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Sensitive of revenue MJ22 Q1biii

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sensitive of revenue MJ22 Q1biii

  • This topic has 6 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • December 27, 2023 at 2:25 pm #697427
    phuongmore
    Participant
    • Topics: 132
    • Replies: 128
    • ☆☆☆

    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 NPV

    In 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.

    December 30, 2023 at 12:14 pm #697504
    phuongmore
    Participant
    • Topics: 132
    • Replies: 128
    • ☆☆☆

    Please answer my question.
    Other person sent the questions later than mine but has received the answer sooner.

    January 1, 2024 at 4:42 pm #697571
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54670
    • ☆☆☆☆☆

    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.

    January 2, 2024 at 3:16 am #697587
    phuongmore
    Participant
    • Topics: 132
    • Replies: 128
    • ☆☆☆

    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 ?

    January 2, 2024 at 8:29 am #697592
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54670
    • ☆☆☆☆☆

    Now I understand you, and yes – you would get the 2 marks 🙂

    February 14, 2024 at 2:54 pm #700343
    phuongmore
    Participant
    • Topics: 132
    • Replies: 128
    • ☆☆☆

    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 ?

    February 15, 2024 at 9:15 am #700396
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54670
    • ☆☆☆☆☆

    The question specifically says that under the terms of the tax treaty they will be assumed to have paid tax at 20%. Whether they did pay at 20% is irrelevant because the treaty says that it will be assumed for the purposes of the treaty that they had paid it.

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