corp. tax mid 1.pdf

8/10/2019 Corp. Tax Mid 1.pdf

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tiniversit) of i)hrknDcpt ofAccounting & Information SysteDrs

IiNIllAIlrogram ( Septern bcr-Dccenr ber) 2()13

Clorrrse # 6102: Corporlte Trx Managcment1" Mid lcrnr Exadination (15yo Wcight)

\I rL\ .l{l I irne-lU5 l\l in u tcs

l.ltts,tct x t'three questio s,,lttsret ofeach questir)tl firust be qie itt seriallt'l

b) l)istirgLrish bel\\cclr ta\ llcc inconrc aud tax creLlit incolrc rl'ith cxanrpl.. \:,irile clowntlrc l).ovision rs p..r s.clion l9 (27) ol the IIO 19ll.l rcuardir{ plrrcltasc ofa rnotor.ar anlccll

() l{AK( crurics l-trl. is a public linriled company iisted with re Stock i--\charges. \ltcrcnd ol lhc lcar l l l)cccnri)er 20l2. ihe.onlpany issuerl 57o bonus shares tnd ltlol, r-i[]rtsharcs. l\{orcovcr, t}c company paid 30,i, cash clividend of its paid up capil,rl. ,^n exlract()l hulilncc shect es on l l I)c.c ber2012isnrovidedbelorv:

.,lzzp wlrar is coryolate ta\ nlanaELement I l]escribc thc objectiVes of corporate tal lnrnagellctltirccording lri I akhrrtir antl I-akLrotia.

,tl lri\ rs\ tlrL rrrLIiti,,n.tl l. \ ploIni| rechuiqcs aud ntodel'r tr\ planning techniques. Whatis cJliclivc ta\ planuirrg'l

t'f i,i .,,,.. 'r(.,.rr,t,t .la\ \'.n.,,rrl < rorJr",c \ltr r,r ar,,i 1. r,.


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-1. lf' { rtitrllr r\llrirr lirc d.litrxtio oJ_ itrconle rs pel incoutc lirx lai\,] \\'lul i,< e:rc*r,; Irrrlitir\'r \I.rii0i) ir\ irl(.

"-VJ'N.1. S"l'jt" liczrrau hls ioiIcd \itlt tltc (irelrltnen Illotrc I t{lon I .lanitar; 2012. llcrlr{jisrrlarl is Llct rrrrilrc(l rt ili 80.(}t)0. /"s N corIorrtc iax arlriscr.ol_tltc c(nnPl 11v. l,olrilvc t)cc| rsl('d b].thc LhO oi thc r(,trr ral. 1o design hcr sllat.l sttuctorc to frininti:ic hctlr{ burllsn lilr tnothl\ Lh.iLrclion \\ illt th( :]autc ou lILre lrlso bcen askr:d to ilctetrrjrle thcrLrir(,LrLrLol \{)nrcr tr\ \hcih to bc rlrcluclccl at rLjLIcc f.r l|()fth li nt itr:r salrrv

/1,, r..irrl .1..r .,rt 'r r,'. ..r.-.r , r....r.r \\rh)/l \\ hl llotlINlalks: 3+5] 2l

21. :t) lr rlrt irr,'n]' 1131 l{lll-Il. llc\inrco l)hrrnra Linlitcd (putricill tradcLl conlpanr) re|orls1,,1 rl r\rl\ irrr,,nrL L,l- il. l.0i).r,00 li.om busincss. house propct.tr and othcr sootocs. LILllils il)rtLrrl irssr:iscd hLrsintss sales is lk. 1(1.00.000. properl) rcornc Tl 2.00.(Xl0 andrcc(ipt lrorr olher sourccs i.c irterest ol1 ballk dcposit lli. 1.2041.00. 1hc corrprrnv had 1k1511.000:rs oDcnin : rccci rhlcs in(l ll 100.000 as ending recciriLlrles.ln tlrls sliultiLrrr rvhrrL * ill bc thc 1rl.i lixbiliL\ol ihe compnrv lirr tlte:rssessIrctrl car 2{)12ll,

,,lit t,n.,gy p". Iro \'cr (lencmir)n I inrircrl lras lisLed \\,ith thc stock cxcllages on 2{l IrcbrLUuy'-'1)ll li)r lrrdifg its sharcs. Its linan,:ial Iear is cnrlcd on l0 JLIrc 2012. lt-i cquitl posirion a.s.ir l0.1rnc -1l0ll is:r,. lirll,rr.,s:

llcscrl rs:

(;encr al Ilcser] rsr,rcktiolaciJ irqiiiir :

lti :.:iur,iric ]

lo. 9rl,o9llif,5.00r:1000

|",p.. 't. Illeleirrrd (]rrri lg:j

ir lr1 :icfrlcrrber l0l2 il has dcciarcd aud lrairl ,


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Uuiversity ofDhakaDept ofAccounting & Inforrnation Systems

EMBA Program (January*April) 2014

Course # 6102: Corporate Tax Managernent1'1 Mid Term Examination (15% Weight)

Marks- 3{) Time-80 Minutes

fAnswer qnv lhree queslions, Pqrl of qnv queslion must be given in seri{rllttl

1. a) \\ftat is tax? What is corporate tax nanagement? Describe the objectives ofcorpolate taxmanagement according to Lakhotia and Lakhotia.

b) Discuss the traditional tirr planning tecbniqes and nodem ta{ plalx.Iing techniques. Whatis effective tax planning?

c) Discuss the concept of tan evasion and tax avoidance. Why tax avoidance somelimesundesirabie? Explain widr exanple.

lMarks: 'l+3+3]

2. r) Discuss the various income tax rates applicable 1br company as per Second Scheduic ofthe I IO 1984 passed in the Finance,\ct 2013.

b) Distinguish between tax credit income and deemed rvith example. Wrjte dou'n theprovision as pcr scction 19 (27) ofthe ITO 1984 regarding purchase ol a motor car or Jeep.

c) RAK Ceranics Ltd. is a publicly traded compaly listed with the Stock Exchallges. Allerend of the year 31 December 2013, the company issued 5% bonus shalos and 57o rightshares. Moreover, the conrpany paid 30/o cash dividend of its paid up capital. An extract olbalance sheet as on 31 December 2013 is provided below:

Reservcs:General Reserve 50,00.00,000Stockholders Equih:

Pajd up cbpital 200.00.00.000Retcjned earnings 50.00.00.000 250.00.00.000Tolal Resen e and Stockholders' Equitl 300.00.00.000

As a corporate ta{ planner, discuss the1984.

consequence of this kind of activites as per i'fO

lMai'ksr 2+3+51

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3. n) Why income year & assesment year and rcsident & non-resident status are significant in incometax law? Explain.

b) AB Bank Ltd, a listed Public Ltd Company boih in DSE aDd CSE, has showed TK 8,000'000 as

ret profit in Tax Retum in the hcome Year 201 I -2012. Its Capital & Reserves were Tk 10,000,000and 5,000,000 respectively. You are asked to calculate the excess profit tax for tlle said income yearfor the said company.

c) Do tou agree with the provision for minitnum ta\ on gloss receipts? Why? Why nol?[Marks:4+5+11

a) Lr th income year 2011-12, Beximco Pharma Limiled (publcily traded company) reporls 1o1altaxable lncome of Tk. 300,000 ftom business, house propety and other sources. Bui its annualassessed business sales ls Tk. 1,000,000, propedy income Tk 200,000 and receipl lronl othersources i.e. interest on bank deposit Tk. 120,000 Opening debtors ofthe company is Tk 50,000

and

clsoing debtors is Tk 95,000.

Ir this siiuatior whal will be the tax iiabilily of dte company lbr the assessment year'2012-13?

b) Ener$.pac Power Generaion Limited has listed with the stock exchages on 20 February2012 for trading its shares. Its linancial year is ended on 30 Julre2012 lts equity position ason 30 June 2012 is as follows:

Reseraesl

General Reserve 2.500,000Stockholders' EquitylPaid uD caDital 100.000.000Retained earnings 5 5.000,000

In 20 September 2012 it has declared and paid 5% dividend on its paid up capital Thecompany is going to submit its return on 31 December 2012 After income computation,taxable income of the company comes at Tk 6,690,000. Head of accounts of the Companyinstructed his junior to charge ta-x tule @) 3'7 5ya as well as instructed for 100/0 rebate asdeclared and paid dividend. But CEO of fie Conpany warts expefi opinion and sent theissue to you. As a corporate tax manager, determine the actual tax liabiliry of the companyin this situation. AIso calculate the effective tax rate ofthe company for the Assessment year

4.

2412-2413. lMarks:5+5]

-Ihe Enl-

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corp. tax mid 1.pdf

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