Question Tag: Non-Tax Considerations

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:

1. (a) Explain the concept of thin capitalisation and the problems it may create for both creditors and tax authorities. (5 Marks)
2. (b) Discuss the thin capitalisation rules put in place by the Federal Government via the provisions of the Finance Act 2019. (4 Marks)
3. (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)