Double taxation relief – NBC Institute

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

Question

Sunproof International Inc. has been in the tyre manufacturing business in Nigeria and Sierra Leone for over ten years.

The Company’s operating results for the year ended 31 December 2012 were as follows:

Particulars	N
Income from Nigeria	75,000,000
Income from Sierra Leone	33,000,000
Overheads	60,000,000
Depreciation – Nigeria	6,750,000
Depreciation – Sierra Leone	1,125,000
Donations to Island Club	375,000
Foreign tax suffered	6,300,000

Other information:

Net profit attributable to the Company in Sierra Leone was N7,725,000.
Capital allowances agreed with Tax Officials for operations in Nigeria and Sierra Leone were N5,310,000 and N2,175,000 respectively.
Assume the Company is a wholly Nigerian company.

Required:
i. Identify the Double Taxation Relief available to the Company. (4 Marks)
ii. Compute the tax liability of the Company for the relevant Year of Assessment.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Double taxation relief, Foreign Taxation, Income Tax Computation, International Taxation, Tax Compliance, Tax Liability
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: NOV 2014

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

Question

Lagode Nigeria Limited, based in Lagos, Nigeria, commenced operations as a manufacturer of indigenous fabrics in 2013. Products are sold to wholesalers and retailers in Nigeria and to Africans in diaspora, particularly during annual holiday periods. A market survey in 2018 revealed a lack of local Nigerian fabric manufacturers in North America, prompting the company to establish Kuramo Incorp. in Ottawa, Canada, which began operations in January 2020.

The operating results for both locations for the year ended December 31, 2022, are as follows:

Description	Lagos, Nigeria (N’000)	Ottawa, Canada (N’000)
Gross turnover	180,200	330,800
Less: Expenses
– Cost of materials	72,100	162,320
– Wages and salaries	18,050	42,120
– Finance costs	1,400	3,150
– Miscellaneous	4,600	5,270
– Depreciation	5,760	8,750
– Share of head office expenses	25,600	16,040
– Foreign tax paid	–	18,900
Total expenses	127,510	256,550
Net profit	52,690	74,250

Additional Information:

Ottawa branch is a wholly owned Nigerian company.
Miscellaneous expenses are allowable for tax purposes.
Capital allowances agreed with Nigerian tax authorities:

Location Capital Allowance (N’000)

Lagos operations 6,800

Ottawa operations 9,900
The exchange rate for Canadian operations is fair.
No double taxation agreement exists between Nigeria and Canada.

Location	Capital Allowance (N’000)
Lagos operations	6,800
Ottawa operations	9,900

Required:
In accordance with the provisions of the Companies Income Tax Act Cap. C21 LFN 2004 (as amended), you are to: a. Compute the double taxation relief (if any) available to the Nigerian company

(9 Marks)
b. Advise on the tax liabilities of the Nigerian company for the relevant assessment year (9 Marks)
c. Comment on the implications of double taxation agreements on withholding tax deductions by a company resident in a country:
(i) With no double taxation agreement with Nigeria

(1 Mark)
(ii) With double taxation treaty with Nigeria (1 Mark)
Total: 20 Marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Commonwealth Tax Rate, Companies Income Tax, Double taxation relief, Foreign Operations, Withholding Tax
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: MAY 2024

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

Question

Engineer Kole Ahmed manages a wholly owned Nigerian engineering outfit – Oduifa Construction Company Limited, based at Ikeja and incorporated in February 2010.

Given the challenging economic environment in Nigeria and inconsistent government policies, the company’s management embarked on foreign diversification of income. They sourced and secured some contracts in the United Kingdom where they have operational activities in London.

Extracts from the Statement of Profit or Loss for the year ended December 31, 2015, for Lagos and London operations, are as follows:

Description	Lagos (N)	London (N)	Global (N)
Revenue	68,000,000	70,200,000	138,200,000
Direct expenses	(43,410,000)	(44,050,000)	(87,460,000)
Gross profit	24,590,000	26,150,000	50,740,000
Administrative expenses:
– Staff salaries	1,200,000	1,440,000	2,640,000
– Rent and rates	840,000	960,000	1,800,000
– Motor vehicle expenses	136,000	148,000	284,000
– Repairs and maintenance	92,000	106,500	198,500
– Utilities	76,840	81,000	157,840
– Business insurances	55,000	60,000	115,000

Capital allowances: N725,000.

Required: Compute the final tax liability of the company for the relevant assessment year. (15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Companies Income Tax, Double taxation relief, Foreign income, Tertiary Education Tax
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: MAY 2018

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

Question

Kofi Agyemang worked in Canada for a very long time and relocated to Ghana to benefit from the One District One Factory (1D1F) initiative. Kofi Agyemang set up a company called Manpower Ltd and was granted approval by the 1D1F Secretariat to operate a manufacturing company at Koforidua, the capital town of Eastern Region.

An extract from the accounts of Manpower Ltd for the 2021 year of assessment was as follows:

Description	GH¢
Chargeable Income	2,000,000
Dividend from Val Ltd:
Ghana (gross)	100,000
Canada (net of tax)	120,000
Interest on current account from:
Ghana (gross)	80,000
Canada (net of taxes)	100,000
Rental Income:
Ghana (gross)	200,000
Canada (gross)	150,000
Depreciation	67,000

Additional information:
i) Taxes paid on the foreign income:

Dividend: GH¢18,000
Interest: GH¢15,000
Rental income: GH¢15,000

ii) Capital allowance agreed with the Ghana Revenue Authority amounted to GH¢140,000.

Required:
Compute the tax payable by Manpower Ltd for the 2021 year of assessment. (8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Double taxation relief, Foreign income
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2023

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

Question

Sunproof International Inc. has been in the tyre manufacturing business in Nigeria and Sierra Leone for over ten years.

The Company’s operating results for the year ended 31 December 2012 were as follows:

Particulars	N
Income from Nigeria	75,000,000
Income from Sierra Leone	33,000,000
Overheads	60,000,000
Depreciation – Nigeria	6,750,000
Depreciation – Sierra Leone	1,125,000
Donations to Island Club	375,000
Foreign tax suffered	6,300,000

Other information:

Net profit attributable to the Company in Sierra Leone was N7,725,000.
Capital allowances agreed with Tax Officials for operations in Nigeria and Sierra Leone were N5,310,000 and N2,175,000 respectively.
Assume the Company is a wholly Nigerian company.

Required:
i. Identify the Double Taxation Relief available to the Company. (4 Marks)
ii. Compute the tax liability of the Company for the relevant Year of Assessment.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Double taxation relief, Foreign Taxation, Income Tax Computation, International Taxation, Tax Compliance, Tax Liability
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: NOV 2014

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

Question

The operating results for both locations for the year ended December 31, 2022, are as follows:

Description	Lagos, Nigeria (N’000)	Ottawa, Canada (N’000)
Gross turnover	180,200	330,800
Less: Expenses
– Cost of materials	72,100	162,320
– Wages and salaries	18,050	42,120
– Finance costs	1,400	3,150
– Miscellaneous	4,600	5,270
– Depreciation	5,760	8,750
– Share of head office expenses	25,600	16,040
– Foreign tax paid	–	18,900
Total expenses	127,510	256,550
Net profit	52,690	74,250

Additional Information:

Ottawa branch is a wholly owned Nigerian company.
Miscellaneous expenses are allowable for tax purposes.
Capital allowances agreed with Nigerian tax authorities:

Location Capital Allowance (N’000)

Lagos operations 6,800

Ottawa operations 9,900
The exchange rate for Canadian operations is fair.
No double taxation agreement exists between Nigeria and Canada.

Location	Capital Allowance (N’000)
Lagos operations	6,800
Ottawa operations	9,900

(1 Mark)
(ii) With double taxation treaty with Nigeria (1 Mark)
Total: 20 Marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Commonwealth Tax Rate, Companies Income Tax, Double taxation relief, Foreign Operations, Withholding Tax
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: MAY 2024

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

Question

Engineer Kole Ahmed manages a wholly owned Nigerian engineering outfit – Oduifa Construction Company Limited, based at Ikeja and incorporated in February 2010.

Extracts from the Statement of Profit or Loss for the year ended December 31, 2015, for Lagos and London operations, are as follows:

Description	Lagos (N)	London (N)	Global (N)
Revenue	68,000,000	70,200,000	138,200,000
Direct expenses	(43,410,000)	(44,050,000)	(87,460,000)
Gross profit	24,590,000	26,150,000	50,740,000
Administrative expenses:
– Staff salaries	1,200,000	1,440,000	2,640,000
– Rent and rates	840,000	960,000	1,800,000
– Motor vehicle expenses	136,000	148,000	284,000
– Repairs and maintenance	92,000	106,500	198,500
– Utilities	76,840	81,000	157,840
– Business insurances	55,000	60,000	115,000

Capital allowances: N725,000.

Required: Compute the final tax liability of the company for the relevant assessment year. (15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Companies Income Tax, Double taxation relief, Foreign income, Tertiary Education Tax
Level: Level 3

Topic: Double Taxation Reliefs and Credits
Series: MAY 2018

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

Question

An extract from the accounts of Manpower Ltd for the 2021 year of assessment was as follows:

Description	GH¢
Chargeable Income	2,000,000
Dividend from Val Ltd:
Ghana (gross)	100,000
Canada (net of tax)	120,000
Interest on current account from:
Ghana (gross)	80,000
Canada (net of taxes)	100,000
Rental Income:
Ghana (gross)	200,000
Canada (gross)	150,000
Depreciation	67,000

Additional information:
i) Taxes paid on the foreign income:

Dividend: GH¢18,000
Interest: GH¢15,000
Rental income: GH¢15,000

ii) Capital allowance agreed with the Ghana Revenue Authority amounted to GH¢140,000.

Required:
Compute the tax payable by Manpower Ltd for the 2021 year of assessment. (8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Double taxation relief, Foreign income
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2023

Question Tag: Double taxation relief

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

Our offerings

Contact Info

Customer

Get In Touch

NBC Institute

Question Tag: Double taxation relief

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

You're reporting an error for "AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits"

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

You're reporting an error for "AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits"

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

You're reporting an error for "AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits"

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

You're reporting an error for "AT – March 2023 – L3 – Q1b – Business income – Corporate income tax"

AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits

Identify double taxation relief and compute the tax liability for a Nigerian company with foreign operations.

You're reporting an error for "AT – Nov 2014 – L3 – SC – Q6a – Double Taxation Reliefs and Credits"

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

You're reporting an error for "AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits"

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

You're reporting an error for "AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits"

AT – March 2023 – L3 – Q1b – Business income – Corporate income tax

Compute the tax payable by Manpower Ltd, considering foreign income and capital allowances.

You're reporting an error for "AT – March 2023 – L3 – Q1b – Business income – Corporate income tax"

Our offerings

Contact Info

Customer

Get In Touch

NBC Institute

admin