tiniversit) of i)hrkn

Dcpt ofAccounting

IiNIllA

& Information

SysteDrs
Ilrogram ( Septern bcr-Dccenr ber) 2()13

Corporlte Trx Managcment

1" Mid lcrnr Exadination (15yo Wcight)

Clorrrse # 6102:

\I rL\

I irne-lU5 l\l in

.l{l

l.ltts,tct x t'three questio s,,lttsret ofeach questir)tl firust

.,lzzp wlrar is coryolate ta\

nlanaELement

be

qie

tcs

itt seriallt'l

I l]escribc thc objectiVes of corporate tal lnrnagellctlt

irccording lri I akhrrtir antl I-akLrotia.

,tl lri\!
is

rs\ tlrL rrrLIiti,,n.tl l.

\ ploIni|!

rechuiqcs aud ntodel'r

tr\

planning techniques. What

cJliclivc ta\ planuirrg'l

t'f i,i .,,,.. 'r(.,.rr,t,t .la\!\'.n.,,rrl

Lrrrdcsilablc

< rorJr",c !\ltr r,r

ar,,i

1.

r,.<.urr.rjrnt-

l I,ixplain rvith exan4rlc

IMr' l' \: 3+{+-rl

2.

1r)

l)iscuss rariorrs consiclerations 1llr lax rranaqentcnl ol a nerv business?

b) l)istirgLrish bel\\cclr ta\ llcc inconrc aud tax creLlit incolrc rl'ith cxanrpl.. \:,irile clown
tlrc l).ovision rs p..r s.clion l9 (27) ol the IIO 19ll.l rcuardir{ plrrcltasc ofa rnotor.ar an
lccll

() l{AK ( crurics l-trl. is a public linriled company iisted with re Stock i--\charges. \ltcr
cnd ol lhc lcar l l l)cccnri)er 20l2. ihe.onlpany issuerl 57o bonus shares tnd ltlol, r-i[]rt
sharcs. l\{orcovcr, t}c company paid 30,i, cash clividend of its paid up capil,rl. ,^n exlract
()l hulilncc shect es on

l l I)c.c ber2012isnrovidedbelorv:

llcscr!es:
licrrcral iicscrlc

l), t:ri L'l L rr-r ,r!

I. r rl

ll c-\c. rl \rn \l

As a corpolalc ta\ planncr'. do

the implications I Explain.

50,00.00.000

l. . l \. i

I.r'

200.00,00,000
50,00.00,000

rirl

c r") ,r\.ct 't r.tt u

100,00,00,000

r:. .ir'rrri.

r..

lf

so. what

will

be

[Marl$:2+3+51

I ol

-1.

lf' { rtitrllr r\llrirr

lirc

d.litrxtio

oJ_

ir\'r \I.rii0i) ir\ irl(.

itrconle rs pel incoutc lirx lai\,] \\'lul

i,<

e:rc*r,; Irrrlit

S"l'jt" liczrrau hls ioiIcd \itlt tltc (irelrltnen Illotrc I t{l on I .lanitar; 2012. llcr
lr{jis rrlarl is Llct!rrrrilrc(l rt ili 80.(}t)0. /"s N corIorrtc iax arlriscr.ol_tltc c(nnPl!11v. l,o
lrilvc t)cc| rsl('d b].thc LhO oi thc r(,trr!!ral. 1o design hcr sllat.l sttuctorc to frininti:ic hct
lr{ burllsn lilr tnothl\ Lh.iLrclion \\ illt th( :]autc !ou lILre lrlso bcen askr:d to ilctetrrjrle thc
rLrir(,LrLrL ol \{)nrcr tr\ \hcih to bc rlrcluclccl at rLjLIcc f.r l|()fth li!nt itr:r salrrv

"-VJ'N.1.

r..irrl

/1,,

.1..r .,rt

'r

r,'.

..r.-.r

r....r.r

\\rh)/l \\ hl llotl
INlalks: 3+5] 2l

1131 l{ll l-Il. llc\inrco l)hrrnra Linlitcd (putricill tradcLl conlpanr) re|orls
irrr,,nrL L,l- il. l.0i).r,00 li.om busincss. house propct.tr and othcr sootocs. LILll
ils il)rtLrrl irssr:iscd hLrsintss sales is lk. 1(1.00.000. properl) rcornc Tl 2.00.(Xl0 and
rcc(ipt lrorr olher sourccs i.c irterest ol1 ballk dcposit lli. 1.2041.00. 1hc corrprrnv had 1k
1511.000:rs oDcnin!: rccci!rhlcs in(l ll 100.000 as ending recciriLlrles.

21. :t) lr rlrt irr,'n]'

1,,1

rl r\rl\!

ln tlrls sliultiLrrr rvhrrL * ill bc thc 1rl.i lixbiliL\ ol ihe compnrv lirr tlte:rssessIrctrl !car

ll,

2{)12

t,n.,gy p". Iro!\'cr (lencmir)n I inrircrl lras lisLed \\,ith thc stock cxcllages on 2{l IrcbrLUuy
li)r lrrdifg its sharcs. Its linan,:ial Iear is cnrlcd on l0 JLIrc 2012. lt-i cquitl posirion a.s
l0.1rnc -1l0ll is:r,. lirll,rr.,s:

,,lit
'-'1)ll

.ir

lti

llcscrl rs:
(;encr al Ilcser]

r
sr,rcktiolaciJ irqiiiir

|",p..

't. I
lleleirrrd (]rrri!lg:j

:.:iur,iric

!!lo.!9rl,o9lli
f,5.00r:1000

ir lr1 :icfrlcrrber l0l2 il has dcciarcd aud lrairl ,<'1'o di,.,idend oD its pairl uI ce|itirl.'lhc
,:onrpanr ls r()ilrg t(' sLLhniil its r(1LrD r)l ll I).r'jmber 2012. 1l1er inc(jrn. cr,ntljul.ttrL r.
1a\irhlc ilrcolne ol_1he conlpa]ll collres Lrl lk 6.690.(l(10. Iltad of accoLlrtts o1_tlte CoutpanJ.
irrstructcd his.ju ior to cltargc tax rate ''ri) ll j9i, as \.,cll as instruclcd llL l()g/o rebrte as
dcclIr'cd untl paid diridend Ilut LI.l() o1 lhc (lo[]Lran) ['auls exl)cr1 opillion atrl scr]t thc
is:iLrc 1o \ou. /\s a co11l{)r:rte Lax nlanag.r. lclcluine lhc aclual lilx liabilitl ol thc corr]l.a|l]\'
in this situation. 1\lso crlclljure lhe eiti.ri,. l"r, .oF;iG;-frp;tlI
;Assessrncrlt rcar
l0t2-t0tl

lvlarl(s:

r5l
/

201

Uuiversity ofDhaka
Dept ofAccounting & Inforrnation Systems
EMBA Program (January*April) 2014
Course # 6102: Corporate Tax Managernent
1'1 Mid Term Examination (15% Weight)
Marks-

Time-80 Minutes

3{)

fAnswer qnv lhree queslions, Pqrl of qnv queslion must be given in seri{rllttl

1.

a) \\ftat is tax? What is corporate tax nanagement? Describe the objectives ofcorpolate tax
management according to Lakhotia and Lakhotia.

b) Discuss the traditional tirr planning tecbniqes and nodem ta{ plalx.Iing techniques. What
is effective tax planning?

c) Discuss the concept of tan evasion and tax avoidance. Why tax avoidance somelimes
undesirabie? Explain widr exanple.
lMarks: 'l+3+3]

2.

!r) Discuss the various income tax rates applicable 1br company as per Second Scheduic of
the I IO 1984 passed in the Finance,\ct 2013.

b) Distinguish between tax credit income and deemed rvith example. Wrjte dou'n the
provision as pcr scction 19 (27) ofthe ITO 1984 regarding purchase ol a motor car or Jeep.
c) RAK Ceranics Ltd. is a publicly traded compaly listed with the Stock Exchallges. Aller
end of the year 31 December 2013, the company issued 5% bonus shalos and 57o right
shares. Moreover, the conrpany paid 30/o cash dividend of its paid up capital. An extract ol
balance sheet as on 31 December 2013 is provided below:
Reservcs:
General Reserve

50,00.00,000

Stockholders Equih:
Pajd up cbpital

Retcjned earnings
Tolal Resen e and Stockholders' Equitl

200.00.00.000
50.00.00.000

250.00.00.000
300.00.00.000

As a corporate ta{ planner, discuss the consequence of this kind of activites

as per

i'fO

1984.

lMai'ksr 2+3+51

ol2

3. n) Why income year

tax law? Explain.

&

assesment year and rcsident

& non-resident

status are significant in income

b) AB Bank Ltd, a listed Public Ltd Company boih in DSE aDd CSE, has showed TK 8,000'000 as
ret profit in Tax Retum in the hcome Year 201 I -2012. Its Capital & Reserves were Tk 10,000,000
and 5,000,000 respectively. You are asked to calculate the excess profit tax for tlle said income year
for the said company.
c) Do

4.

tou

agree

with the provision for minitnum ta\ on gloss receipts? Why? Why nol?
[Marks:4+5+11

a) Lr th income year 2011-12, Beximco Pharma Limiled (publcily traded company) reporls 1o1al
taxable lncome of Tk. 300,000 ftom business, house propety and other sources. Bui its annual
assessed business sales ls Tk. 1,000,000, propedy income Tk 200,000 and receipl lronl other
sources i.e. interest on bank deposit Tk. 120,000 Opening debtors ofthe company is Tk 50,000 and
clsoing debtors is Tk 95,000.

Ir this siiuatior whal will

be the tax

iiabilily of dte company lbr the

assessment year'2012-

13?

b) Ener$.pac Power Generaion Limited has listed with the stock exchages on 20 February
2012 for trading its shares. Its linancial year is ended on 30 Julre2012 lts equity position as
on 30 June 2012 is as follows:
Reseraesl
General Reserve

2.500,000

Stockholders' Equityl
100.000.000
5 5.000,000

Paid uD caDital
Retained earnings

In 20 September 2012 it has declared and paid 5% dividend on its paid up capital The
company is going to submit its return on 31 December 2012 After income computation,
taxable income of the company comes at Tk 6,690,000. Head of accounts of the Company
instructed his junior to charge ta-x tule @) 3'7 5ya as well as instructed for 100/0 rebate as
declared and paid dividend. But CEO of fie Conpany warts expefi opinion and sent the
issue to you. As a corporate tax manager, determine the actual tax liabiliry of the company
in this situation. AIso calculate the effective tax rate ofthe company for the Assessment year
2412-2413.
lMarks:5+5]
-Ihe Enl-

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