F1 - tax

  1. Co Z has a factory in Malaysia, retail outlets in HK. Co reg office is London, HO in Cayman islands. Board meeting in Cayman islands. Which is Z's country of residence?

    D - Cayman Islands
  2. Which of the following is a source of tax rules? A - IAS
    B - Local co legislation
    C - International tax treaties
    D - Domestic accounting practice
    • C - International tax treaties
    • others source of accounting rules
  3. EU supernatioanl body, describe effect on member states' tax rules
    EU issues rules on sales taxes, which must be applied by all member states.
  4. UK, different income taxed to different rules, name of this system?
    Schedular system
  5. Name 4 payments usually affected by withholding tax.
    Interest payments



    Capital gains accruing on non-residents
  6. Name 3 methods of giving double taxation relief.
    Full deduction


  7. Double tax relief is used to :

    B - Mitigate taxing overseas income twice
  8. The OECD model tax convention defines a permanent establishment to include a No. of diff types of est.:

    1 place of management
    2 warehouse
    3 workshop
    4 quarry
    5 building site used for 9 months

    Which above are incl in OECD list of perm estbl A - 1, 2 & 3
    B - 1, 3 & 4
    C - 2, 3 & 4
    D - 3, 4 & 5
    B - 1, 3 & 4

    1 place of management

    3 workshop

    4 quarry
  9. Corporate residence for tax purposes can be determined in a no. of ways, depending on the country concerned.

    Which ONE of the following is NOT normally used to determine corporate residence for tax purpose?

    B - the country where most of the entity's products are sold
  10. Entity DP, in country A receives a dividend from an entity in country B. The gross dividend of $50,000 is subject to withholding tax of $5,000 & $45,000 is paid to DP.

    Country A levies a tax of 12% on overseas dividends.

    Ctry A & B have signed a double taxation treaty based on OECD model and both apply the credit method when relieving double taxation.

    How much tax would DP be expected to pay in Ctry A ?

    D - $1000

    • gross 50000
    • tax due 12% 6000
    • paid WH tax -5000
    • due 1000
  11. Where a resident entity runs an OS op as a branch, certain tax implications arise.

    Which of the following does not usually apply in relation to an OS branch?

    A - Assets can be transferred to the branch without triggering capital gain

    B - Corporate income tax is paid on profits remitted by the branch

    C - Tax depreciation can be claimed on any qualifying assets used in the trade of the branch

    D - Losses sustained by the branch are immediately deductible against the resident entity's income
    B - Corporate income tax is paid on profits remitted by the branch

    is paid on all profits of branch not just those remitted
  12. The following details relate to EA
    Incorporated in country A
    Carries out main business in country B
    Snr management operate in country C & effective ctrl is exercised from C
    Assume countries A, B & C all signed double tax treaties based on OECD

    Which country will EA be deemed to be resident in for tax purposes?

    B - Country C
  13. The OECD model defines a permanent tax est.

    Which ONE is not listed

    C - site of 11 month construction project

    only if more than 12 months
  14. Developed countries generally uses 3 tax bases, one is income, list other 2.
    Net assets & consumption
  15. HC carries out main business in country A
    HC is incorporated in country B
    HC's snr management controls from country C
    HC raises finances & is quoted on stock exchange in D
    Assume A B C & D have signed double taxation treaties. Which country deemed resident for tax?

    B - country C
  16. EB has an investment of 25% equity shares in XY, entity in foreign country. EB receives a dividend of £90,000 from XY, amt is after deducting withholding tax of 10%.

    XY had profits before tax of £1.2 mil & paid tax of £200,000.

    How much underlying tax can EB claim for double taxation relief?
    • net dividend 90,000
    • witholding tax 10,000
    • gross divid 100,000

    • tax 200,000
    • PAT 1,000,000
    • tax rate 0.2

    tax due 100,000 x 0.2 = 20,000
  17. Excise duties are deemed to be the most suitable for commoditees that have certain specific characteristics. List THREE.
    • Easily defined products
    • Limited number of large producers
    • Produced in large volume
  18. Which of the following is an indirect tax?

    A - Sales tax
  19. The cost of sales tax is borne by which person?

    D - end consumer
  20. Which of the following types of taxes is regarded as an indirect tax?

    A - Sales tax
  21. AE purchases products from a foreign entity & imports them to country A. On import, products are subject to excise duty of $5 per item & VAT of 15% on cost plus excise duty.

    AE purchased 200 items for $30 ea & after importing them sold all of them for $50 ea plus VAT at 15%.

    How much is due to be paid to the tax authorities?

    B - $1450

    • VAT out (200 x 50 x 15%) 1500
    • VAT in (200 x 35 x 15%) -1050
    • VAT payable 450
    • excise (200 x 5) 1000

    Total payable 1450
  22. HN purchases products from a foreign country. The products cost $14 ea & subject to excise duty of $3 per item & VAT 15%.

    If HN imports 1000 items how much does it pay to the tax authorities?

    B - £5550

    • cost 14000
    • duty 3000
    • 17000

    VAT 15% 2550

    paid 5550
Card Set
F1 - tax
tax various