reduced
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions not
allowed
Domestic or private expense
Expenses not wholly, exclusively and necessarily made
on petroleum operations
Any capital withdrawn or sums employed or intended
to be employed as capital
Any capital employed in improvements
Sums recoverable under an insurance policy or contact
of indemnity
Rent of or repairs to any premises or part of premises
not paid or incurred for the purposes of petroleum
operations
Any amount paid/payable in respect of income tax,
profit tax or other similar taxes whether in Ghana or
elsewhere

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions not
allowed (contd)
Depreciation of any fixed assets
Any contribution to a pension, provident or other
similar fund not within the terms of section 3 of
the PITL

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Withholding tax compliance under
PITL Sub-contractors &
Employees

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors
S.27 (1) Any amounts due to a sub-contractor in respect of
works or services under the terms of a contract in
connection with a PA, the person making the payment shall
withhold tax from the aggregate amount as may be
specified in a PA
Amount withheld should be paid to the Commissioner and
the payment made shall have the effect provided under
S.27 (2) i.e. deemed as a final tax . BUT there is an
exception
The PA expressly waives the withholding requirement from
the aggregate payment to the sub-contractor , on condition
that the sub-contractor is an affiliate of the contractor
whose services are charged to the contractor at cost
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors

S.27 (2) deems such withholding tax as final tax on the sub-
contractor. It stipulates that when an amount has been withheld
from an aggregate amount due to a sub-contractor as explained
earlier, the sub-contractor shall not in respect of the aggregate
amount be liable for tax under the provisions of any other law in
force in Ghana
Withholding tax provisions under the IRA are not applicable to a
contract for the supply of goods or the provision of work or
services for or in connection with petroleum operations
Issues to consider:
Does the withholding tax regime not cover goods?
Are we to resort to S.39 (5) of PITL in respect of goods? To what
extent?
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors
Issues to consider:
Assuming it applies that sub-contractors are to suffer final
withholding tax , should sub-contractors not register and
file tax returns? Why?
What about when the conditions for the waiver of
withholding tax by reason of the affiliate relationship and
supply of works or services are made at cost, should sub-
contractors still register and file returns?
How do we determine that works and services supplied by
an affiliate sub-contractor to the operator were made at
cost?. Can we verify supplies made at cost?
Challenges of transfer pricing and arms length transaction
implications?
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Employees
Unless, and to the extent that, a Petroleum Agreement
provides in respect of any expatriate employee employed
by a contractor or a sub-contractor carrying on
exclusively petroleum operations the gains or profits of
such employee shall be liable to income tax and the
withholding of tax under the laws of Ghana
PAs have made specific provisions for
expatriates..
Thus PAs say.. foreign national employees of
Contractor, its Affiliates, and its sub-Contractors shall be
exempt from the income tax and withholding tax
liabilities if they are resident in Ghana for thirty (30) days
or less in any Calendar Year.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Overview of Internal Revenue
Act, 2000 (Act 592) As Amended
(IRA) In Relation to Upstream
Oil and Gas Operations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 IRA with Respect to Upstream Oil & Gas Operations
Some general provisions relating to capital allowances
contained in the Third Schedule to the IRA a follows:
A person shall be granted capital allowances for each year of
assessment in respect of depreciable assets owned by the
person at the end of a basis period ending within the year
and used in carrying on a business during that period
The Commissioner shall be notified about any new
depreciable asset acquired within one month after it has
been put into use in the production of the income from the
business
Capital allowance which a person is entitled to or granted
under this Act is not transferable either separately or
together with any depreciable asset

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd)
Under Class Three of the Schedule, its provided that
capital allowance be granted on Petroleum Operations as
follows:
Mineral and petroleum exploration and production rights;
assets in respect of mineral and petroleum prospecting,
exploration, and development costs;
Buildings, structures and works of a permanent nature used
in respect of assets used for mineral and petroleum
exploration and production which are likely to be of little or
no value when the rights are exhausted or the prospecting,
exploration, or development ends, as the case requires;
Plant and machinery used in mining or petroleum
operations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd)
It is further provided that Costs incurred by a person in
the production of income from a business in respect of
mineral and petroleum prospecting, exploration, and
development are treated as if they were incurred in
securing the acquisition of an asset that is used by the
person in that production
The rate of capital allowance is 80% in the year the asset
was acquired and 50% on reducing balance basis in
subsequent years. 5% of the cost of assets acquired in a
preceding year is added to determine the written down
value of assets for the current year

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

Issue to Consider:
1. Which way do we go? PITL or IRA?
2. Contentions from taxpayers if these differences exists ?
3. Capital allowance matters that have been expressly
provided for in the PITL cannot be replaced by
provisions of 592 due to ..S.39 (5) of PITL do you
agree?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

Leases
Two types namely operating and finance lease
PITL does not provide for this but IRA does, so.
Under IRA (S.34) we have the following:
Where a lessor leases a tangible asset to a lessee under an
operating lease then for the purposes of IRA, the lessor is
treated as the owner of the asset and the lease payments
are treated as payment received from the lessee

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd
Where a lessor leases a tangible asset to a lessee under a finance
lease, and that asset is used by the lessee in the production of
that lessee's income the lease rentals payable by the lessee shall
be treated as an expense deductible for tax purposes
Capital allowances are not granted to the lessee of an asset
under both operating and finance lease arrangements
Lease rent is fully deductible by lessee under both operating
and finance lease arrangement
Lessor who leases out an asset under operating lease can obtain
capital allowance and rent payable to him is fully taxable
A lessor who leases out an asset under finance lease is not
entitled to capital allowance in respect of the asset but may
reduce the rent

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

A lessor who leases out an asset under finance lease is not

entitled to capital allowance in respect of the asset but
may reduce the amount of rent income of the lessor by a
capital amount determined in accordance with guidelines
issued by the Commissioner
Issue to consider
Some assets of contractors may be on leasing possibly
finance lease
Do we go by IRAs treatment?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Review of Petroleum Agreements

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements

Article 12.1 of the Petroleum Agreement (PA) stipulates the following:

No tax, duty, fee or other impost shall be imposed by the State or any
Political Subdivision on Contractor, its Subcontractors or its Affiliates in
respect of activities related to Petroleum Operations and to the sale and
export of Petroleum other than as provided in the Article.
Royalty
Payment for the right to take oil or gas from the land or sea
Levied as a percentage of the gross value of (gross production) of oil or
gas won, irrespective of profitability
Rate ranges from 4% to 12.5% but depends on each contractors PA
(e.g.5%, 7.5%,10% etc)
Income Tax
Income Tax at the rate of 35%

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements-contd
Others include:
Additional Oil Entitlements
Surface rentals
Rental of Government Property, public lands or provision of
specific services requested by contractor from state affiliates
Surface rentals
Final withholding tax at 5% on sub-contractors on works and
services but some could be exempt if services are supplied to
the contractor are at cost
No export tax on petroleum exported from Ghana and no
duty and any other charge shall be levied on such exports
Vessels or other means of loading and transportation not to
be liable for any tax, duty, or other charge

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

Others include:
Subject to the local purchase obligations hereunder,
Contractor and Subcontractors may import into Ghana all
plant, equipment and materials to be used solely and
exclusively in the conduct of Petroleum Operations without
payment of customs and other duties, taxes, fees and charges
on imports save minor administrative charges, provided that:

GNPC shall have the right of first refusal for any item
imported duty free under this Article which is later sold in
Ghana; and

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

where GNPC does not exercise its right of purchase

Contractor may sell to any other person only subject to all
import duty and taxes as if such items were being imported
at the time of such sale; provided, however, that no duty or
tax shall be levied if the purchaser could have imported the
item sold free of duty or tax under an exemption similar to
Contractors hereunder. (PA Article 12.5).
Foreign National Employees
Foreign national employees of Contractor are allowed to
import and re-export personal and household goods free of
duties and taxes
Where the person decides to dispose of the items in Ghana,
the taxes and duties become due
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

Employees PAYE
All employees of Contractors and sub-Contractors are
subject to pay income tax in accordance with the
provisions of Act 592.

However, foreign national employees of Contractor, its

Affiliates, and its sub-Contractors shall be exempt from the
income tax and withholding tax liabilities if they are
resident in Ghana for thirty (30) days or less in any
Calendar Year.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of Inconsistencies between
PITL & IRA and way forward

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward
Income derived from assignment of interest or part
thereof and assets connected thereto in any petroleum
agreement is not included in Gross Income from
commencement year. Need to clarify the treatment of such
income be it under income tax or capital gains tax
Clarification is needed on income incidental thereto in
respect of Petroleum Operation as these are to be included
in Gross Income
To avoid confusion, capital allowance provisions relating
to petroleum operations be removed from the IRA since
PITL is to be the operative regime

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd
Taxation of profit earned from assignment of interest in a
PA is not captured in the PITL
Need to clarify how dividend tax should be applied on
distributions and which legislation should have
jurisdiction for dividend taxation
Need to provide clear guidance on how chargeable assets
for capital gains tax and gift tax purposes should be
administered on taxpayers
Provide guidance on legislations to be used for leasing
transactions. Is it IRA or there should be amendment to
reflect leasing transactions under PITL

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd
Thin capitalisation provisions need to be clearly set out for the
upstream oil and gas industry to provide adequate guidance
Transfer pricing rules to guide pricing of transactions between
affiliates and other associated entities
Limits for contribution to Pensions or Provident Fund for both
employer and employee as per PITL 3 (f) being 25% of total
remuneration needs to be revised to reflect the limits of (35%)
set out in the New Pensions Act
Clarify how joint venture partners should file returns and how
the filing should be done under unitisation
Need to expressly clarify if withholding tax regime does not
cover goods at all in the Law

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd

Under withholding tax on goods supplied by sub-

contractors, there is the need for clarification of what is
meant by supply of goods by an affiliate at cost to merit
exemption of the withholding tax

How does the Domestic Revenue Tax Division of the GRA

determine that works and services were supplied at cost?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview of Internal Revenue
(Amendment) (No. 4) Bill

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview

The Internal Revenue (Amendment) (No. 4) which we will call

The No. 4 Bill) is being amended principally to:
Make revision to some sections of the Internal Revenue Act,
2000 (Act 592) (IRA); and
To introduce a Chapter in Act 592 to provide for the
payment of Income Tax on petroleum operations, thereby
repealing the Petroleum Income Tax, Act 1987 (PNDCL 188)
which previously provided for the taxation of petroleum
operations
The No. 4 Bill introduces a fixed income tax rate of 35% for
petroleum operations. This is believed to be comparable to
the rates levied in countries with similar exploration
experiences and risks

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview (contd)

The Bill introduces tax treatment of Decommissioned Fund

required to be established by a contractor under the Petroleum
(Exploration and Production) Bill, 2010
The Bill retains the provisions in the PITL relating to capital
allowances which are considered adequate
The Bill provides for the imposition of Capital Gains Tax on
petroleum operations and the imposition of tax on profits arising
from the assignment of interest in a petroleum agreement
The Bill limits interest that should be allowed as deduction to
debt to equity ratio of 3:1 as safe harbour on petroleum
operations (thin capitalization);
Imposes withholding tax on interest payments, subcontractors,
expatriates etc; and
Provides for relevant sections of Act 592 to apply to petroleum
operations
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL

A person conducting petroleum operations shall be

subject to the Internal Revenue (Amendment) (No. 4) Bill
Pay income tax on chargeable income calculated in
accordance with provisions in the Bill in each year of
assessment
Tax payable in each year of assessment or quarterly
period shall be at the rate of 35%
CHARGEABLE INCOME
This shall now be total assessable income of a person from
the operations less the total amount of deductions allowed
to that person as specified in the Bill.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL-contd
Assessable Income
Full amount of income of a person from the operations
accruing in, derived from, brought into or received in
Ghana during any basis period of a person ending within
the year of assessment
Includes:
Income from sale, or disposal without sale of the petroleum to
which that person is entitled under a petroleum agreement
Income incidental* to those operations before the making of
allowable deductions
Excludes:
Any amounts referred to in para. 5 of Third Sch. A (i.e. pre-
commencement (specified incomes/receipts); and
Consideration for an assignment under paragraph 7 of Third Sch.
A
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL (contd)

Assessable Income
Income from sale shall be price actually realised at
arms length sale
For sale to an affiliate or disposal without an arms
length sale at market values, according to the PA which
the contractor is a party
Excess of consideration received from assignment of an
interest or part of an interest in a PA over the value of
the interest or part of the interest of that person would
be taxed at the petroleum income tax rate at the time
of assignment of the interest**
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL (contd)
Excess of consideration received from assignment of
an interest or part of an interest in a PA over the value
of the interest or part of the interest of that person
would be taxed at the petroleum income tax rate at
the time of assignment of the interest**
Where there is an assignment and the consideration
for the assignment is in the form of work by the
assignee, that work shall not be treated as income by
the assignor
Issue to consider
Why?. How do we tax this? Should CGT be assessed?
Clearly, this is an exchange. So
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions

The cardinal principle still applies (i.e. expenses wholly,

exclusively and necessarily incurred in the production of
income)
Areas affected include:
Interest- Introduction of thin capitalisation rules (94D (C(ii)
says: where debt to equity ratio of any person exceeds 3:1, the
interest allowable as a deduction shall be limited to the interest on
total loan that yields a debt to equity ratio of 3:1 for that person
Decommissioning fund Contributions to a decommissioning
fund set up in accordance with the Petroleum (Exploration and
Production) Bill, 2010
An expense incurred by a contractor in carrying out work required
by the decommissioning plan approved by the Authority in
respect of the contractors petroleum operations if that work is
not paid for directly
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Or indirectly from money made available from the
decommissioning fund are allowable deductions.
Any other applicable deductions specified under Part One of the Act
(i.e. IRA)
A deductible expense shall be in respect of income for the year of
assessment or basis period in which the expense was incurred and
no other expenses shall be set off against previous years of
assessment or basis period
Regulations made under S.114 of IRA can include any other
deductions
Loss carry forward is permitted up to 10 basis periods (10 years).
Losses shall be carried forward on FIFO basis. Loss carry incurred
cannot be made before commencement of this Bill/Act
Capital allowance provisions remain same as under PITL
A person shall not be allowed any deduction under this Act other
than those specifically provided in Part One and Part One A.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Taxation of Decommissioning Funds-Special
Consideration
An expense incurred in addition to contributions to
the fund shall be deductible from assessable income
Where the decommissioning fund was established by
that person under a petroleum agreement;
Or for the purpose of implementing obligations
under an approved decommissioning plan
No tax or levy shall be imposed by any law on
accumulated amounts in a decommissioning fund
under a PA
An amount withdrawn from the fund for the purpose
of decommissioning shall be exempt from tax
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Taxation of Decommissioning Funds-Special
Consideration
An expense incurred by a contractor in the course of
carrying out decommissioning shall not be
deductible from assessable income unless there is a
shortage of funds available in the decommissioning
fund to defray cost of decommissioning and the
contractor meets the shortfall from the contractors
own resources
Any surplus fund remaining in a decommissioning
fund after completing decommissioning in
accordance with the approved decommissioning
plan, shall be treated as Chargeable Income and tax
imposed on the surplus
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
Specific Changes to PITL-Deductions (contd)
Taxation of Decommissioning Funds-Special Consideration
The tax shall be the aggregate of:
A. An amount determined by applying to the surplus the
applicable tax rate; and
B. An amount determined by applying to the surplus amount,
less the amount determined under para (a) above, the
highest rate, calculated in accordance with the formula
prescribed in the relevant petroleum agreement of
additional oil entitlement paid by the person during the
period in which the person made annual contributions to
the relevant decommissioning fund
C. Any amount standing to the credit of the decommissioning
fund after payment of tax as above shall revert to the
contractor
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Transitional Provisions IRO No. 4 Amendment Bill

The petroleum tax regime in respect of an existing

petroleum agreement is hereby preserved and this part
shall not apply to an existing petroleum agreement except
in so far as a contractor is entitled to opt in based on the
terms of the petroleum agreement.
Consequential Amendment
Any reference to the PITL in an enactment shall be
construed as reference to this part.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Miscellaneous Provisions
The provisions of IRA relating to the imposition of tax,
assessment, collection, recovery, refunds, notices,
objections, appeals, offences and penalties as well as other
general and specific provisions including provisions to anti
avoidance of tax shall, unless expressly excluded by this
part or inconsistent with express provisions of this Part,
apply to petroleum operations
Part 2 of the amended IRA relating to capital gains tax
shall apply to petroleum operations
Where a provision of the IRA is inconsistent with the
provision of this Part (i.e. Part A), the provision of this
Part shall to the extent of the inconsistency prevail over
the provision of the IRA
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Value Added Tax Considerations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Value Added Tax Related Issues
General Considerations
Under the VAT Act, crude oil and hydrocarbon products (i.e.
petrol, diesel, LPG, kerosene and residual fuel oil (Schedule 1,
Item 15) are exempt from VAT;
the Petroleum Agreements grant exemption from the payment
of taxes, duties and fees to the main Contractor, its sub-
contractors and affiliates in respect of activities related to
petroleum operations and the sale and export of petroleum;
Exemptions would be granted administratively by way of:
1. A Relief Register and exemption letters for imports;
2. VAT Relief Purchase Orders (VRPOs) and Tax Refunds for
Domestic VAT/NHIL;
3. VRPOS made available to the Contractor.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
Value Added Tax Related Issues-contd
Challenges exist in the administration of the exemption clause
in the PA..
The typical exemption clause in the agreement states that No
tax, duty, fee or other impost (including VAT) shall be
imposed by the state or any entity or affiliate political sub-
division on the contractor, its sub-contractor or affiliate in
respect of activities related to petroleum operations and the
sale and export of petroleum other than as provided in this
Article.
The meaning of Petroleum Operations for purposes of
granting relief from VAT/NHIL does not appear to be clear;
Transactions need to be wholly, exclusively and necessarily
incurred for Petroleum Operations to qualify for exemption.
What then constitutes petroleum operations?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
Value Added Tax Related Issues-Contd
Challenges exist in the administration of the exemption
clause in the PA..
What constitutes wholly, exclusively and necessarily to
qualify as petroleum operations for purposes of
exemptions?

Areas of conflict can arise due to grey areas in the

exemption provisions of PAs and the VATA;

Inappropriate use of VRPOS: Non-issuance (or

retrospective issuance) of VRPOs and non-submission
of VRPO returns.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 CEPS Related Issues

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 CEPS Related Issues
General Considerations
Customs controls at importation, landing and exportation
begin from a port. Going by current CEPS law, FPSO-KN is a
port hence presence of Customs Division staff necessary on
it;
Accommodation for Customs officers on FPSO-KN to
facilitate their work is currently inadequate
Minimal amendment to CEPS Law which:
Declares FPSO-KN as a port;
Declare the security area around FPSO-KN as a customs area
to enable customs laws to apply to ships and tankers that
come to the field; and
Proscribe direct importation to the FPSO-KN.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 CEPS Related Issues-contd

General Considerations
Legislation is required to ensure that Contractors do
provide accommodation for CEPS officers.

The current legislation requires amendment to define

manufacturing to include petroleum operations which
will then make it mandatory that operators provide
accommodation on FPSO- KN.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Scope for further Laws and Legislative
Reviews ?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Further Laws and legislative reviews ?
The following draft bills which when passed into law will also
form part of the legal and regulatory framework:
Internal Revenue (Amendment) (No.4) Bill;
Ghana Petroleum Regulatory Authority Bill;
Petroleum (Exploration and Production) Bill.
The Internal Revenue (Amendment) (No.4) Bill will
encapsulate all the income tax laws relating to petroleum
operations;
Some issues identified for additional legislation are likely
to be addressed in the No. 4 Amendment Bill and possibly
Regulations
VAT and CEPS might issue internal regulations or seek
minor amendment in the Law to address issues identified.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Thank you

Questions, Contributions, Comments

et al

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 THANK YOU
ali@nakyea.com or
alinakyea@hotmail.com

THANK YOU
AND
DO STAY BLESSED
WTS Nakyea & Adebiyi Consult
Tax Attorneys & Solicitors
Geoman House, Pig farm Roundabout, Olusegun Obasanjo
Way, P.O. Box KD 66, Kanda-Accra.
Tel: 233 21 236334 (Direct) 233 21 238242 (Main)
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 The Institute of Chartered Accountants (Ghana)

Conference on Oil and Gas

Thursday, 27th October 2011

Presented By:
Abdallah Ali-Nakyea
FCIT, FCCE, FICB, FIIA, MTP(SA), CA(GH), LLB (Hons), BL, MPhil (Econs)
 Table of Contents
Details
1 Objectives
2 Legal Framework for Taxation & Overview of
Revenue Types
3 Ascertainment of Chargeable Incomes under PITL &
Deductions
4 Withholding taxsub contractors, employees etc
5 Overview IRA relating to upstream Oil and Gas
Operations
6 Review of Petroleum Agreements
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011 2
 Table of Contents-contd
Details
7 Areas of inconsistencies between PITL & IRA and
way forward
8 Overview of Internal Revenue (Amendment) (No.
4) Bill
9 Value Added Tax Considerations

10 CEPS related Issues

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011 3
 Objectives

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Objectives

Enable participants appreciate the general principles of

direct & indirect taxes relating to petroleum activities;
Discuss with participants key tax legislations impacting
upstream petroleum operations and compliance
obligations of taxpayers;
Share with participants any strategic tax knowledge and tax
risks of the industry; and
Discuss with participants tax risk management issues
under the various laws and the way forward.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation &
Overview of Revenue Types

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation of Oil & Gas in Ghana

Source Framework
Primary source The Constitution of Ghana (Art.
174)
Direct Tax The Ghana National Petroleum
Regimes Corporation Law, 1983 (PNDCL 64)
Petroleum (Exploration and
Production) Law, 1984 (PNDCL 84)-
(PEPL);
Petroleum Income Tax Law, 1987
(PNDCL 188)-(PITL);
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Legal Framework for Taxation of Oil & Gas in Ghana (contd)
Source Framework
Direct Tax The Internal Revenue Act, 2000
Regimes (contd) (Act 592)-(IRA); and Regulations
as amended; and
The Petroleum Agreements-
(PA).
Indirect Tax The Value Added Tax Act, 1998 (Act
Regime 546) as amended-(VATA) and
Regulations
Indirect Tax The Customs, Excise and Preventive
Regime Service (Management) Law, 1993
(PNDCL 330) as amended-(CEPS
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference

LAW). Thursday, 27 October 2011

 Overview of Revenue Types

These include:
Royalty
Carried interest
Additional interest
Petroleum income tax
Additional oil entitlement
Surface rentals
Other rentals
Technology allowance; and
Training allowance
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Royalty
Payment for the right to take oil or gas from the land or
sea
Levied as a percentage of the gross value of oil or gas
won (produced), irrespective of profitability
Rate ranges from 4% to 12.5% but depends on each
contractors PA ( 5%, 7.5%, 10% etc)
Carried Interest
Participating (or carried) interest entitles GNPC to 10%
of any distribution of petroleum or revenue to interest
holders in any petroleum operation for which GNPC
does not pay exploration and production expenses
GNPC does this on behalf of the state

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Additional interest
After discovery of petroleum in commercial quantities,
GNPC on behalf of the State would be required to pay an
agreed percentage of the development and production cost
to acquire additional interest in any petroleum operations.
This entitles GNPC to additional interest in any distribution
of petroleum or revenue to interest holders
Petroleum income tax
Petroleum Income Tax is essentially the tax payable on the
income derived from oil and gas production. It includes the
corporate tax, withholding tax of subcontractors and
employment tax.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Additional Oil Entitlement (AOE)
The AOE is an additional profit tax based on the rate of
return achieved. The State is entitled to additional oil, if
the Contractor achieves a specified after tax real rate of
return. The Contractors rate of return is calculated on its
net cash flow in accordance with a formula specified in
the Petroleum Agreement. The AOE is meant to ensure
that the State shares in excess profit accruing to
Contractors

Applies where contractors actual IRR>Target rate of

return used to evaluate the profitability of venture during
negotiations
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Surface Rental
Contractors are obliged to pay surface rentals for blocks
assigned to them for petroleum operations
Surface rentals payable to the state are as follows:

Phase of Operation Surface Rental Per

Annum
Initial Exploration Period US$30 per sq. km
1st Extension Period US$50 per sq. km
2nd Extension Period US$75 per sq. km
Development and US$100 per sq.km
Production Area
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Overview of Revenue Types (contd)
Other Rentals
These consist of:
Government property
Public lands
Specific services provided by public enterprises (at not
more than commercial rates)
Technology Allowance
A onetime payment by the Contractor to assist GNPC procure
plants, equipment and machinery required for petroleum
operations.
Training Allowance
Annual payment by Contractor to support GNPC in human
resource capacity building

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Specific Legal Framework

Petroleum income tax regimes include:

Petroleum Income Tax Law, 1987 (PNDCL 188);

Internal Revenue Act, 2000 (Act 592);

Petroleum Agreements;

Amendment No. (4) Bill

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable
Income & Deductions

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income-Basis of Taxation
Article 12.1 of the Petroleum Agreement (PA) stipulates the
following:
No tax, duty, fee or other impost shall be imposed by the
State or any Political Subdivision on a Contractor, its
Subcontractors or its Affiliates in respect of activities
related to Petroleum Operations and to the sale and export
of Petroleum other than as provided in the Article.
Art.12.2 makes reference to the PITL for taxation purposes
and says:
A contractor shall be subject to Income Tax in accordance
with the PITL levied at the rate specified by the PA. The
company tax rate of the PITL is 50%. Most PAs have
agreed 35%.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
S.1 of P.N.D.C.L. 188 stipulates:
A person carrying on petroleum operations shall pay tax
for each year of assessment on his chargeable income
calculated in the manner prescribed by the PITL
Chargeable income is calculated by deducting from the
gross income for the year amounts specified in S.3 of
PITL;
Gross income means income from the sale at selling
prices actually realised or export without sale as per PA
In the case of a sale to an affiliate or an export without
sale at world market prices as provided for under the
specific PA to which such person is a party (See PA 11.7)

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Gross Income is defined under S. 38 of P.N.D.C.L. 188 as
the income derived from the sale or export without sale
of petroleum and income incidental thereto.
Income derived from assignment of interest in any
petroleum agreement is not included in Gross Income
Note also income from sale of assets used in petroleum
operations under schedule 3 paragraph 6. Divide by 5
years and add to gross income
Gross income excludes income as per paragraph 5 and 7.
Some matters to consider:
See next slide.............

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Matters to consider!!
What about other incidental incomes as can be seen
below?
Interest income e.g. (i) interest on money deposited in a
current account in the ordinary course of business (ii)
Interest arising from investment decisions such as
treasury bills, fixed deposits etc
PITL does not address other incomes BUT does not also
make us helpless, why?
Because of S.39 (5) Repeals of PITL .............So can we
depend on this?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable Income - Charge to Tax
(contd)
Because of S.39 (Repeals).............
S.39 (5) says-Except as specifically provided in this Law (PITL)
or under legislative instruments made under S.41, the
general laws of Ghana relating to tax administration,
jurisdiction to impose tax and to try offences in respect of
tax matters, shall continue to apply to the matters provided
for in this Law.
S.41 referred to above relating to legislative instrument has
this to say:
Where the Secretary/Minister deems fit, he may by Legislative
Instrument (L.I) exempt a contractor from the operation of
any general law or provisions thereof relating to taxation
other than this Law.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable Income Deductions
S.6The cardinal principle
Expenses must meet the deductibility test as follows:
All outgoings and expenses must be wholly, exclusively
and necessarily incurred by such person for the
purpose of petroleum operations for the year of
assessment. These include:
Rentals
Royalties
Interest, fees or charges upon any money borrowed by
an operator, BUT the Commissioner must be satisfied
that such interest, fees or charges were payable on
capital employed for purpose of petroleum operations
.....
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Expenses in respect of repairs of premises, plant and
machinery or fixtures employed for the purposes of
petroleum operations
Debts directly incurred in the conduct of petroleum
operations proved to have become bad or doubtful under
certain conditions
Contributions to a pension fund or provident fund
approved by the Commissioner under certain provisos
Sums expended in educating or training of citizens and
nationals of Ghana in an approved educational and
technical institutions et al
Special Carried Interest Allowance Income from sale of
petroleum transferred by GNPC to the Contractor to settle
moneys advanced by the Contractor in respect of GNPCs
participation interest;

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Such other deductions as may be prescribed by any rule
made under the Secretary/Minister (in charge of Revenue)
..
S.3 (7) says. The Minister may by legislative
instrument prescribe rules and the method for calculating or
estimating the deductions allowed or prescribed under S. 3
(i.e. deductions).
Tax losses of prior year after commencement of operations
are legitimate deductions
Loss carry forward in petroleum operations are indefinite
(unlimited)
Losses deducted prior to the coming into force of this Law
(PITL) cannot be deducted

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Capital allowance computed and allocated in a manner set
forth in the provisions of the schedule to the PITL
So what about the provisions set forth under the
Internal Revenue Act, 2000 (Act 592) relating to
petroleum operations?. We will review this aspect
later..
Take a look at capital allowance in much detail below.
Schedule 3 of PITL has detailed provisions relating to capital
allowances (CAs)
CA shall be deducted from the gross income in each year of
assessment and in subsequent years of assessment
CA in the year of commencement is calculated by dividing
the sum of petroleum capital expenditure incurred in the
year of commencement and the capital expenditure incurred
in previous years by five (i.e. 20%)

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
Ascertainment of Chargeable IncomeDeductions (contd)
Amount so calculated shall be deducted in the year of
commencement and in each of the immediately succeeding
four years
CA for the year of commencement shall cease to subsist
where it has been deducted in five (5) successive years
including the year of commencement
Annual CA is calculated by dividing the total CA incurred in
that year by five(5) and the amount so calculated shall be
deducted in the year and the subsequent four (4) years
Annual CA shall cease after five (5) years
CA for any year shall be the sum of annual CA for that year +
CAs calculated for capital expenditure for years before
commencement and in the year of commencement

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
For purposes of calculating CA for the year of commencement
and prior years, capital expenditure shall be determined as
follows:
Deduct from capital expenditure consideration paid by any person
in acquiring an interest or proportionate part in a petroleum
agreement and in the assets held in connection therewith
Deduct the proceeds of sale of an asset on which petroleum capital
expenditure has been incurred other than under bullet one above
Deduct any insurance moneys, compensations as damages paid in
respect of loss or destruction of any such asset
Deduct sums received as reimbursement of costs and premiums
thereon in respect of sole risk operations conducted in accordance
with the terms of a PA

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Deduct any other amounts received in connection with
petroleum operations in or before the year of commencement
In the case of sale of asset after year of commencement, the
following shall apply:
The proceeds of such sale, or in the case of an asset lost or
destroyed, any insurance moneys, compensation or damages
received shall be divided by five and the resulting amount
shall in the year of sale and in each of the immediately
succeeding four years be added to the gross income of such
person from petroleum operations for the purpose of
calculating his chargeable income

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Any sums received after the year of commencement as
reimbursement of cost and premium to a sole risk party
under the sole risk terms of a joint operating agreement
shall be treated as proceeds from the sale of an asset and shall
be divided by five and the resulting amount shall in that year
and in each of the following four years be added to the gross
income of such person from petroleum operations for the
purpose of calculating his chargeable income
The above provisions shall not apply to the assignment of
an interest in a PA any proportionate part thereof or to any
other asset assigned therewith

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions (contd)
Assignment of Interest
Where a petroleum operator assigns his interest in a PA or a
proportionate part and his interest in the assets held with
regards to the PA and the proportionate part, this will
impact capital allowances as follows:
Capital allowances to which the assignor would have been
entitled will be reduced for that year and subsequent years
by a proportion corresponding to the proportion of the
interest of the assignor in the PA which has been so
assigned
CAs to which the assignee would be entitled in that year
and subsequent years will be increased by an amount equal
to the amount by which the assignors CA has been reduced
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions not
allowed
Domestic or private expense
Expenses not wholly, exclusively and necessarily made
on petroleum operations
Any capital withdrawn or sums employed or intended
to be employed as capital
Any capital employed in improvements
Sums recoverable under an insurance policy or contact
of indemnity
Rent of or repairs to any premises or part of premises
not paid or incurred for the purposes of petroleum
operations
Any amount paid/payable in respect of income tax,
profit tax or other similar taxes whether in Ghana or
elsewhere

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Ascertainment of Chargeable IncomeDeductions not
allowed (contd)
Depreciation of any fixed assets
Any contribution to a pension, provident or other
similar fund not within the terms of section 3 of
the PITL

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Withholding tax compliance under
PITL Sub-contractors &
Employees

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors
S.27 (1) Any amounts due to a sub-contractor in respect of
works or services under the terms of a contract in
connection with a PA, the person making the payment shall
withhold tax from the aggregate amount as may be
specified in a PA
Amount withheld should be paid to the Commissioner and
the payment made shall have the effect provided under
S.27 (2) i.e. deemed as a final tax . BUT there is an
exception
The PA expressly waives the withholding requirement from
the aggregate payment to the sub-contractor , on condition
that the sub-contractor is an affiliate of the contractor
whose services are charged to the contractor at cost
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors

S.27 (2) deems such withholding tax as final tax on the sub-
contractor. It stipulates that when an amount has been withheld
from an aggregate amount due to a sub-contractor as explained
earlier, the sub-contractor shall not in respect of the aggregate
amount be liable for tax under the provisions of any other law in
force in Ghana
Withholding tax provisions under the IRA are not applicable to a
contract for the supply of goods or the provision of work or
services for or in connection with petroleum operations
Issues to consider:
Does the withholding tax regime not cover goods?
Are we to resort to S.39 (5) of PITL in respect of goods? To what
extent?
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Sub-Contractors
Issues to consider:
Assuming it applies that sub-contractors are to suffer final
withholding tax , should sub-contractors not register and
file tax returns? Why?
What about when the conditions for the waiver of
withholding tax by reason of the affiliate relationship and
supply of works or services are made at cost, should sub-
contractors still register and file returns?
How do we determine that works and services supplied by
an affiliate sub-contractor to the operator were made at
cost?. Can we verify supplies made at cost?
Challenges of transfer pricing and arms length transaction
implications?
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Withholding Tax on Employees
Unless, and to the extent that, a Petroleum Agreement
provides in respect of any expatriate employee employed
by a contractor or a sub-contractor carrying on
exclusively petroleum operations the gains or profits of
such employee shall be liable to income tax and the
withholding of tax under the laws of Ghana
PAs have made specific provisions for
expatriates..
Thus PAs say.. foreign national employees of
Contractor, its Affiliates, and its sub-Contractors shall be
exempt from the income tax and withholding tax
liabilities if they are resident in Ghana for thirty (30) days
or less in any Calendar Year.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Overview of Internal Revenue
Act, 2000 (Act 592) As Amended
(IRA) In Relation to Upstream
Oil and Gas Operations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 IRA with Respect to Upstream Oil & Gas Operations
Some general provisions relating to capital allowances
contained in the Third Schedule to the IRA a follows:
A person shall be granted capital allowances for each year of
assessment in respect of depreciable assets owned by the
person at the end of a basis period ending within the year
and used in carrying on a business during that period
The Commissioner shall be notified about any new
depreciable asset acquired within one month after it has
been put into use in the production of the income from the
business
Capital allowance which a person is entitled to or granted
under this Act is not transferable either separately or
together with any depreciable asset

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd)
Under Class Three of the Schedule, its provided that
capital allowance be granted on Petroleum Operations as
follows:
Mineral and petroleum exploration and production rights;
assets in respect of mineral and petroleum prospecting,
exploration, and development costs;
Buildings, structures and works of a permanent nature used
in respect of assets used for mineral and petroleum
exploration and production which are likely to be of little or
no value when the rights are exhausted or the prospecting,
exploration, or development ends, as the case requires;
Plant and machinery used in mining or petroleum
operations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd)
It is further provided that Costs incurred by a person in
the production of income from a business in respect of
mineral and petroleum prospecting, exploration, and
development are treated as if they were incurred in
securing the acquisition of an asset that is used by the
person in that production
The rate of capital allowance is 80% in the year the asset
was acquired and 50% on reducing balance basis in
subsequent years. 5% of the cost of assets acquired in a
preceding year is added to determine the written down
value of assets for the current year

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

Issue to Consider:
1. Which way do we go? PITL or IRA?
2. Contentions from taxpayers if these differences exists ?
3. Capital allowance matters that have been expressly
provided for in the PITL cannot be replaced by
provisions of 592 due to ..S.39 (5) of PITL do you
agree?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

Leases
Two types namely operating and finance lease
PITL does not provide for this but IRA does, so.
Under IRA (S.34) we have the following:
Where a lessor leases a tangible asset to a lessee under an
operating lease then for the purposes of IRA, the lessor is
treated as the owner of the asset and the lease payments
are treated as payment received from the lessee

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd
Where a lessor leases a tangible asset to a lessee under a finance
lease, and that asset is used by the lessee in the production of
that lessee's income the lease rentals payable by the lessee shall
be treated as an expense deductible for tax purposes
Capital allowances are not granted to the lessee of an asset
under both operating and finance lease arrangements
Lease rent is fully deductible by lessee under both operating
and finance lease arrangement
Lessor who leases out an asset under operating lease can obtain
capital allowance and rent payable to him is fully taxable
A lessor who leases out an asset under finance lease is not
entitled to capital allowance in respect of the asset but may
reduce the rent

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
IRA with Respect to Upstream Oil & Gas Operations (contd

A lessor who leases out an asset under finance lease is not

entitled to capital allowance in respect of the asset but
may reduce the amount of rent income of the lessor by a
capital amount determined in accordance with guidelines
issued by the Commissioner
Issue to consider
Some assets of contractors may be on leasing possibly
finance lease
Do we go by IRAs treatment?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Review of Petroleum Agreements

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements

Article 12.1 of the Petroleum Agreement (PA) stipulates the following:

No tax, duty, fee or other impost shall be imposed by the State or any
Political Subdivision on Contractor, its Subcontractors or its Affiliates in
respect of activities related to Petroleum Operations and to the sale and
export of Petroleum other than as provided in the Article.
Royalty
Payment for the right to take oil or gas from the land or sea
Levied as a percentage of the gross value of (gross production) of oil or
gas won, irrespective of profitability
Rate ranges from 4% to 12.5% but depends on each contractors PA
(e.g.5%, 7.5%,10% etc)
Income Tax
Income Tax at the rate of 35%

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements-contd
Others include:
Additional Oil Entitlements
Surface rentals
Rental of Government Property, public lands or provision of
specific services requested by contractor from state affiliates
Surface rentals
Final withholding tax at 5% on sub-contractors on works and
services but some could be exempt if services are supplied to
the contractor are at cost
No export tax on petroleum exported from Ghana and no
duty and any other charge shall be levied on such exports
Vessels or other means of loading and transportation not to
be liable for any tax, duty, or other charge

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

Others include:
Subject to the local purchase obligations hereunder,
Contractor and Subcontractors may import into Ghana all
plant, equipment and materials to be used solely and
exclusively in the conduct of Petroleum Operations without
payment of customs and other duties, taxes, fees and charges
on imports save minor administrative charges, provided that:

GNPC shall have the right of first refusal for any item
imported duty free under this Article which is later sold in
Ghana; and

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

where GNPC does not exercise its right of purchase

Contractor may sell to any other person only subject to all
import duty and taxes as if such items were being imported
at the time of such sale; provided, however, that no duty or
tax shall be levied if the purchaser could have imported the
item sold free of duty or tax under an exemption similar to
Contractors hereunder. (PA Article 12.5).
Foreign National Employees
Foreign national employees of Contractor are allowed to
import and re-export personal and household goods free of
duties and taxes
Where the person decides to dispose of the items in Ghana,
the taxes and duties become due
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Petroleum Agreements contd

Employees PAYE
All employees of Contractors and sub-Contractors are
subject to pay income tax in accordance with the
provisions of Act 592.

However, foreign national employees of Contractor, its

Affiliates, and its sub-Contractors shall be exempt from the
income tax and withholding tax liabilities if they are
resident in Ghana for thirty (30) days or less in any
Calendar Year.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of Inconsistencies between
PITL & IRA and way forward

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward
Income derived from assignment of interest or part
thereof and assets connected thereto in any petroleum
agreement is not included in Gross Income from
commencement year. Need to clarify the treatment of such
income be it under income tax or capital gains tax
Clarification is needed on income incidental thereto in
respect of Petroleum Operation as these are to be included
in Gross Income
To avoid confusion, capital allowance provisions relating
to petroleum operations be removed from the IRA since
PITL is to be the operative regime

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd
Taxation of profit earned from assignment of interest in a
PA is not captured in the PITL
Need to clarify how dividend tax should be applied on
distributions and which legislation should have
jurisdiction for dividend taxation
Need to provide clear guidance on how chargeable assets
for capital gains tax and gift tax purposes should be
administered on taxpayers
Provide guidance on legislations to be used for leasing
transactions. Is it IRA or there should be amendment to
reflect leasing transactions under PITL

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd
Thin capitalisation provisions need to be clearly set out for the
upstream oil and gas industry to provide adequate guidance
Transfer pricing rules to guide pricing of transactions between
affiliates and other associated entities
Limits for contribution to Pensions or Provident Fund for both
employer and employee as per PITL 3 (f) being 25% of total
remuneration needs to be revised to reflect the limits of (35%)
set out in the New Pensions Act
Clarify how joint venture partners should file returns and how
the filing should be done under unitisation
Need to expressly clarify if withholding tax regime does not
cover goods at all in the Law

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Areas of inconsistencies & way forward-contd

Under withholding tax on goods supplied by sub-

contractors, there is the need for clarification of what is
meant by supply of goods by an affiliate at cost to merit
exemption of the withholding tax

How does the Domestic Revenue Tax Division of the GRA

determine that works and services were supplied at cost?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview of Internal Revenue
(Amendment) (No. 4) Bill

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview

The Internal Revenue (Amendment) (No. 4) which we will call

The No. 4 Bill) is being amended principally to:
Make revision to some sections of the Internal Revenue Act,
2000 (Act 592) (IRA); and
To introduce a Chapter in Act 592 to provide for the
payment of Income Tax on petroleum operations, thereby
repealing the Petroleum Income Tax, Act 1987 (PNDCL 188)
which previously provided for the taxation of petroleum
operations
The No. 4 Bill introduces a fixed income tax rate of 35% for
petroleum operations. This is believed to be comparable to
the rates levied in countries with similar exploration
experiences and risks

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Overview (contd)

The Bill introduces tax treatment of Decommissioned Fund

required to be established by a contractor under the Petroleum
(Exploration and Production) Bill, 2010
The Bill retains the provisions in the PITL relating to capital
allowances which are considered adequate
The Bill provides for the imposition of Capital Gains Tax on
petroleum operations and the imposition of tax on profits arising
from the assignment of interest in a petroleum agreement
The Bill limits interest that should be allowed as deduction to
debt to equity ratio of 3:1 as safe harbour on petroleum
operations (thin capitalization);
Imposes withholding tax on interest payments, subcontractors,
expatriates etc; and
Provides for relevant sections of Act 592 to apply to petroleum
operations
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL

A person conducting petroleum operations shall be

subject to the Internal Revenue (Amendment) (No. 4) Bill
Pay income tax on chargeable income calculated in
accordance with provisions in the Bill in each year of
assessment
Tax payable in each year of assessment or quarterly
period shall be at the rate of 35%
CHARGEABLE INCOME
This shall now be total assessable income of a person from
the operations less the total amount of deductions allowed
to that person as specified in the Bill.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL-contd
Assessable Income
Full amount of income of a person from the operations
accruing in, derived from, brought into or received in
Ghana during any basis period of a person ending within
the year of assessment
Includes:
Income from sale, or disposal without sale of the petroleum to
which that person is entitled under a petroleum agreement
Income incidental* to those operations before the making of
allowable deductions
Excludes:
Any amounts referred to in para. 5 of Third Sch. A (i.e. pre-
commencement (specified incomes/receipts); and
Consideration for an assignment under paragraph 7 of Third Sch.
A
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL (contd)

Assessable Income
Income from sale shall be price actually realised at
arms length sale
For sale to an affiliate or disposal without an arms
length sale at market values, according to the PA which
the contractor is a party
Excess of consideration received from assignment of an
interest or part of an interest in a PA over the value of
the interest or part of the interest of that person would
be taxed at the petroleum income tax rate at the time
of assignment of the interest**
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL (contd)
Excess of consideration received from assignment of
an interest or part of an interest in a PA over the value
of the interest or part of the interest of that person
would be taxed at the petroleum income tax rate at
the time of assignment of the interest**
Where there is an assignment and the consideration
for the assignment is in the form of work by the
assignee, that work shall not be treated as income by
the assignor
Issue to consider
Why?. How do we tax this? Should CGT be assessed?
Clearly, this is an exchange. So
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions

The cardinal principle still applies (i.e. expenses wholly,

exclusively and necessarily incurred in the production of
income)
Areas affected include:
Interest- Introduction of thin capitalisation rules (94D (C(ii)
says: where debt to equity ratio of any person exceeds 3:1, the
interest allowable as a deduction shall be limited to the interest on
total loan that yields a debt to equity ratio of 3:1 for that person
Decommissioning fund Contributions to a decommissioning
fund set up in accordance with the Petroleum (Exploration and
Production) Bill, 2010
An expense incurred by a contractor in carrying out work required
by the decommissioning plan approved by the Authority in
respect of the contractors petroleum operations if that work is
not paid for directly
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Or indirectly from money made available from the
decommissioning fund are allowable deductions.
Any other applicable deductions specified under Part One of the Act
(i.e. IRA)
A deductible expense shall be in respect of income for the year of
assessment or basis period in which the expense was incurred and
no other expenses shall be set off against previous years of
assessment or basis period
Regulations made under S.114 of IRA can include any other
deductions
Loss carry forward is permitted up to 10 basis periods (10 years).
Losses shall be carried forward on FIFO basis. Loss carry incurred
cannot be made before commencement of this Bill/Act
Capital allowance provisions remain same as under PITL
A person shall not be allowed any deduction under this Act other
than those specifically provided in Part One and Part One A.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Taxation of Decommissioning Funds-Special
Consideration
An expense incurred in addition to contributions to
the fund shall be deductible from assessable income
Where the decommissioning fund was established by
that person under a petroleum agreement;
Or for the purpose of implementing obligations
under an approved decommissioning plan
No tax or levy shall be imposed by any law on
accumulated amounts in a decommissioning fund
under a PA
An amount withdrawn from the fund for the purpose
of decommissioning shall be exempt from tax
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Specific Changes to PITL- Deductions (contd)
Taxation of Decommissioning Funds-Special
Consideration
An expense incurred by a contractor in the course of
carrying out decommissioning shall not be
deductible from assessable income unless there is a
shortage of funds available in the decommissioning
fund to defray cost of decommissioning and the
contractor meets the shortfall from the contractors
own resources
Any surplus fund remaining in a decommissioning
fund after completing decommissioning in
accordance with the approved decommissioning
plan, shall be treated as Chargeable Income and tax
imposed on the surplus
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
Specific Changes to PITL-Deductions (contd)
Taxation of Decommissioning Funds-Special Consideration
The tax shall be the aggregate of:
A. An amount determined by applying to the surplus the
applicable tax rate; and
B. An amount determined by applying to the surplus amount,
less the amount determined under para (a) above, the
highest rate, calculated in accordance with the formula
prescribed in the relevant petroleum agreement of
additional oil entitlement paid by the person during the
period in which the person made annual contributions to
the relevant decommissioning fund
C. Any amount standing to the credit of the decommissioning
fund after payment of tax as above shall revert to the
contractor
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Transitional Provisions IRO No. 4 Amendment Bill

The petroleum tax regime in respect of an existing

petroleum agreement is hereby preserved and this part
shall not apply to an existing petroleum agreement except
in so far as a contractor is entitled to opt in based on the
terms of the petroleum agreement.
Consequential Amendment
Any reference to the PITL in an enactment shall be
construed as reference to this part.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Miscellaneous Provisions
The provisions of IRA relating to the imposition of tax,
assessment, collection, recovery, refunds, notices,
objections, appeals, offences and penalties as well as other
general and specific provisions including provisions to anti
avoidance of tax shall, unless expressly excluded by this
part or inconsistent with express provisions of this Part,
apply to petroleum operations
Part 2 of the amended IRA relating to capital gains tax
shall apply to petroleum operations
Where a provision of the IRA is inconsistent with the
provision of this Part (i.e. Part A), the provision of this
Part shall to the extent of the inconsistency prevail over
the provision of the IRA
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Value Added Tax Considerations

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 Value Added Tax Related Issues
General Considerations
Under the VAT Act, crude oil and hydrocarbon products (i.e.
petrol, diesel, LPG, kerosene and residual fuel oil (Schedule 1,
Item 15) are exempt from VAT;
the Petroleum Agreements grant exemption from the payment
of taxes, duties and fees to the main Contractor, its sub-
contractors and affiliates in respect of activities related to
petroleum operations and the sale and export of petroleum;
Exemptions would be granted administratively by way of:
1. A Relief Register and exemption letters for imports;
2. VAT Relief Purchase Orders (VRPOs) and Tax Refunds for
Domestic VAT/NHIL;
3. VRPOS made available to the Contractor.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
Value Added Tax Related Issues-contd
Challenges exist in the administration of the exemption clause
in the PA..
The typical exemption clause in the agreement states that No
tax, duty, fee or other impost (including VAT) shall be
imposed by the state or any entity or affiliate political sub-
division on the contractor, its sub-contractor or affiliate in
respect of activities related to petroleum operations and the
sale and export of petroleum other than as provided in this
Article.
The meaning of Petroleum Operations for purposes of
granting relief from VAT/NHIL does not appear to be clear;
Transactions need to be wholly, exclusively and necessarily
incurred for Petroleum Operations to qualify for exemption.
What then constitutes petroleum operations?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
Value Added Tax Related Issues-Contd
Challenges exist in the administration of the exemption
clause in the PA..
What constitutes wholly, exclusively and necessarily to
qualify as petroleum operations for purposes of
exemptions?

Areas of conflict can arise due to grey areas in the

exemption provisions of PAs and the VATA;

Inappropriate use of VRPOS: Non-issuance (or

retrospective issuance) of VRPOs and non-submission
of VRPO returns.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 CEPS Related Issues

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 CEPS Related Issues
General Considerations
Customs controls at importation, landing and exportation
begin from a port. Going by current CEPS law, FPSO-KN is a
port hence presence of Customs Division staff necessary on
it;
Accommodation for Customs officers on FPSO-KN to
facilitate their work is currently inadequate
Minimal amendment to CEPS Law which:
Declares FPSO-KN as a port;
Declare the security area around FPSO-KN as a customs area
to enable customs laws to apply to ships and tankers that
come to the field; and
Proscribe direct importation to the FPSO-KN.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 CEPS Related Issues-contd

General Considerations
Legislation is required to ensure that Contractors do
provide accommodation for CEPS officers.

The current legislation requires amendment to define

manufacturing to include petroleum operations which
will then make it mandatory that operators provide
accommodation on FPSO- KN.

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Scope for further Laws and Legislative
Reviews ?

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference
Thursday, 27 October 2011
 Further Laws and legislative reviews ?
The following draft bills which when passed into law will also
form part of the legal and regulatory framework:
Internal Revenue (Amendment) (No.4) Bill;
Ghana Petroleum Regulatory Authority Bill;
Petroleum (Exploration and Production) Bill.
The Internal Revenue (Amendment) (No.4) Bill will
encapsulate all the income tax laws relating to petroleum
operations;
Some issues identified for additional legislation are likely
to be addressed in the No. 4 Amendment Bill and possibly
Regulations
VAT and CEPS might issue internal regulations or seek
minor amendment in the Law to address issues identified.
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference
Thursday, 27 October 2011
 Thank you

Questions, Contributions, Comments

et al

The Institute of Chartered Accountants (Ghana) Oil and

Gas Conference Thursday, 27 October 2011
 THANK YOU
ali@nakyea.com or
alinakyea@hotmail.com

THANK YOU
AND
DO STAY BLESSED
WTS Nakyea & Adebiyi Consult
Tax Attorneys & Solicitors
Geoman House, Pig farm Roundabout, Olusegun Obasanjo
Way, P.O. Box KD 66, Kanda-Accra.
Tel: 233 21 236334 (Direct) 233 21 238242 (Main)
The Institute of Chartered Accountants (Ghana) Oil and
Gas Conference Thursday, 27 October 2011
 Oil & Gas Taxation

1. Petroleum Income Tax Law, 1987 (PNDC Law 188)

2. The Taxation of Petroleum and Minerals: Principles, Problems and Practice

By Philip Daniel, Michael Keen, and Charles Mc Pherson

Publishers: T & F Books

3. Model Petroleum Agreement of Ghana

4. The Ghana National Petroleum Corporation Law, 1983 (PNDC Law 64)

5. Petroleum Exploration and Production Law, 1884 (PNDC Law 84)

6. Petroleum Revenue Management Act, (Act 815)

7. Petroleum Commission Act, 2011 (Act 821)

8. National Petroleum Act, 2005 (Act 691)

9. Minerals and Mining Act 2006 (Act 703)

 International Taxation

1. Internal Revenue Act 592

2. International Tax Primer (Kluwer Law International, 2002) by Arnold, Bryan J &

McIntyre, Michael J

3. Model Tax Convention on Income and on Capital, By OECD, 2010,

4. Transfer Pricing Guidelines for Multinational Enterprises and Tax

Administrations, By OECD

5. Trends in International Taxation, By Williams, David W.

6. Basic International Taxation Volume 1 (Principles) By Rohatgi, Roy

7. International Taxation in the Age of Electronic Commerce: A Comparative Study

By Li, Jinyan,

8. Principles of International Taxation By Miller, A & Oats, L,

9. Fundamentals of International Tax Planning By Finnerty, CJ, Merks, P,

Pettricione M, Edited by Russo, R

 Public Sector Economics & Finance
1. Public Sector Economics & Finance, By Abdallah Ali-Nakyea & Samuel Addo

2. Economics of the Public Sector, By Joseph E. Stiglitz).

3. Government Finance in Developing Countries By Richard Goode.

4. Public Finance in Developing Countries, A. R. Prest.

5. Public Finance, By H. L. Bhatia,

6. Public Finance in Theory and Practice, (New York: McGraw Hill, 1989).

(Note: Students must always read the latest edition of all

materials)
 CHARTERED INSTITUTE OF TAXATION (GHANA)
STUDENTSHIP REGISTRATION FORM
P.O.BOX OS.1558, OSU ACCRA, P.O.B0X LG 1253, LEGON-ACCRA GHANA
TEL (0303934846)

I hereby apply to be registered as a student of the Chartered Institute of Taxation (Ghana) in accordance
with the Regulations of the Council of the Institute, and I herewith enclose ...............being Registration
Fee which is not refundable under any circumstances.

1. Surname (Block Letters) ..

2. Other Names in full (Block Letters)..

3. (a) Postal Address (Block Letters).

(b) E-mail...

(c) Telephones ..

4. Age and Date of Birth (Attach evidence of date of birth) Sex .

5. Academic/Professional Qualifications

Qualifications Date Subjects Passed Grades

 1

6. Occupation/Employment History

Name and Address of Position Nature of employment Date

employer From To

Previous

1.

2.

Present
(If self-employed state the nature of employment with dates in the columns.)

7. If following a course of full time instruction

at an educational institution, give particulars
of such full time course of instruction and
name and address of the institution ..

8. Names and addresses of two References (one

of whom must be applicants employer or applicants head
of educational institution or member of the
Chartered Institute of Taxation (Ghana) who
can testify as to the truth and correctness
of statements made by the applicant and that
he is fit and proper to be registered as a
student of the Institute

(1) Name...
Profession
Postal Address..

E-mail: ......
Tel:.

Signature

(2) Name..
Profession ..
Postal Address

E-mail .
Tel:......

Signature:.

I hereby on registering as a student agree to abide by the Rules laid down by the Council of the Institute from time to
time

Date..
 ...
Signature
N.B. Completed Registration Form should be forwarded to

The Secretary
Chartered Institute of Taxation (Ghana)
P. O. Box OS 1558
Osu-Accra

together with the following:-

1. Photostat copies of your certificate (s)
2. Original (s) of your certificate (s) for verification. This/these will be returned to you under registered cover.
3. Two passport size photographs with your name at the back of them
4. Evidence of date of birth.

C. I. T. Form No3
 CHARTERED INSTITUTE OF TAXATION (GHANA)
SPECIAL MEMBERSHIP INDUCTION SEMINAR
Technical Case Scenario for Discussion

Case Scenario 1

The resort industry at Ada in the Greater Accra region of Ghana is extremely popular with
foreign tourists due to the Volta estuary, good weather and the wide range of leisure
activities. These attract investments from multinational companies in the resort business. The
multinational enterprises (MNEs) dominate the resort industry at Ada. They operate over
90% of the resort industry servicing business clients and other travellers. There are smaller
enterprises apart from the multinationals in the resort business. The MNEs operating in the
resort industry make use of central booking companies in low tax jurisdictions. These central
booking companies are their associated companies. The central booking companies advertise
the resorts in targeted markets, accept bookings for stay at the resorts and conclude the
contracts for stay at the resorts. A recent study by a non- government organisation (NGO)
revealed that the multinational enterprises in the resort industry in Ghana reported minimal
profits or losses for the last 5 years.
Sunrise Pleasure Beach Limited is a Ghanaian registered company whilst Sunrise Marketing
Limited is a Cayman Island registered company. Sunrise Pleasure Beach Limited and Sunrise
Marketing Limited are 100% owned by the Manna Group S.A., a company resident in
Austria.
Sunrise Pleasure Beach Limited owns, manages and operates a chain of full service resorts at
Ada. Sunrise Marketing Limited advertises the resorts, accepts bookings for stay at the
resorts, concludes the contracts and receives payments from clients. Special vouchers are then
given to the clients. Clients present the special vouchers to Sunrise Pleasure Beach Limited in
Ada to access their resort services. Sunrise Marketing Limited pays fees to Sunrise Pleasure
Beach Limited from the payment it receives from the clients. Some local and foreign clients
book, patronise and pay for the resort services directly at the Sunrise Pleasure Beach Limited.
Sunrise Pleasure Beach Limited is among the multinationals that has reported losses from
their operation of resorts in Ghana for the last 5 years.
In view of the NGOs report the Ghana Revenue Authority has publicly announced that it will
embark on transfer pricing audits to ascertain whether pricings are at arms length within the
resort industry. As a result, the management of Sunrise Pleasure Beach Limited has
contracted you, a Transfer Pricing specialist, to review their operations and advise them on
how to determine the arms length price of their products and services.
Required
Prepare a preliminary Transfer Pricing Report for the management of Sunrise Pleasure Beach
Limited on how to determine the arms length price of their products and services in Ghana
based on the information you have at your disposal.
(Final Examination, CITG, August, 2014)

Case Scenario 2
Starkest Limited is a United Kingdom resident company. The company sent Mr. Billy Fry to
work in its branch office in Accra, Ghana for five months, from 1st June, 2014 to 31st
October, 2014. During that time, Starkest Limited paid 20% of his salary to his Swiss bank
accounts, and the other 80% is paid to him in Ghana. He is provided with an apartment in
Accra arranged by Starkest Limited. His salary was invoiced and charged to the branch in
Accra.
On completion of his assignment on 31st October, 2014 in Ghana, Mr. Billy Fry took his
annual leave during which he stayed on in Accra to spend all his holidays. He left Accra on
the 18th December, 2014 to London to resume his duties.
Required
What are the Ghana tax implications of the activities of Mr. Billy Fry and his employers?
(Final Examination, CITG, February, 2015)

Case Scenario 3
Professor Anagli is a distinguished professor of wireless technology at the Kwame Nkrumah
University of Science and Technology in Kumasi. He received an invitation from Oxford
University in England to conduct research in wireless communication in 2010 for two years.
He was paid for the two years he conducted the research by the Oxford University. After the
initial two years of research, Professor Anagli was asked to stay on by the Oxford University
for further one year of research. The extra one year was funded by Edacs Electronics PLC, an
electronics giant.
On the completion of the research project he published a book on his research entitled
Wireless Communications for the 21st Century. His book became very popular within the
communication industry. He earns considerable amount of royalties from the sale of his book.

Required

What is the tax implication of Professor Anaglis activities at the Oxford University and the
subsequent book publishing, within the context of Ghana/United Kingdom Double Taxation
Agreement?

(Final Examination, CITG, February, 2015)

 THE NEED FOR TRANSFER PRICING REGULATIONS TO ADDRESS TRANSFER
PRICING ACTIVITIES OF MULTINATIONAL COMPANIES

By

Abdallah Ali-Nakyea1

Introduction

Governments all over the world are seeking resources to develop, as well as maintain
and sustain their economies. The Government of Ghana is thus not left out in this noble
objective of Governments, that is to seek the welfare of its citizens through the provision
of not only the basic necessities of life but also creating an enabling environment for
businesses to thrive so as to create jobs, as well as provide Government with the
needed domestic resources, particularly tax revenue to continue honouring its
obligations to its citizens.

It is in the light of the above that Governments do not take kindly to tax evasion by
taxpayers. One area where there is a debate as to legitimacy or otherwise is that of tax
avoidance. This is because although tax avoidance is the legal means by which
taxpayers tend to pay minimum tax or not pay tax at all, the Revenue Authorities are
saddled with the responsibility of ensuring that abuses do not occur, leading to loss of
revenue to Government. One of such abuses is that of Transfer Pricing.

Transfer Pricing

Transfer price refers to the amount used in accounting for transfer of goods or services
from one responsibility centre to another or from one company to another which belongs
to the same group. Transfer pricing is a mechanism for distributing revenue between

1
Abdallah Ali-Nakyea is the Managing Consultant of WTS Nakyea & Adebiyi, a firm of Tax Attorneys & Solicitors in
Accra. He is also a Part-time Lecturer in Law of Taxation as well as Legal Accountancy at the Ghana School of Law;
an Adjunct Lecturer at the Ghana Institute of Management and Public Administration (GIMPA). He is a Fellow of
the Chartered Institute of Taxation, Ghana (FCIT), a Fellow of the Institute of Certified Book-keepers (FICB), a
Fellow Certified Chartered Economist (FCCE) of the American Academy of Financial Management, a Certified
Economic Policy Analyst (CEPA), Master Tax Practitioner, South Africa (MTP-SA), a Member of the Institute of
Chartered Accountants, Ghana (CA), a Barrister at Law (BL) and possesses a Bachelor of Laws degree (LLB) as well
as a Masters degree in Economics (MPhil-Econs). He is also a Member of the Institute of Internal Auditors (Ghana).

1
different divisions which jointly develop, manufacture and market products and services
(Asish K Bhattacharyya / New Delhi June 30, 2008).

Transfer pricing can be market-based, that is equivalent to what is being charged in the
outside market for similar goods, or it can be non-market based, which is when the
concern arises.

Objectives of Transfer Pricing

Transfer pricing systems are designed to accomplish the following objectives:

to provide each division with relevant information required to make optimal

decisions for the organisation as a whole;
to promote goal congruence that is, actions by divisional managers to optimize
divisional performance should automatically optimize the firm's performance; and
to facilitate measuring divisional performances.

MNEs use variations of market-based and cost-based transfer pricing mechanisms to

achieve the objective of goal congruence. Transfer-pricing system must however have
in-built mechanisms for smooth negotiation and conflict resolution.

Although there is sound economic theory behind the selection of transfer pricing
methods, companies use transfer price methods to achieve certain other objectives
even at the cost of goal congruence.

For multinational corporations, it may be advantageous to arbitrarily select prices such

that most of the profit is made in a country with low taxes, thus shifting the profits to
reduce overall taxes paid by a multinational group. This leads to the point of Transfer
Pricing Manipulation (TPM). It is TPM that is discouraged by governments as against
Transfer Pricing which is the act of pricing. However, in common parlance, it is Transfer
Pricing which is generally used to mean Transfer Pricing Manipulation. This position
was re-echoed by Dr. Larbi Siaw, Director of Tax Policy at the Ministry of Finance and
Economic Planning (MoFEP) when he stated at the recent five-day training programme
on transfer pricing that transfer pricing among multinational companies on market price
basis, did not in itself constitute a tax avoidance and evasion scheme, however

2
manipulations of transfers among the MNEs were of serious tax concerns for
government.

Transfer Pricing Manipulation is fixing transfer price on non-market basis which

generally results in saving the total quantum of a MNEs tax by shifting accounting
profits from high tax to low tax jurisdictions. The implication is moving of one nations tax
revenue to another. However, most countries enforce tax laws based on the arm's
length principle as defined in the OECD (Organisation for Economic Co-operation and
Development) Transfer Pricing Guidelines for Multinational Enterprises and Tax
Administrations, limiting how transfer prices can be set and ensuring that that country
gets to tax its "fair" share.

Why Transfer Pricing Manipulation

It is important to mention that corporate tax differential is not the only factor that induces
MNEs to manipulate their transfer prices, but also

high customs duty, which leads to under-invoicing of goods and services;

restriction on profit repatriation, which leads to over-invoicing of raw materials,
etc. transferred from a parent company, hence compensating for locked foreign
exchange;
ownership restrictions, which leads to less than justified returns on the
technology or knowledge invested in the Joint Venture. MNEs circumvent it
through over charging on technical and management service fees.

The Need for Transfer Pricing Regulations

The need for Transfer Pricing Regulations can be better appreciated if we examine the
effects Transfer Pricing manipulations have on economies.

The loss of Government tax revenue, leading to a burden being brought to bear
on the rest of the population through over taxation and borrowings by the
Government, which becomes essential to meet expenditure requirements. The
Hon. Minister of Finance indicated in the 2012 Budget Statement (Clause 85)
that Madam Speaker, it is estimated that developing countries lose about

3
 US$160 billion every year through transfer pricing fraud. Recent studies in the
mining sector showed that Ghana loses about US$36 million a year through
transfer pricing. Together with the Ghana Revenue Authority we have drafted
regulations to strengthen existing tax legislation to deal with taxation of
multinational companies and minimize the incidence of abuse of transfer pricing.
The regulation will soon be presented to Parliament.
Transfer Pricing Manipulation also leads distortions in balance of Payments
between the host and home country of MNEs, which distortion has the potential
to challenge the sovereignty of nations, including Ghana, given the mega size of
MNEs.
The location of international production and employment is also of concern. With
the driving objective of maximizing their global profits, MNEs will set up
subsidiaries where production is most profitable, which obviously is where the tax
burden is less and therefore affect the level of foreign direct investment (FDI) a
country gets.
MNEs in the recent past are acquiring huge economic power, in most cases
more than nations themselves, operating in a number of nations, making their
sales, production and distribution structure more and more complex to come
under the purview of one tax regime.
The increasing liberalization by most countries, including Ghana owing to which
MNEs are being allowed entry leading to a higher proportion of intra organization
trade in international trade. Dr. Larbi Siaw had this to say on this point It has,
therefore, become imperative for our country, which is home to a number of
multi-national companies and still continues to attract a lot of foreign direct
investments, to have detailed transfer pricing regulations, since the issue of
transfer pricing has become a serious global tax risk which has implications for
the countrys corporate income and value added taxes; thus becoming the
largest source of litigation for governments and MNEs.

4
Dealing with Transfer Pricing Abuses in Ghana

Although the Transfer Pricing Regulations for Ghana are yet to be presented to
Parliament, there exist provisions in Internal Revenue Act, 2000 (Act 592) that seek to
stem the tide of these abuses.

Section 70 (1) of Act 592, as amended is to the effect that

(1) In a transaction between persons who are associates, the Commissioner-General

may distribute, apportion or allocate inclusions in income, deductions, credits or
personal reliefs between those persons as is necessary to reflect the chargeable
income or tax payable which would have arisen for these persons if the transaction had
been conducted at arms length.

(2) Where,

(a) in the case of an associated resident entity of a non-resident person, the

Commissioner-General is satisfied that some adjustment is warranted under subsection
(1) or section 69, or

(b) in the case of a permanent establishment of a non-resident person in the

Republic the Commissioner-General is not satisfied with a return of income of that
person made under section 72,

the Commissioner-General may adjust the income of the permanent establishment or

the entity for a basis period so that it reflects an amount calculated

(c) by reference to the total consolidated income of the non-resident person

and the associates of that non-resident person, other than individuals but irrespective of
residence;

(d) by taking into account the proportion which the turnover of the permanent
establishment or entity bears to the total consolidated turnover of the non-resident
person and those associates; and

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 (e) by taking into account any other relevant considerations in determining the
proportion of the total consolidated income which should be attributed to the permanent
establishment or entity.

(3) In making an adjustment under subsection (1) or (2), the Commissioner-General

may re-characterise the source of income and the nature of the payment or loss as
revenue, capital or otherwise.

Transfer Pricing and Treaties

Adequate provisions exist under section 111 of Act 592, as amended to resolve any
controversy that may arise in respect of Treaties. Section 111 (1) states

(1) To the extent that the terms of an international arrangement which has been ratified
by Parliament under article 75 of the Constitution are inconsistent with the provisions of
this Act, apart from section 34, sections 69 to 71, section 96, and subsection (4) of this
section, the terms of the international arrangement shall prevail over the provisions of
this Act.

The Way Forward

The Transfer Pricing Regulations are necessary as they will set out in clear terms the
way forward for both Government and MNEs as regards setting of prices amongst and
between related parties as the basic premise would be the application of the arms
length principle which is to the effect that that taxpayers need to make reasonable
efforts to establish their transfer pricing in accordance with the arms length principle.
Such efforts include, but are not limited to, analysis of controlled transactions, searches
for comparable transactions between independent enterprises dealing at arms length,
and selection and application of transfer pricing methods that are reasonably concluded
to produce arms length results in accordance with applicable transfer pricing rules and
the relevant treaty, consistent with the OECD Guidelines.

A taxpayer may choose the appropriate transfer pricing method in determining the arms
length range among the following methods:

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 a. Comparable Uncontrolled Price (CUP) method.
b. Resale Price (RP) method.
c. Cost Plus (CP) method.
d. Profit Split method.
e. Transactional Net Margin (TNM) method.
f. Such other methods as may be prescribed by the Commissioner-General
from time to time, where in his opinion and in view of the nature of the
transactions, the arms length cannot be determined using any of the methods
contained in this Regulation.
The choice of a particular method shall depend on the facts and circumstances of the
transaction and in particular the availability of comparables.

A taxpayer shall apply to the CommissionerGeneral in writing of his intention to apply a

transfer pricing method other than the approved methods contained above where it can
prove that;

i. none of the approved methods can be reasonably applied to determine arms

length conditions for the controlled transaction; and

ii. such other method yields a result consistent with that which would be
achieved by independent persons engaging in comparable uncontrolled
transactions under comparable circumstances.
The taxpayer asserting the use of a method other than the approved methods shall bear
the burden of demonstrating that the requirements listed above have been met.

Conclusion

Governments have the right to prescribe the conditions under which multinational
enterprise operate within their jurisdictions, subject to international law. Thus entities of
a multinational enterprise located in Ghana are subject to the laws applicable in Ghana,
which includes the tax laws of Ghana. MNEs should thus ensure that timely, regular,
reliable and relevant information is disclosed to the Ghana Revenue Authority regarding
their activities, structure, financial situation and performance, with due regard to
business confidentiality and other competitive concerns. This is where the role of the

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Qualified Accountants, Lawyers and other professionals is called to question in assisting
Government to obtain the information required to ensure transparency, thus preventing
loss of tax revenue to the state, albeit through transfer pricing manipulations. MNEs
should endeavour to conform to transfer pricing practices at the arms length principle.

This brings to the fore the need to also build the capacity of staff of the Ghana Revenue
Authority as well as resourcing them to play their critical watchdog role of monitoring
and evaluation to ensure that transfer pricing abuses do not thrive in Ghana, hence
preventing the loss of revenue to the State.

It is important that MNEs contribute to the public finances of Ghana, their host country,
by making timely payment of their tax liabilities; particularly they should comply with the
tax laws and regulations in Ghana and should exert every effort to act in accordance
with both the letter and spirit of those laws and regulations since obeying domestic law
is the first obligation of business.