Question Tag: Exempt Companies

Adamu Musa Company Limited is a Nigerian telecommunications company that has been in business for several years. The company’s annual report for the year ended October 31, 2017, provides the following summary of the statement of profit or loss:

• Gross profit: N3,062,500
• Dividend received from other Nigerian companies (gross): N175,000
• Profit on sale of property, plant, and equipment: N160,000
• Rents received (gross): N140,000
• Expenses:
  • Rent paid: N250,000
  • Wages and salaries: N725,000
  • Lighting and air conditioning: N37,500
  • Travelling expenses: N50,000
  • Rates: N60,000
  • Repairs to premises: N150,000
  • Depreciation: N125,000
  • Bad debts written off: N50,000
  • Income tax provision: N175,000
  • Stationery: N75,000
  • Postages and telephone: N30,000
  • Business name sign post: N10,000
  • Legal expenses: N100,000
  • General expenses: N200,000
  • Expansion of cold room: N500,000

Additional information:

• Bad debts include general provisions of N22,500 written off on the sale of trade inventory.
• Legal expenses include N25,000 for acquiring a new lease and N12,500 for renewing an old lease.
• General expenses include 
• Travelling expenses include Chief Taragi‟s (managing director) private hotel bill of N11,250

• Capital allowances agreed with the tax office total N125,000.
• Withholding tax at 10% was deducted from rental income.

Required:
(a) Compute the total profit and companies’ income tax payable.
(b) Calculate tertiary education tax (TET).
(c) State five categories of companies liable to information technology tax.