- 20 Marks
AT – Nov 2014 – L3 – SB – Q4 – Petroleum Profits Tax (PPT)
Analyze tax implications for Broadway Limited's pioneer status and relevant years of assessment.
Question
Broadway Limited was incorporated on 31 May 2004, as a manufacturer of plastic products. Four Lebanese shareholders invested substantially, intending to become members of the Board of Directors. The company applied for a Pioneer Status under the Industrial Development (Income Tax Relief) Act, Cap. 17, LFN 2004 and was granted a Pioneer Certificate, with a Production Day certified as 1 August 2004.
The following information has been extracted from the company’s records:
| Details | Amount (N) |
|---|---|
| Net Profit for Financial Year Ended 31 July 2008 | 5,005,000 |
| Depreciation | 396,435 |
The Federal Inland Revenue Service (FIRS) certified the following expenditures up to and including the year ended 31 July 2007:
| Expenditure Type | Amount (N) |
|---|---|
| Industrial Building | 6,142,500 |
| Non-Industrial Building | 2,990,000 |
| Plant and Machinery | 4,631,250 |
| Motor Vehicles | 4,062,500 |
The promoters declined to apply for an extension of the Pioneer period.
Required:
Advise the management on the tax implications for the relevant years of assessment.
Find Related Questions by Tags, levels, etc.
- Tags: Income Tax, Industrial Development, Pioneer Status, Tax Relief
- Level: Level 3
- Topic: Petroleum Profits Tax (PPT)
- Series: NOV 2014