SECTION B
INSTRUCTION: Answer question ONE and any other.
QUESTION 1
A) Samlin imports raw materials from Afghanistan worth GHS 15,000,000 which she later sells to a Shasha, a manufacturer at GHS 28,000,000. Shasha converts these raw materials into finished goods and sells them to Fashion, a distributor at GHS 42,000,000 Fashion, in turn sells these finished goods to Adwoa at GHS 60,000,000 who later sells to the final consumer at GHS 75,000.000. Assuming the Value Added Tax (VAT) rate of 15%, compute the VAT payable at each stage of the production-distribution chain. [30 marks]
B) Magdalene was appointed the principal of Ola Training Institute December 1, 2022. On the occasion of her induction into office, the following gifts were sent to her:
i) Cash of GHS 12,000, 000 from her former mates from Cape Coast Technical University.
ii) $2,000 was sent by Precious to her. The prevailing exchange rate at the time was $1 = GHS 9,100)
iii) Her father in-law bought her watch valued at GHS 4,300,000.
The applicable gift tax rates are shown in the table below:
| Total value of taxable gift | Tax Rate |
| Not exceeding GHS 500,00 | Nil |
| Exceeding GHS 500,000 | 10% of excess over 500,000 |
Required:
Calculate the gift tax payable by Magdalene [10 marks]
QUESTION 2
a) Briefly explain any FOUR (4) main functions of Tax [10 marks]
b) Section 141-150 of Act 179 spell out a number of offences and associate penalties.
Mention any FIVE (5) of such offences and their corresponding penalties [10 marks]
QUESTION 3
a) A friend of yours has approached you to explain what a tax system is to him. Describe what a tax system is and the function it fulfils in an economy. [5 marks]
b) Briefly explain any FOUR (4) characteristics of an effective tax system (10 marks)
c) Mention any THREE (3) advantages of direct taxes and TWO (2) disadvantages of indirect taxes. (5 marks)
QUESTION 4
The attributes of a good tax system have traditionally been embodied in Adam Smith’s cannons of taxation.
a) What are cannons of taxation? [3 marks]
b) The following are some cannons of taxation. Write short notes on them:
i) Equity [3 marks]
ii) Certainty [3 marks]
iii) Convenience of payment [3 marks]
iv) Economy of collection [3 marks]
c) State any FIVE (5) functions of the Ghana Revenue Authority [5 marks]
