Question Tag: Tax Evasion

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  • 15 Marks

AT – May 2016 – L3 – Q6 – Tax Audits and Investigations

Define tax avoidance and evasion, outline the differences, and explain key stages and objectives of a tax audit.

YASSAR LIMITED imports baby wears and has been in business for some years now. The company is doing very well, and the Directors are impressed with the growth. The company’s Managing Director, Chief Agbaegonkiti, is a member of Enugu Sports Club. On January 14, 2015, after the morning aerobics in the club’s gym, a friend of Chief Agbaegonkiti, who is also the Finance Director of a trading outfit, narrated how the company he works for was subjected to a Tax Audit by the Federal Inland Revenue Service (FIRS), which resulted in payment of additional tax liabilities totaling N10.5 million.

The Finance Director attributed their company’s ordeal to the Board’s poor understanding of key tax-related issues. Chief Agbaegonkiti, after listening to his friend, was highly worried about such a fate befalling his company. As a proactive move, he enquired for seasoned tax practitioners, and your firm, Cutting-Edge & Co, Chartered Accountants, was referred to him.

As the Managing Partner, you are to take action and address the following:

REQUIRED:

a. Briefly explain what you understand by the terms Tax Avoidance and Tax Evasion. (2 marks)

b. State FIVE differences between Tax Avoidance and Tax Evasion. (5 marks)

c. Outline the key stages in the Tax Audit process. (3 marks)

d. State SIX objectives of a Tax Audit exercise. (5 marks)

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  • 15 Marks

AT – Nov 2016 – L3 – SC – Q7 – Tax Planning and Management

Explain tax planning and anti-avoidance legislation, summarize tax evasion and double taxation provisions, and highlight non-tax investment factors.

You were invited as the Chairman of a Tax Summit at Ikeja, Lagos State. The topics for discussion were as follows:

i. Tax Planning, an Effective Method of Tax Avoidance
ii. Tax Evasion in a Growing Economy
iii. Double Taxation – The Provisions and the Impact
iv. Jurisdiction for Investment – Non-Tax Factors

As the Chairman, you had the opportunity to summarize the papers presented by the four paper presenters in just ten minutes.

You are required to:

a. Explain briefly, Tax Planning and Anti-Avoidance Legislations put in place by the Government (3 Marks).

b. Summarize situations that may involve Tax Evasion (4 Marks).

c. Explain Double Taxation Agreement – Provisions and the Main Objectives (4 Marks).

d. Summarize Non-tax factors that attract investors in choosing a business jurisdiction (4 Marks).

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  • 20 Marks

ATAX – May 2019 – L3 – Q2 – Tax Administration and Dispute Resolution

Discuss the distinction between tax evasion and avoidance, provide solutions, and evaluate Nigeria’s anti-avoidance legislation.

You have been approached by the managing director of a manufacturing company, Ojieaga Integrated Limited, for professional advice on tax evasion and tax avoidance and their challenges to an equitable tax system in Nigeria. Your report is expected to guide the operation of the business, having been subjected in the last three years to various forms of fines and penalties by the Federal Inland Revenue Service on confirmed cases of sharp business practices with their attendant loss of tax revenue to the government.

Required:
Having accepted the terms of engagement, you are to write a report to management for consideration at its next meeting, dealing with the following areas of concern:

a. Distinction between tax evasion and tax avoidance, highlighting THREE examples of each case. (6 Marks)
b. Seven solutions to the problem of tax evasion and tax avoidance. (7 Marks)
c. Comment on anti-avoidance legislations in Nigeria. (7 Marks)

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  • 15 Marks

ATAX – Nov 2016 – L3 – Q7 – Tax Planning and Management

Summarizes key points on tax planning, tax evasion, double taxation agreements, and non-tax factors for investment.

As the Chairman of a Tax Summit in Ikeja, Lagos State, the discussion topics were:

  1. Tax Planning, an Effective Method of Tax Avoidance
  2. Tax Evasion in a Growing Economy
  3. Double Taxation – The Provisions and the Impact
  4. Jurisdiction for Investment – Non-Tax Factors

You are required to:

a) Explain briefly Tax Planning and Anti-Avoidance Legislations put in place by the Government. (3 Marks)
b) Summarize situations that may involve Tax Evasion. (4 Marks)
c) Explain Double Taxation Agreement – Provisions and the Main Objectives. (4 Marks)
d) Summarize Non-tax factors that attract investors in choosing a business jurisdiction. (4 Marks)

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  • 30 Marks

ATAX – Nov 2016 – L3 – Q1 – Taxation of Companies

Discusses tax planning concepts, anti-avoidance measures, tax evasion, double taxation, and non-tax factors influencing investor choices.

Zezee Nigeria Limited was incorporated on September 7, 2012, but did not commence business until July 1, 2013. Based on its Memorandum and Articles of Association, the company was established to carry on distributorship and general contracting.

Extracts from Statements of Profit or Loss and Other Comprehensive Income:

Additional information:

(i) Other Income comprises:

(ii) Administrative expenses include:

(iii) Details of Property, Plant and Equipment are as follows:

(iv) On January 2, 2015, the company bought another Motor
vehicle for N1,800,000

(v) Extracts of the Statements of Financial Position are given below:

You were recently appointed the Tax Consultant to the company. The directors sought your advice on whether or not to exercise the company’s right of election for the relevant years of assessment.
For all the relevant years of assessment, you are required to:
a. Compute the Adjusted Profit/Loss. (9 Marks)
b. Determine the Assessable Profit/Loss and advise the Company on whether or not to exercise its right of election. (6 Marks)
c. Compute the capital allowances. (4½ Marks)
d. Compute the tax liabilities. (10½ Marks)

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  • 5 Marks

AT – May 2018 – L3 – SB – Q4a – Ethical Issues in Tax Practice

Differentiate between tax avoidance and tax evasion with key distinctions and implications.

The tax authorities view any case of tax evasion seriously. They are empowered to set aside tax avoidance schemes that result in artificial or fictitious transactions. Tax evasion is usually more prevalent when the tax system is perceived to be unfair.

Required: Differentiate between Tax Avoidance and Tax Evasion. (5 Marks)

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  • 10 Marks

AT – Mar 2024 – L3 – Q3c – Anti-avoidance measures

Explaining the difference between tax avoidance and tax evasion, examples of both, and limitations to tax planning.

According to the Organisation for Economic Co-operation and Development (OECD), tax avoidance and tax evasion are terms which are difficult to define but are generally used to describe the arrangement of a taxpayer’s affairs intended to reduce their tax liability.

Required:

i) Explain the differences between tax avoidance and tax evasion.
(3 marks)

ii) Enumerate THREE (3) examples of tax avoidance activities firms and individuals are likely to engage in.
(3 marks)

iii) Identify FOUR (4) examples of activities that are likely to be classified as tax evasion and not tax avoidance.
(2 marks)

iv) Explain TWO (2) limitations to effective tax planning.
(2 marks)

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  • 5 Marks

AT – Nov 2015 – L3 – Q3b – Anti-avoidance measures

Explaining the difference between tax evasion and tax avoidance with examples.

Distinguish between Tax Evasion and Tax Avoidance and give one example of each.

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  • 5 Marks

AT – Nov 2017 – L3 – Q1d – Tax planning, Anti-avoidance measures

Explaining tax evasion and identifying ways companies evade taxes.

The Presidential Commission on Revenue Mobilization has indicated that tax evasion activities of some companies deny the state of its required revenue for development.

Required:

  1. Explain what tax evasion is, and
  2. Identify THREE ways by which companies evade tax. (5 marks)

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  • 15 Marks

AT – May 2016 – L3 – Q6 – Tax Audits and Investigations

Define tax avoidance and evasion, outline the differences, and explain key stages and objectives of a tax audit.

YASSAR LIMITED imports baby wears and has been in business for some years now. The company is doing very well, and the Directors are impressed with the growth. The company’s Managing Director, Chief Agbaegonkiti, is a member of Enugu Sports Club. On January 14, 2015, after the morning aerobics in the club’s gym, a friend of Chief Agbaegonkiti, who is also the Finance Director of a trading outfit, narrated how the company he works for was subjected to a Tax Audit by the Federal Inland Revenue Service (FIRS), which resulted in payment of additional tax liabilities totaling N10.5 million.

The Finance Director attributed their company’s ordeal to the Board’s poor understanding of key tax-related issues. Chief Agbaegonkiti, after listening to his friend, was highly worried about such a fate befalling his company. As a proactive move, he enquired for seasoned tax practitioners, and your firm, Cutting-Edge & Co, Chartered Accountants, was referred to him.

As the Managing Partner, you are to take action and address the following:

REQUIRED:

a. Briefly explain what you understand by the terms Tax Avoidance and Tax Evasion. (2 marks)

b. State FIVE differences between Tax Avoidance and Tax Evasion. (5 marks)

c. Outline the key stages in the Tax Audit process. (3 marks)

d. State SIX objectives of a Tax Audit exercise. (5 marks)

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  • 15 Marks

AT – Nov 2016 – L3 – SC – Q7 – Tax Planning and Management

Explain tax planning and anti-avoidance legislation, summarize tax evasion and double taxation provisions, and highlight non-tax investment factors.

You were invited as the Chairman of a Tax Summit at Ikeja, Lagos State. The topics for discussion were as follows:

i. Tax Planning, an Effective Method of Tax Avoidance
ii. Tax Evasion in a Growing Economy
iii. Double Taxation – The Provisions and the Impact
iv. Jurisdiction for Investment – Non-Tax Factors

As the Chairman, you had the opportunity to summarize the papers presented by the four paper presenters in just ten minutes.

You are required to:

a. Explain briefly, Tax Planning and Anti-Avoidance Legislations put in place by the Government (3 Marks).

b. Summarize situations that may involve Tax Evasion (4 Marks).

c. Explain Double Taxation Agreement – Provisions and the Main Objectives (4 Marks).

d. Summarize Non-tax factors that attract investors in choosing a business jurisdiction (4 Marks).

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  • 20 Marks

ATAX – May 2019 – L3 – Q2 – Tax Administration and Dispute Resolution

Discuss the distinction between tax evasion and avoidance, provide solutions, and evaluate Nigeria’s anti-avoidance legislation.

You have been approached by the managing director of a manufacturing company, Ojieaga Integrated Limited, for professional advice on tax evasion and tax avoidance and their challenges to an equitable tax system in Nigeria. Your report is expected to guide the operation of the business, having been subjected in the last three years to various forms of fines and penalties by the Federal Inland Revenue Service on confirmed cases of sharp business practices with their attendant loss of tax revenue to the government.

Required:
Having accepted the terms of engagement, you are to write a report to management for consideration at its next meeting, dealing with the following areas of concern:

a. Distinction between tax evasion and tax avoidance, highlighting THREE examples of each case. (6 Marks)
b. Seven solutions to the problem of tax evasion and tax avoidance. (7 Marks)
c. Comment on anti-avoidance legislations in Nigeria. (7 Marks)

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  • 15 Marks

ATAX – Nov 2016 – L3 – Q7 – Tax Planning and Management

Summarizes key points on tax planning, tax evasion, double taxation agreements, and non-tax factors for investment.

As the Chairman of a Tax Summit in Ikeja, Lagos State, the discussion topics were:

  1. Tax Planning, an Effective Method of Tax Avoidance
  2. Tax Evasion in a Growing Economy
  3. Double Taxation – The Provisions and the Impact
  4. Jurisdiction for Investment – Non-Tax Factors

You are required to:

a) Explain briefly Tax Planning and Anti-Avoidance Legislations put in place by the Government. (3 Marks)
b) Summarize situations that may involve Tax Evasion. (4 Marks)
c) Explain Double Taxation Agreement – Provisions and the Main Objectives. (4 Marks)
d) Summarize Non-tax factors that attract investors in choosing a business jurisdiction. (4 Marks)

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  • 30 Marks

ATAX – Nov 2016 – L3 – Q1 – Taxation of Companies

Discusses tax planning concepts, anti-avoidance measures, tax evasion, double taxation, and non-tax factors influencing investor choices.

Zezee Nigeria Limited was incorporated on September 7, 2012, but did not commence business until July 1, 2013. Based on its Memorandum and Articles of Association, the company was established to carry on distributorship and general contracting.

Extracts from Statements of Profit or Loss and Other Comprehensive Income:

Additional information:

(i) Other Income comprises:

(ii) Administrative expenses include:

(iii) Details of Property, Plant and Equipment are as follows:

(iv) On January 2, 2015, the company bought another Motor
vehicle for N1,800,000

(v) Extracts of the Statements of Financial Position are given below:

You were recently appointed the Tax Consultant to the company. The directors sought your advice on whether or not to exercise the company’s right of election for the relevant years of assessment.
For all the relevant years of assessment, you are required to:
a. Compute the Adjusted Profit/Loss. (9 Marks)
b. Determine the Assessable Profit/Loss and advise the Company on whether or not to exercise its right of election. (6 Marks)
c. Compute the capital allowances. (4½ Marks)
d. Compute the tax liabilities. (10½ Marks)

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  • 5 Marks

AT – May 2018 – L3 – SB – Q4a – Ethical Issues in Tax Practice

Differentiate between tax avoidance and tax evasion with key distinctions and implications.

The tax authorities view any case of tax evasion seriously. They are empowered to set aside tax avoidance schemes that result in artificial or fictitious transactions. Tax evasion is usually more prevalent when the tax system is perceived to be unfair.

Required: Differentiate between Tax Avoidance and Tax Evasion. (5 Marks)

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  • 10 Marks

AT – Mar 2024 – L3 – Q3c – Anti-avoidance measures

Explaining the difference between tax avoidance and tax evasion, examples of both, and limitations to tax planning.

According to the Organisation for Economic Co-operation and Development (OECD), tax avoidance and tax evasion are terms which are difficult to define but are generally used to describe the arrangement of a taxpayer’s affairs intended to reduce their tax liability.

Required:

i) Explain the differences between tax avoidance and tax evasion.
(3 marks)

ii) Enumerate THREE (3) examples of tax avoidance activities firms and individuals are likely to engage in.
(3 marks)

iii) Identify FOUR (4) examples of activities that are likely to be classified as tax evasion and not tax avoidance.
(2 marks)

iv) Explain TWO (2) limitations to effective tax planning.
(2 marks)

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  • 5 Marks

AT – Nov 2015 – L3 – Q3b – Anti-avoidance measures

Explaining the difference between tax evasion and tax avoidance with examples.

Distinguish between Tax Evasion and Tax Avoidance and give one example of each.

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  • 5 Marks

AT – Nov 2017 – L3 – Q1d – Tax planning, Anti-avoidance measures

Explaining tax evasion and identifying ways companies evade taxes.

The Presidential Commission on Revenue Mobilization has indicated that tax evasion activities of some companies deny the state of its required revenue for development.

Required:

  1. Explain what tax evasion is, and
  2. Identify THREE ways by which companies evade tax. (5 marks)

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