- 30 Marks
AT – Nov 2017 – L3 – Q1 – Taxation of Companies
Explain conditions for pioneer status and compute tax for HUSNA Ltd.
Question
HUSNA Nigeria Limited was incorporated on May 13, 2015, to manufacture adhesives using gum arabic. The company, led by Mr. Onyeocha Ben, sought to benefit from the Industrial Development (Income Tax Relief) Act. They applied and were granted a Pioneer Certificate, with the production day certified as July 1, 2015.
The company’s financial records provide the following data:
(i) Accumulated profit as of June 30, 2016 – ₦41,250,000
(ii) Capital expenditure during the Pioneer period (certified by FIRS):
- Building – ₦20,000,000
- Property, Plant & Equipment – ₦18,750,000
- Motor vehicles – ₦12,500,000
- Furniture & Fittings – ₦6,250,000
(iii) Adjusted profits from the new trade after the pioneer period:
- For 6 months to December 31, 2016 – ₦15,000,000
- For the year to December 31, 2017 – ₦22,500,000
Required:
a. Explain briefly the conditions for granting a Pioneer Status to a company.
b. Compute the tax liabilities of the company for the relevant assessment years.
c. Differentiate between Tax Audit and Tax Investigation.
Find Related Questions by Tags, levels, etc.
- Tags: Pioneer Status, Tax Audit, Tax computation, Tax Investigation, Tax liabilities
- Level: Level 3
- Topic: Taxation of Companies
- Series: NOV 2017