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In Sensitive of revenue question MJ22 Q1biii, can I calculate as following order and gain full marks:
Sale ( ED )
Tax 20% paid in Elan( ED)
Additional 10 % paid in Marteg (ED)
Sale after tax(ED)
Sale after tax(M$))
PV of sale after tax
% of selling price for investment to have zero NPVIn marking scheme, there are 2 marks award for additional tax in Marteg in M$.
Could I get 2 marks for calculation of Additional 10 % paid in Marteg (ED) as above ?Thank you.
Please answer my question.
Other person sent the questions later than mine but has received the answer sooner.Sorry – I obviously missed seeing your question (and then I have been away for two days because of New Year) 🙁
I am not sure that I understand. what you are asking because the only affect in Marteg of changing the selling price is the extra tax payable in Marteg, and for that there are 2 marks.
In the answer, 10% additional tax in Marteg is firstly calculated in ED, after that it is converted to M$.
The same approach is applied for sale and tax on Elan.
My approach is that calculate all figures in ED (including of 10% additional tax in Marteg) , and after that convert the result to M$.
My question is that will I be awarded 2 mark for the calculation of 10% additional tax in Marteg by this approach ?
In the question, Pryso will pay 20% tax in Elan, but it is exempt for first two years.
Pryso will pay 30% tax in Marteg.
A bi lateral tax treaty exist between 2 countries, hence Pryso must pay additional 10% tax in Marteg.
But In the year 1, Pryso has profit, and exempt. So I understand that it must pay full 30% tax in Marteg ?
Why in the answer, Pryso will pay only addition 10% of tax ?
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