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John Moffat.
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Ron123
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https://opentuition.com/topic/bpp-revision-kit-afm-q-9-lamri/
Hi, as discussed in the replies above, please may I know why Lamri still needs to pay an additional corporation tax of 14% (as seen in sample answer part (b) 1st paragraph), since Strymon has already been taxed at 42%, and Lamri will therefore get full credit for such tax already paid?
Thank you.
John Moffat
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You are misreading the answer.
It is not that Lamri will actually be charged an extra 14%. It is saying that because Strymon will have had to pay tax at a rate 14% more than Lamri pays on its own profits, then effectively Lamri will be getting less than they would have got if they had earned those profits – it is effectively as though they have ended up paying 14% more.
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