Addel Resources Ltd. is a mining company operating in the Alpha mine and Omega mine in Ghana.
Question:
Addel Resources Ltd. is a mining company operating in the Alpha mine and Omega mine in Ghana. Alpha mine share a processing plant with Omega mine, and both mines commenced commercial production in 2016. At the close of business on December 31, 2016, Addel Resources Ltd. acquired 10% exploration and production rights in the Sunset mine which is production mine for GH¢20,000,000.
The highlights of 2016 revenue and expenditure disclosed in tax returns filed by Addel Resources Ltd. Include the following:
Revenuue GHC
Gross income from its operation in 2016 250,000,000
Hedging Income 3,000,000
Interest Income 1,000,000
Consideration realized from the sales of assets 800,000
Gross Dividend from a resident company in which it has 30% voting rights 200,000
Total Revenue 255,000,000
Expenses include the following:
Reconnaissance & Prospecting Cost (Alpha Mine) 45,000,000
Reconnaissance & Prospecting Cost (Omega Mine) 35,000,000
Depreciation 12,000,000
Exploration & Production Rights (Sunset Mine) 20,000,000
Expenses on Hedging transactions 5,000,000
Cost of the assets sold 300,000
Administration Expenses 10,000,000
Profit before tax 100,000,000
Additional Information:
Income Tax Rate for companies 25%
Mineral Income Tax Rate 35%
Mineral Royalty Rate 5%
Capital Allowance Rate 20% on straight line basis
Dividend Withholding Tax Rate 8%
Interest Withholding Tax Rate 8%
Capital Gains Tax 15%
Required:
Compute the tax liability for each tax type that Addel Resources Ltd will be liable to pay in 2016.
Managing the Law The Legal Aspects of Doing Business
ISBN: 978-0132164429
4th edition
Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer