Tax Relief – Page 2 – NBC Institute

ATAX – May 2019 – L3 – Q7a – Taxation of Specialized Businesses

Provide a report on fiscal incentives in Nigeria’s oil and gas sector, including gas production, exploitation of associated gas, and free trade zone investments.

Question

The Federal Government of Nigeria, in the third quarter of 2018, announced the discovery of a huge hydro-carbon deposit in the Chad Basin area of Borno State. This information has attracted interest from local and foreign investors in the Nigerian oil and gas sector. One such foreign investor is a Japanese billionaire, Mr. Sun Nagasaki, who has investments in oil and gas operations in the Middle East and Latin America.

Mr. Nagasaki is, however, not familiar with the regulations guiding operations and the incentives available to investors in the oil and gas sub-sector in Nigeria. You have been appointed as a tax consultant by Mr. Nagasaki’s representative in Nigeria.

Required:
a. Draft a report addressed to Mr. Nagasaki explaining the following issues of interest:

i. Fiscal incentives available in the gas production phase (2 Marks)
ii. Six incentives for the encouragement of exploitation and utilization of associated gas for commercial purposes (downstream operations) (3 Marks)
iii. Six incentives and fiscal measures that favour and encourage large investment in oil and gas free trade zones (4 Marks)

Answer

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Tags: Fiscal Incentives, Investment, Nigeria, Oil and gas, Tax Relief
Level: Level 3

Topic: Taxation of Specialized Businesses

ATAX – May 2019 – L3 – Q5c – Double Taxation Reliefs and Credits

Advise on double taxation relief for SOKGlobal Limited and compute the applicable relief.

Question

SOKGlobal Limited is a wholly owned Nigerian company that deals with stationery items. It has a functional business unit in Cape Town, South Africa. The company’s operating results for the year ended December 31, 2017, are as follows:

Profit attributable to South Africa business: ₦8,740
Capital allowances agreed with tax officials for Nigeria and South Africa businesses were ₦5,500,000 and ₦2,210,000, respectively.

Required:
Advise the company on the double taxation relief applicable to the company, showing the necessary computations.

Answer

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Tags: Corporate Tax, Double Taxation, Foreign Tax Credit, International Taxation, Tax Relief
Level: Level 3

Topic: Double Taxation Reliefs and Credits, Taxation of Companies

ATAX – May 2019 – L3 – Q5a – Double Taxation Reliefs and Credits

State provisions regarding double taxation agreements between Nigeria and another country, as provided in Sections 34 and 35 of the Companies Income Tax Act.

Question

a. State four of the specific provisions of the law as provided in Sections 34 and 35 of the Companies Income Tax Act Cap C2 LFN 2004 (as amended) regarding where there is a double taxation agreement between one country and Nigeria. (2 Marks)

Answer

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Tags: Companies Income Tax Act, Double Taxation, International Taxation, Tax Relief, Tax treaties
Level: Level 3

Topic: Double Taxation Reliefs and Credits

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.

Answer

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Tags: Income Tax, Industrial Development, Pioneer Status, Tax Relief
Level: Level 3

Topic: Petroleum Profits Tax (PPT)
Series: NOV 2014

AT – May 2018 – L3 – SB – Q3a – Capital Gains Tax

Explain disposal under Capital Gains Tax Act, define incidental costs, and describe delayed remittance relief conditions.

Question

Capital gains may be defined as gains arising from increases in the market value of capital assets, to a corporate body or person who does not habitually offer them for sale, and in whose hands they do not constitute inventory-in-trade.

With respect to the Capital Gains Tax Act, you are required to explain:

(i) When a “disposal” is said to have taken place. (2 Marks)

(ii) What constitutes “incidental costs”? (2 Marks)

(iii) Under what circumstances can a “delayed remittance” relief be granted? (2 Marks)

Answer

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Tags: Asset Disposal, Capital gains tax, Delayed Remittance Relief, Disposal, Incidental Costs, Tax Relief
Level: Level 3

Topic: Capital Gains Tax (CGT)
Series: MAY 2018

AT – Nov 2023 – L1 – SB – Q3 – Capital Gains Tax

Evaluate capital gains tax implications and relief for Damaturu Nigeria Ltd on asset disposal and reinvestment under Nigerian tax laws.

Question

a. Explain the provisions of the Capital Gains Tax Act C1 LFN 2004 (as amended) in respect of tax payable on disposal of assets situated outside Nigeria by a non-Nigerian company. (2 Marks)

b. Damaturu Nigeria Limited had been in business as a manufacturer of dairy products for several years. In its bid to re-engineer its operations by investing in another viable product line (to be cited in a major city), the Board of Directors in February 2022, approved the sales and re-acquisition of some assets as shown below:

(i) The underlisted assets were acquired in 2015:

Description	N’000
Land	25,000
Plant and equipment	13,000
Factory building	30,000

(ii) Sales proceeds from assets disposed of in July 2022:

Description	N’000
Land	32,000
Plant and equipment	15,000
Factory building	38,000

(iii) Expenses incurred (as percentage of sales proceeds) in connection with disposal of assets:

Legal: 1%
Professional valuers’ fees: 3%

(iv) Re-investment in new assets (for the purpose of the business) to replace the disposed ones, was made between September and October, 2022:

Description	N’000
Land	28,000
Plant and equipment	18,000
Factory building	30,000

Required:

i. Compute the capital gains tax payable (if any) for each of the transactions and state the date of payment of the tax due. (14 Marks)

ii. Determine the relief available (if any) on the investment in the new assets. (4 Marks)

(Total: 20 Marks)

Answer

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Tags: Asset Reinvestment, Capital gains tax, Disposal of assets, Financial Reporting, International Taxation, Legal Compliance, Tax Relief
Level: Level 3

Topic: Capital Gains Tax (CGT)
Series: NOV 2023

FR – May 2021 – L2 – Q2b – Accounting for Government Grants under IAS 20

Explain how government grants and tax reliefs should be accounted for under IAS 20

Question

Tango Ltd, a manufacturer and supplier of cashew products, has recently established a new facility in Damongo. To help in this new operation, Tango Ltd has secured support from the Government of Ghana and is unsure how the grants are to be accounted for in the financial statements. The company has a year-end of 30 April 2021, and all the following transactions took place on 1 May 2020.

i) A grant of GH¢150,000 was paid to a company to allow it to settle its outstanding accounts payable and prevent it from going into liquidation.

ii) A grant of 50% tax relief, the net effect of which is estimated at GH¢85,000 per annum, for establishing a manufacturing company in the area to provide employment for the youth.

iii) Tango Ltd receives a grant of GH¢300,000 towards the acquisition of a machine costing GH¢500,000. The machine has a useful life of five years.

Required:
Explain how each of the above should be accounted for in the financial statements of Tango Ltd for the year ended 30 April 2021, in accordance with IAS 20: Accounting for Government Grants and Disclosure of Government Assistance.
(6 marks)

Answer

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Tags: Disclosure of Government Assistance, Government Grants, IAS 20, Tax Relief
Level: Level 2

Topic: IAS 20: Government Grants
Series: MAY 2021

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Question

Dr. Alade Ogungbemi retired from the service of Oyo State Government after attaining 60 years of age on July 31, 2017. He secured an employment with TUC Foods Limited as human resources manager, effective August 1, 2017.

The following details were provided:

Salary: January 1 – July 31, 2017: N420,000 per month
New employment: N4,800,000 per annum
Pension income, effective August 1, 2017: N840,000 per annum
Transport allowance (new employment): N120,000 per annum
Rent allowance (new employment): N720,000 per annum
Contributions to national housing fund and contributory pension fund scheme at 2½% and 7½% of gross income, respectively
Rental income received (gross):
- July 19, 2015: N240,000
- December 1, 2015: N120,000
- July 4, 2016: N360,000
- December 4, 2016: N420,000
Dr. Ogungbemi is married and has four children. All except one, aged 20 years, are still in school.
Dr. Ogungbemi has a life assurance policy with a sum assured of N7,500,000 and an annual premium of N460,000. His aged parents live with him, and neither of them has an income.

Required:
Compute the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Answer

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Tags: chargeable income, Gross Income, Personal income tax, PIT Computation, Tax Relief
Level: Level 2

Topic: Personal Income Tax
Series: NOV 2018

TF – May 2018 – L3 – Q3b – Tax planning

Briefly explain tax holiday, tax exemptions, tax reliefs, and tax rebates.

Question

Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency, with the elements of the financial plan working together in the most tax-efficient manner possible.

Required:
Briefly explain the following terms with respect to tax planning:
i) Tax holiday
ii) Tax exemptions
iii) Tax relief
iv) Tax rebates/refund
(6 marks)

Answer

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Tags: Tax Exemptions, Tax Holiday, Tax Planning, Tax rebates, Tax Relief
Level: Level 3

Topic: Tax planning
Series: MAY 2018

AT – April 2022 – L3 – Q1a – Business income – Corporate income tax

Explain the mechanism of carrying over business losses for tax purposes.

Question

All persons can carry over their losses, so far as it can be proven that it is a loss by the person making the claim. This was mooted at a seminar organised for a business community in some parts of Accra, the capital city of Ghana.

Required:
Explain the mechanism of carryover of losses.

Answer

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Tags: Business income, Loss Carryover, Tax Relief
Level: Level 3

Topic: Business income - Corporate income tax
Series: APR 2022

AT – Nov 2020 – L3 – Q3b – International taxation

Tax computation for Andrew Soweah as an individual, granting relief under the Ghana/UK Double Taxation Agreement using the credit method.

Question

Andrew Soweah recently relocated to Ghana to commence his business after retirement from TaskForce (UK) Ltd, a security company he served for over 20 years. The nature of the business was to provide private security to diplomats and the very affluent.

Before coming to Ghana, he rented out his apartment in the UK for a yearly rent of £18,000. He also maintained a healthy balance in his account with Diamond Bank in London.

His income for 2019 year of assessment is summarized as follows:

Business Income (net of all taxes): GH¢126,000.
Dividend received from Faithful Ltd, a resident company at gross amount was GH¢18,000.
Rent of £16,200 was paid into his account with Diamond Bank. Withholding tax amounting to £1,800 had been deducted.
Diamond Bank credited his account with net of £8,100 bank interest. UK tax rate on interest is 10%.

Additional Information:

Exchange rate is GH¢7.5 for £1.
Andrew Soweah does not contribute to social security in Ghana.

Required: Compute his tax liability as an individual for the relevant year of assessment while granting him relief for double taxation under the Ghana/UK Double Taxation Agreement using the credit method.

Answer

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Tags: Business income, Double Taxation, Foreign income, Ghana-UK treaty, Individual tax, Rental Income, Tax Relief
Level: Level 3

Topic: International taxation
Series: NOV 2020

AT – Mar 2024 – L3 – Q1b – International taxation

Discussing the challenges posed by double taxation agreements and the methods of granting double taxation relief.

Question

There is growing attention on the question of tax treaties signed by developing countries. The costs of tax treaties to developing countries have been highlighted in recent years by NGOs such as ActionAid and SOMO (Lewis, 2013). During 2014, an influential IMF paper warned that developing countries “would be well-advised to sign treaties only with considerable caution” (IMF, Spillovers on International Corporate Taxation, 2014) and the OECD, as part of its Base Erosion and Profit Shifting (BEPS) project, proposes to add text to the commentary of its model treaty to help countries decide “whether a treaty should be concluded with a State but also whether a State should seek to modify or replace an existing treaty or even, as a last resort, terminate a treaty” (OECD, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, 2014).

Required:

i) Examine the challenges double taxation agreements pose to Ghana.
(4 marks)

ii) Explain the methods of granting double taxation reliefs.
(4 marks)

Answer

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Tags: Double Taxation, Tax Compliance, Tax Relief, Tax treaties
Level: Level 3

Topic: International taxation
Series: MAR 2024

AT – Nov 2019 – L3 – Q2a – International taxation

Outline the conditions required to satisfy before foreign tax credit relief is granted.

Question

Any resident person other than a partnership may be allowed a foreign tax credit relief on any income that is earned outside Ghana subject to the fulfillment of certain conditions, which are critical in the granting of the relief.

Required:

What are the conditions to satisfy before the foreign tax credit relief is granted?

Answer

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Tags: Foreign Tax Credit, International Taxation, Tax Relief
Level: Level 3

Topic: International taxation
Series: NOV 2019

Question Tag: Tax Relief

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ATAX – May 2019 – L3 – Q7a – Taxation of Specialized Businesses

Provide a report on fiscal incentives in Nigeria’s oil and gas sector, including gas production, exploitation of associated gas, and free trade zone investments.

ATAX – May 2019 – L3 – Q5c – Double Taxation Reliefs and Credits

Advise on double taxation relief for SOKGlobal Limited and compute the applicable relief.

ATAX – May 2019 – L3 – Q5a – Double Taxation Reliefs and Credits

State provisions regarding double taxation agreements between Nigeria and another country, as provided in Sections 34 and 35 of the Companies Income Tax Act.

AT – Nov 2014 – L3 – SB – Q4 – Petroleum Profits Tax (PPT)

Analyze tax implications for Broadway Limited's pioneer status and relevant years of assessment.

AT – May 2018 – L3 – SB – Q3a – Capital Gains Tax

Explain disposal under Capital Gains Tax Act, define incidental costs, and describe delayed remittance relief conditions.

AT – Nov 2023 – L1 – SB – Q3 – Capital Gains Tax

Evaluate capital gains tax implications and relief for Damaturu Nigeria Ltd on asset disposal and reinvestment under Nigerian tax laws.

FR – May 2021 – L2 – Q2b – Accounting for Government Grants under IAS 20

Explain how government grants and tax reliefs should be accounted for under IAS 20

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

TF – May 2018 – L3 – Q3b – Tax planning

Briefly explain tax holiday, tax exemptions, tax reliefs, and tax rebates.

AT – April 2022 – L3 – Q1a – Business income – Corporate income tax

Explain the mechanism of carrying over business losses for tax purposes.

AT – Nov 2020 – L3 – Q3b – International taxation

Tax computation for Andrew Soweah as an individual, granting relief under the Ghana/UK Double Taxation Agreement using the credit method.

AT – Mar 2024 – L3 – Q1b – International taxation

Discussing the challenges posed by double taxation agreements and the methods of granting double taxation relief.

AT – Nov 2019 – L3 – Q2a – International taxation

Outline the conditions required to satisfy before foreign tax credit relief is granted.

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ATAX – May 2019 – L3 – Q7a – Taxation of Specialized Businesses

Provide a report on fiscal incentives in Nigeria’s oil and gas sector, including gas production, exploitation of associated gas, and free trade zone investments.

You're reporting an error for "ATAX – May 2019 – L3 – Q7a – Taxation of Specialized Businesses"

ATAX – May 2019 – L3 – Q5c – Double Taxation Reliefs and Credits

Advise on double taxation relief for SOKGlobal Limited and compute the applicable relief.

You're reporting an error for "ATAX – May 2019 – L3 – Q5c – Double Taxation Reliefs and Credits"

ATAX – May 2019 – L3 – Q5a – Double Taxation Reliefs and Credits

State provisions regarding double taxation agreements between Nigeria and another country, as provided in Sections 34 and 35 of the Companies Income Tax Act.

You're reporting an error for "ATAX – May 2019 – L3 – Q5a – Double Taxation Reliefs and Credits"

AT – Nov 2014 – L3 – SB – Q4 – Petroleum Profits Tax (PPT)

Analyze tax implications for Broadway Limited's pioneer status and relevant years of assessment.

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AT – May 2018 – L3 – SB – Q3a – Capital Gains Tax

Explain disposal under Capital Gains Tax Act, define incidental costs, and describe delayed remittance relief conditions.

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AT – Nov 2023 – L1 – SB – Q3 – Capital Gains Tax

Evaluate capital gains tax implications and relief for Damaturu Nigeria Ltd on asset disposal and reinvestment under Nigerian tax laws.

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FR – May 2021 – L2 – Q2b – Accounting for Government Grants under IAS 20

Explain how government grants and tax reliefs should be accounted for under IAS 20

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TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

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TF – May 2018 – L3 – Q3b – Tax planning

Briefly explain tax holiday, tax exemptions, tax reliefs, and tax rebates.

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AT – April 2022 – L3 – Q1a – Business income – Corporate income tax

Explain the mechanism of carrying over business losses for tax purposes.

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AT – Nov 2020 – L3 – Q3b – International taxation

Tax computation for Andrew Soweah as an individual, granting relief under the Ghana/UK Double Taxation Agreement using the credit method.

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AT – Mar 2024 – L3 – Q1b – International taxation

Discussing the challenges posed by double taxation agreements and the methods of granting double taxation relief.

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AT – Nov 2019 – L3 – Q2a – International taxation

Outline the conditions required to satisfy before foreign tax credit relief is granted.

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