Finance Act – NBC Institute

ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

Question

Tax planning is a right that taxpayers must exercise to reduce tax liability and improve profitability while fully complying with existing tax legislations to avoid penalties and further risks. Thin capitalisation and non-tax factors are important fiscal policy issues that corporate players and governments in different tax jurisdictions should not undermine.

Required:

(a) Explain the concept of thin capitalisation and the problems it may create for both creditors and tax authorities. (5 Marks)
(b) Discuss the thin capitalisation rules put in place by the Federal Government via the provisions of the Finance Act 2019. (4 Marks)
(c) Explain briefly, six important non-tax factors that may affect the choice of location of a corporate entity by a holding company in another tax jurisdiction. (6 Marks)

Answer

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Tags: Finance Act, Non-Tax Considerations, Thin Capitalisation
Level: Level 3

Topic: Tax Impact of Financing Decisions

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

Question

The rapid growth in information and communication technology in Nigeria has brought with it boundless opportunities and changes in the way business activities are conducted. A significant number of transactions in Nigeria, in recent times, are consummated using mobile devices and online payments. In the same vein, the online platforms (mostly operated by international private entities) are perceived by various governments in developing countries (Nigeria inclusive) as undermining the economic interests of their host countries through non-payment of taxes, despite their significant economic presence.

In light of the above, the Finance Act 2019 provides for the treatment of digital and other service providers concerning the significant economic presence of a foreign entity. This provision was followed up with the issuance of Companies Income Tax (Significant Economic Presence) Order 2020 by the Federal Government of Nigeria.

You have been contacted by a foreign online outfit with interest in mobile networking and consultancy, TWITTY Incorporation, California, USA, through its official partner in Nigeria, MAAbioro Partners, to explain issues on the significant economic presence of a foreign entity, deemed to be operating in Nigeria.

Required:

As a tax consultant to TWITTY Incorporation, draft a report explaining the following areas:

a. The objectives of the relevant provisions of Finance Act 2019 and Companies Income Tax (Significant Economic Presence) Order 2020 concerning the significant economic presence of a foreign entity. (3 Marks)
b. Conditions for the determination of significant economic presence for digital activities. (5 Marks)
c. Determination of significant economic presence for technical and consultancy services. (2 Marks)
d. Activities exempted from significant economic presence in Nigeria. (3 Marks)
e. The tax implications of the Order 2020 on the activities of TWITTY Incorporation. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Compliance, Digital Economy, Finance Act, International Taxation, Significant Economic Presence
Level: Level 3

Topic: International taxation

ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

Question

Required:

(a) Explain the concept of thin capitalisation and the problems it may create for both creditors and tax authorities. (5 Marks)
(b) Discuss the thin capitalisation rules put in place by the Federal Government via the provisions of the Finance Act 2019. (4 Marks)
(c) Explain briefly, six important non-tax factors that may affect the choice of location of a corporate entity by a holding company in another tax jurisdiction. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Finance Act, Non-Tax Considerations, Thin Capitalisation
Level: Level 3

Topic: Tax Impact of Financing Decisions

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

Question

Required:

As a tax consultant to TWITTY Incorporation, draft a report explaining the following areas:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Compliance, Digital Economy, Finance Act, International Taxation, Significant Economic Presence
Level: Level 3

Topic: International taxation

Question Tag: Finance Act

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ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

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ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

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ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

You're reporting an error for "ATAX – Nov 2021 – L3 – Q5 – International Taxation"

ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions

Discuss thin capitalisation concepts, related rules under the Finance Act 2019, and non-tax factors affecting corporate location decisions.

You're reporting an error for "ATAX – May 2023 – L3 – Q6 – Tax Impact of Financing Decisions"

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

You're reporting an error for "ATAX – Nov 2021 – L3 – Q5 – International Taxation"

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