SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest RMB.<br>2. All apportionments should be made to the nearest month.<br>3. All workings should be shown.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.<br>1.<br>(a) Company B is a limited liability company set up on 1 January 2013. Company B is engaged in the provision of information technology and data processing services. The company’s accountant has prepared the following tax computation for the year ended 31 December 2013:<br>Notes:<br>(1) The cost of services includes wages and salaries of RMB 2,900,000, of which RMB 500,000 relates to the accrued portion of a bonus due and payable to a member of senior management on the termination of his contract in 2017.<br>(2) Sales expenses include:<br>(3) Financial expenses include RMB 40,000 of interest paid on a shareholder’s loan. The interest rate on this loan is 5% p.a. which is the same as the market interest rate on loans on similar terms from banks.<br>(4) Administrative expenses include:<br>(5) Research and development (R&D) expenses include RMB 320,000 which has been registered with the tax bureau and agreed as qualifying for the tax incentives on R&D expenses.<br>(6) Other income and expenses comprise:<br>Required:<br>(i) Briefly explain the enterprise income tax (EIT) treatment of each of the 14 items referred to in notes (1) to (6). (17 marks)<br>(ii) Calculate the correct amount of EIT payable by Company B for the year 2013, starting with the loss of RMB 757,000 and clearly identifying those items which do not require any adjustment. (8 marks)<br>(b) Company H is a Hong Kong company which has set up a representative office (RO) in China. The RO provides liaison services in China for Company H. The China tax authorities have assessed the tax position of the RO and concluded that the RO should pay tax on a cost-plus basis at a deemed profit rate of 15%. In 2013 the taxable costs of the RO are RMB 160,000.<br>Required:<br>Calculate the business tax (BT) and enterprise income tax (EIT) of the representative office (RO) for the year 2013. (3 marks)<br>(c) Briefly explain the principle of ‘effective management’ used to determine whether an enterprise registered outside China can be considered as a China tax resident. (3 marks)<br>(d) State any FOUR circumstances in which the tax authorities can assess an enterprise’s liability to enterprise income tax (EIT) using the deemed basis. (4 marks)<br>2.<br>Ms Chen, a Chinese national, received the following income in 2013.<br>Income from her employment as a manager with Company X:<br>(1) A salary of RMB 10,000 per month for each of the 12 months of 2013. In addition, she was entitled to the following subsidies and allowances in 2013:<br>(a) A meal allowance of RMB 500 per month.<br>(b) Overtime income of RMB 1,000 per month.<br>(c) Reimbursement of business trip expenses in January 2013. The amount incurred was RMB 1,200 and the whole amount was supported with invoices.<br>(d) Employer’s mandatory contribution to social security of RMB 1,200.<br>(2) A year-end bonus of RMB 40,000 in December 2013.<br>Other income:<br>(3) She had an article published in a magazine in June and republished in July. The authorship fee was RMB 3,000 for each publication.<br>(4) In June, a private limited company paid her a dividend from which it withheld individual income tax (IIT). The net-of-tax dividend she received was RMB 40,000.<br>(5) In April 2013, she invested RMB 20,000 in A-shares and sold them for RMB 35,000 in August 2013.<br>(6) She has provided consultancy services to a Canadian company and received a gross service fee of USD20,000. Canadian tax of USD2,000 was withheld and deducted at source from this fee.<br>(7) Her uncle in France died in 2013 and she inherited an estate worth USD1,000,000.<br>(8) An advertising company used Ms Chen’s photo and image in an advertisement and paid her a fee of RMB 100,000. She decided to donate RMB 15,000 of this fee to an approved charitable organisation specifically for the earthquake in Sichuan. The donation was paid directly to the charity from the advertising company.<br>(9) She received net-of-tax interest from a private company of RMB 4,800. Individual income tax and business tax were withheld and deducted by the company before paying this interest.<br>Required:<br>(a) Calculate the individual income tax (IIT) payable by Ms Chen in respect of each of the items (1) to (9), clearly identifying any item(s) which are tax exempt.<br>Note: You should ignore the effect of business tax and surtaxes on business tax in respect of items (6) and (8) and surtaxes on business tax in respect of item (9). (16 marks)<br>(b) (i) State the penalty which will be levied on the publisher for not withholding IIT from the payment made to Ms Chen (item (3)). (1 mark)<br>(ii) Explain Ms Chen’s responsibilities for filing and paying the IIT on this fee. (3 marks)<br>3.<br>(a) Company T, an accountancy firm in Shanghai, is a value added tax (VAT) general taxpayer. Company T’s transactions for the month of November 2013 included the following:<br>(1) Provided book-keeping services to Client A and billed a fee of RMB 30,000 and outlays of RMB 1,000.<br>(2) Billed Client B RMB 40,000 inclusive of VAT for audit services provided.<br>(3) Sent a bill to Client Z on 1 November for RMB 100,000. As Client Z settled the bill before the end of November, Company T granted it an early payment discount of RMB 1,000.<br>(4) Provided consultancy services to a German client for a fee of RMB 80,000. These services qualified as an export of services.<br>(5) Engaged a law firm to provide legal advisory services and received a VAT invoice for fees of RMB 15,000.<br>(6) Paid a trademark fee to a global firm in the USA of RMB 50,000. VAT was withheld and paid by Company T.<br>(7) Bought computers for RMB 20,000 and obtained a VAT general invoice. (8) Paid RMB 5,000 for the repair of the computers. The repair company was a small-scale taxpayer and issued a general invoice to Company T.<br>(9) Paid rent to its landlord of RMB 60,000. A business tax invoice was obtained.<br>(10) Paid a transportation fee of RMB 2,000 for picking up its staff from the metro station and bringing them to its office. A VAT invoice at 11% was obtained.<br>(11) Provided free-of-charge audit services to a charitable organisation. The market value of these services was RMB 35,000.<br>(12) Paid leasing charges of RMB 6,000 for a photocopying machine. A VAT invoice was obtained.<br>Except where stated otherwise, all amounts are exclusive of VAT.<br>Required:<br>(i) In respect of Company T’s transactions for November 2013, state, giving reasons, those transactions on which value added tax (VAT) will not be charged or for which a VAT credit will not be allowed. (5 marks)<br>(ii) Calculate the VAT payable by Company T for the month of November 2013 as a result of transactions (1) to (12). (9 marks)<br>(b) Company M is a production company manufacturing lighting products for exportation. The company’s transactions for December 2013 are as follows:<br>(1) Exported goods at a FOB (freight on board) price of RMB 200,000.<br>(2) Sold goods domestically in China for RMB 180,000.<br>(3) Imported materials at a CIF (cost including insurance and freight) value of RMB 12,000. The import customs duty rate was 10%.<br>(4) Purchased raw materials for RMB 160,000. A bulk purchase discount of RMB 10,000 was deducted directly in the VAT invoice obtained.<br>(5) Paid transportation costs of RMB 10,000. A VAT invoice at 11% was obtained.<br>Except where stated otherwise, all amounts are exclusive of VAT.<br>Required:<br>(i) Calculate the amount of irrecoverable input value added tax (VAT) on the exported goods. Note: The export refund rate is 13%. (1 mark)<br>(ii) Calculate the VAT payable by Company M for the month of December 2013. (5 marks)<br>4.<br>(a) Company S sells cosmetics, its transactions in October 2013 were as follows:<br>(1) Imported 300 sets of cosmetics packs at a CIF (cost including insurance and freight) value of USD100 per set. The import customs duty rate was 10%.<br>(2) Purchased 1,000 pieces of lipstick at RMB 10 per piece from a manufacturing company, Company W.<br>(3) Purchased chemicals for the production of cosmetics packs from Company L for RMB 123,000.<br>(4) Sold 200 sets of the imported cosmetics packs at RMB 1,500 per set without further processing.<br>(5) Sold 600 pieces of lipstick at RMB 50 per piece without further processing.<br>(6) Sold 450 sets of self-produced cosmetics packs at RMB 1,000 per set.<br>All amounts are stated exclusive of VAT.<br>Required:<br>(i) Calculate the consumption tax (CT) paid by Company S on the importation of the cosmetics sets (item (1)). (2 marks)<br>(ii) State clearly whether the sales of goods in each of items (4), (5) and (6) are or are not subject to CT. (3 marks)<br>(iii) Calculate the CT payable by Company S on its sales for the month of October 2013. (1 mark)<br>Note: The consumption tax rate on cosmetics is 30%.<br>(b) In July 1998, Company P acquired an office for self-use, comprising one floor in a multi-storey building, for RMB 3,000,000. In December 2013, Company P sold the office for RMB 20,000,000. The appraised value of the office was RMB 15,000,000.<br>The taxes payable on the sale of the property were: business tax (BT); city maintenance and construction tax and education levy of 10% on the BT; and stamp duty of 0·05% on the sales contract.<br>Required:<br>Calculate the land appreciation tax (LAT) payable by Company P on the sale of the office. (5 marks)<br>(c) A retail shop, Shop R, sells air-conditioners to customers for RMB 2,000 each; at the same time Shop R charges a RMB 100 installation fee.<br>Required:<br>State, giving reasons, whether Shop R should pay business tax (BT) or value added tax (VAT) on the installation fee. (4 marks)<br>5.<br>(a) (i) Define the term ‘tax evasion’ as provided for in the Tax Collection and Administration Law. (3 marks)<br>(ii) State the statute of limitation on the recovery of taxes in the case of tax evasion. (1 mark)<br>(b) During a tax audit of Company A, it was discovered that it had committed the following acts:<br>(1) Deducted expenses of RMB 250,000 which were not related to its business operations.<br>(2) Sold goods to a related company for RMB 500,000 when the open market selling price of the similar type of goods was RMB 2,000,000.<br>Required:<br>Explain whether either or both of the acts committed by Company A constitutes tax evasion, and if not, state how the issue will be classified. (2 marks)<br>(c) State the actions which the taxpayer can take if there is a dispute on the amount of tax assessed by the tax authorities and by when such action should be taken. (4 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest RMB.<br>2. All apportionments should be made to the nearest month.<br>3. All workings should be shown.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.<br>1.<br>(a) Company Y is a manufacturing joint venture enterprise, which was established and started operations on 1 January 2011.<br>The statement of enterprise income tax (EIT) payable prepared by the accountant of Company Y for the year 2011 is as follows:<br>Notes:<br>(1) This amount includes bonuses of RMB 300,000 paid in December 2011.<br>(2) The office rental expense comprises a lump sum rental payment made for a period of two years from 1 July 2011.<br>(3) The amortisation of a self-developed brand name according to an independent valuer’s report.<br>(4) This amount includes depreciation of RMB 100,000 for a machine which was unused for the whole of 2011 because of a water flood.<br>(5) The provision is calculated at 5% of the closing stock value. (6) This loss represents Company Y’s share of the losses incurred by an associated company calculated under the equity accounting method.<br>Required:<br>(i) Explain the correct treatment of each of the items (1) to (15) of management expense and investment income included in the income tax calculation prepared by Company Y’s accountant; (16 marks)<br>(ii) Calculate the correct amount of enterprise income tax (EIT) payable by Company Y for the year 2011. (5 marks)<br>(b) Company C is a manufacturing foreign invested enterprise which commenced business two years ago. It has an accounting policy of making a general provision for obsolescence equal to 3% of its year-end stock balance.<br>Details of the movements in this provision for the two years since the commencement of Company C’s business are as follows:<br>Required:<br>Briefly explain the tax treatment of the items identified as (1), (2) and (3) comprising the movements in the provision in years 1 and 2. (4 marks)<br>(c) Briefly explain the enterprise income tax (EIT) treatment of the interest expense in each of the following cases:<br>(i) Interest incurred on a loan used for the purchase or construction of fixed assets prior to the assets being put into use; (1 mark)<br>(ii) Interest paid between operational units within a non-financial enterprise; (1 mark)<br>(iii) Interest incurred on a related party debt. (2 marks)<br>(d) Define the term ‘intangible assets’ for tax purposes and state the valuation bases used initially for such assets and their subsequent tax treatment. (6 marks)<br>2.<br>(a) Mr Chang, a Chinese citizen, is a university professor. He had the following income for the month of January 2012:<br>(1) Monthly employment income of RMB 16,000 and a bonus for the year 2011 of RMB 36,000.<br>(2) A dividend of RMB 10,000 received from an unlisted company.<br>(3) A translation fee of RMB 5,000 from a book publisher.<br>(4) Interest income of RMB 5,200 derived from Government bonds.<br>(5) Provided a patent to an overseas enterprise and received RMB 80,000. He paid RMB 7,000 individual income tax in the source country according to the tax rules of that country.<br>(6) Published a book and a series in a newspaper, and received income of RMB 60,000 and RMB 4,000 from the book publisher and newspaper respectively.<br>(7) Income of RMB 4,800 (net) received from selling certain listed shares on hand.<br>(8) Income of RMB 30,000 (gross) earned from proof reading the English translation version of a literary work.<br>(9) Sold a real property for RMB 700,000, which he had acquired two years earlier for RMB 400,000. He paid the relevant business tax on the sale, plus RMB 8,000 to the real estate agency which had handled the sales transaction. (Ignore any land appreciation tax (LAT) implications of this transaction)<br>Required:<br>Calculate the individual income tax (IIT) payable by Mr Chang for the year 2012, clearly identifying any amounts which are tax exempt.<br>Note: The monthly personal allowance for a Chinese local is RMB 3,500. (14 marks)<br>(b) Briefly explain the individual income tax (IIT) treatment of each of the following transactions and calculate the tax payable (if any) by Mr A, Mr B and Mr C:<br>(i) Mr A is one of the investors in a limited company, Company J. During the year, Company J bought a car for RMB 300,000 for Mr A’s personal use. Mr A is the registered owner of the car; (2 marks)<br>(ii) Mr B is one of the investors in a limited company, Company K. During the year, Company K lent RMB 300,000 to Mr B so he could buy a car for his personal use; (2 marks)<br>(iii) Mr C is the sole owner of private enterprise L. During the year, enterprise L bought a car for RMB 300,000 for Mr C’s personal use. Mr C is the registered owner of the car. (2 marks)<br>3.<br>(a) Company P manufactures fans. The standard selling price per fan, net of value added tax (VAT), is RMB 80 each.<br>For the month of May 2012, the following sales were made and the VAT on the goods sold was recorded by the company accountant:<br>(i) Sale of 10,000 fans to a supermarket at RMB 76 each; this price is net of a discount of 5% because of the large volume. RMB 700,000 was received to settle the transaction, which was net of a cash discount of RMB 60,000.<br>Output VAT: RMB 700,000 x 17% = RMB 119,000<br>(ii) Sale of 100 (new) fans, partly paid for by the trade-in of 100 old fans, resulting in a net sales value of RMB 50 each. The old fans were used as a staff benefit.<br>Output VAT : 100 x RMB 50 x 17% = RMB 850<br>(iii) Sale of 10,000 fans to a wholesaler at RMB 80 each. As a part of the contract terms, Company P agreed to pay back the whole consideration of RMB 800,000 to the wholesaler, at the end of four years.<br>Output VAT: RMB 800,000/4 years x 17% = RMB 34,000<br>(iv) Exchanged 1,000 fans for raw materials with a market value of RMB 68,000, for use in production.<br>Output VAT: RMB 68,000 x 17% = RMB 11,560<br>All amounts are stated excluding VAT.<br>Required:<br>Calculate the correct value added tax (VAT) output and input arising from items (i) to (iv), clearly explaining the treatment applied in each case. (9 marks)<br>(b) A trading company, Company W, imported some goods costing USD 2 million. The additional costs of importing these goods were ocean freight of USD 40,000, an ocean insurance premium of USD 4,000, inland transportation and customs declaration fees of USD 20,000 and a middle-man agent fee of USD 2,000.<br>All amounts are stated excluding VAT.<br>Required:<br>Calculate the customs duty and value added tax (VAT) on the importation of the goods, stating by when they must be paid.<br>Notes:<br>1 The exchange rate is USD 1 to RMB 6.<br>2 The customs tariff rate is 30%. (4 marks)<br>(c) (i) Briefly explain the criteria used to determine the status of a small value added tax (VAT) payer and its tax implication; (5 marks)<br>(ii) Calculate the VAT payable by a small scale VAT payer who sold goods for RMB 20,600 and a used car for RMB 46,350 in February 2012. (2 marks)<br>4.<br>Company M, a cigarette company, had the following transactions in the month of January 2012:<br>(1) Bought tobacco for RMB 250,000 (including value added tax (VAT) and consumption tax (CT)) from a commercial supplier who is a general VAT payer.<br>(2) Bought tobacco for RMB 40,000 (invoice value) from a local farmer and paid the related transportation cost of RMB 20,000 (invoice value).<br>(3) Subcontracted the tobacco in (2) to an outside subcontractor, Company N, and paid the fee of RMB 90,000 (including VAT) stated in the VAT invoice received from Company N.<br>(4) Received goods back from the subcontractor in (3), but Company N had not paid the related CT on Company M’s behalf.<br>(5) 50% of the goods in (1) and (4) were used in production during the month of January 2012.<br>(6) Sold 20,000 cases of cigarettes for RMB 40 million (excluding VAT).<br>(7) Distributed four cases of cigarettes for staff welfare.<br>Required:<br>(a) Calculate the value added tax (VAT) liability of Company M for the month of January 2012. (7 marks)<br>(b) Calculate the consumption tax (CT) liability of Company M for the month of January 2012. (7 marks)<br>(c) Calculate the consumption tax (CT) liability of Company N, if any, for the month of January 2012. (1 mark)<br>Note: The CT rate for tobacco is 30% and for cigarettes is RMB 160 per case plus 45% of turnover. (15 marks)<br>5.<br>(a) Define the term ‘controlled foreign subsidiary’ and briefly explain the tax treatment of the profits of such an enterprise in the context of the special tax adjustment pursuant to the enterprise income tax law and rules. (5 marks)<br>(b) (i) Briefly explain when the tax authority can make a special tax adjustment in respect of transactions between related parties; (2 marks)<br>(ii) Briefly explain the interest levy applicable in the case of a special tax adjustment. (3 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest RMB.<br>2. All apportionments should be made to the nearest month.<br>3. All workings should be shown.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.<br>1.<br>(a) Company L is a manufacturing joint venture enterprise which was established and started operations on 1 January 2010. The statement of enterprise income tax (EIT) payable prepared by the accountant of Company L for the year 2011 is as follows:<br>Required:<br>(i) Briefly comment on the correctness of the accountant’s treatment of the 15 items marked with an asterisk (*); (15 marks)<br>(ii) Calculate the correct amount of enterprise income tax (EIT) payable by Company L for the year 2011. (8 marks)<br>(b) State under what circumstances a company intending to launch a sales promotion involving the giving of gifts to its individual customers is/is not required to withhold the individual income tax (IIT). (7 marks)<br>(c) Company L is considering the following two alternatives for launching a sales promotion.<br>(i) An individual customer will get a gift with a market value equal to RMB100 (cost of purchase RMB80) for free if he/she has accumulated purchases within any single business day of RMB1,000 during the sales promotion period.<br>(ii) An individual customer will get a gift with a market value equal to RMB200 (cost of purchase RMB100) for free if he/she wins the lottery. A customer will be able to join the lottery for one time when he/she has accumulated purchases within any single business day of RMB1,000 during the sales promotion period.<br>Required:<br>Calculate the enterprise income tax (EIT) and individual income tax (IIT), if any, payable for each of the alternatives, assuming that Company L will bear any IIT due.<br>The following mark allocation is provided as guidance for this requirement:<br>(i) 2 marks<br>(ii) 3 marks<br>2.<br>(a) Mr Huang, a Chinese national, is the technical officer of Company J. He had the following receipts in the year 2011:<br>(1) In April, he provided technical services to an enterprise and received RMB 30,000. The related individual income tax was borne by the enterprise.<br>(2) Mr Huang together with three other people jointly started a partnership with equal shares on 1 October 2011. The profits of the partnership were RMB 300,000 in 2011.<br>(3) A net gain of RMB 18,000 from trading in the A-shares market.<br>(4) Euro 10,000 of income received in Country G for the transfer of a patent. Individual income tax equivalent to RMB 15,000 was paid in Country G.<br>(5) During his visit to Country K, he was invited to give a lecture in a university and was paid income of USD 1,500. Individual income tax equivalent to RMB 1,800 was paid in Country K.<br>(6) Received RMB 17,000 as insurance compensation.<br>(7) He won a lottery prize of RMB 30,000, but donated half of this amount to an approved charity.<br>Required:<br>Calculate the individual income tax (IIT) payable on each of the items (1) to (7) received by Mr Huang for the year 2011. Clearly state if any of the items of income are exempt from IIT.<br>Note: the following exchange rates are to be used:<br>Euro: RMB – 1:9·5<br>USD: RMB – 1:7 (10 marks)<br>(b) (i) Briefly explain the individual income tax (IIT) treatment of an annual one-off bonus where the IIT payable is partly borne by the employer as:<br>(1) a fixed amount; and (1 mark)<br>(2) a percentage of the IIT payable. (3 marks)<br>(ii) Company B is considering awarding an annual one-off bonus of RMB 100,000 to its general manager with the IIT being partly borne by the company. The general manager’s normal monthly salary exceeds the monthly deduction.<br>Required:<br>Calculate the individual income tax (IIT) payable and the amount to be borne by the general manager (as employee) if:<br>(1) Company B bears the fixed amount of RMB 20,000 of the total IIT payable by the general manager; and<br>(2) Company B bears 20% of the total IIT payable by the general manager. (6 marks)<br>3.<br>(a) Company M, a coal company, had the following transactions in the month of March 2011:<br>(1) Bought an excavator for RMB 720,000 plus value added tax (VAT) of RMB 122,400 and paid the related transportation fee of RMB 48,000 (invoice value).<br>(2) Bought low-value consumption goods for RMB 96,000 plus VAT of RMB 6,720.<br>(3) Sold 10,000 tons of coal by instalment to a customer for RMB 600 per ton (excluding VAT). One quarter of the payment was due in the month, but only RMB 1,000,000 (excluding VAT) was received. Separately RMB 72,000 was paid for transportation relating to the delivery.<br>(4) 250 tons of coal was used to provide heating for the staff dormitory and 600 tons of coal was given to customers as gifts.<br>(5) Sold 150 thousand cubic metres of natural gas acquired while mining for RMB 300,000 (excluding VAT).<br>Required:<br>Calculate the value added tax (VAT) liability of Company M for the month of March 2011. (6 marks)<br>(b) Define ‘Small-scale taxpayer’ for value added tax (VAT) purposes and state how their VAT liability is calculated and the type of VAT invoices they should use. (4 marks)<br>(c) Company N, a construction company, had the following transactions in the month of March 2011:<br>(1) Signed a contract with a metal company to build a factory. Partial payment of RMB 9,600,000 was received when the contract was signed. 15% of the building was constructed at the end of the month.<br>(2) Signed a contract with a country club for laying cables. The contract sum was RMB 1,200,000 which included the value of the cables provided by the country club of RMB 200,000. The job was finished and the money was received before the end of the month.<br>(3) Signed a contract with a metro company to provide mud engineering services and received RMB 2,000,000.<br>(4) Signed a contract with a supermarket for decoration services, including labour costs of RMB 450,000, management fees of RMB 50,000 and material costs of RMB200,000. The supermarket provided an additional RMB 150,000 of materials.<br>(5) Sold a self-constructed house to a member of staff for RMB 1,500,000, plus a gas pipe installation fee of RMB 10,000 and building repair funds of RMB 150,000. The cost of the building construction was RMB 600,000. The profit ratio for the construction as set by the local tax bureau is 20%.<br>Required:<br>Calculate the business tax payable by Company N for each of the transactions (1) to (5) relating to the month of March 2011.<br>(d) State how the tax bureau may assess business tax on service income if it considers the income declared to be too low and without proper justification and list the methods that may be used. (4 marks)<br>4.<br>(a) A trading company, Company S, imported some cosmetic goods costing USD 1,680,000. The additional costs of importing these goods were freight and insurance charges of USD 252,000, customs handling fees of USD 140,000 and a service fee to an overseas agent of USD 28,000.<br>Company S repacked the cosmetic goods into 10,000 sets for sale in China. 9,000 sets were sold to a wholesaler for USD 6,000,000 and 1,000 sets were sold by retail for USD 900,000. Both these sales figures include value added tax (VAT).<br>Required:<br>(i) Calculate the consumption tax, customs duty and value added tax (VAT) payable on the importation of the cosmetic goods; (5 marks)<br>(ii) Calculate the consumption tax and VAT payable on the sale of the cosmetic goods. (5 marks)<br>Notes:<br>(1) The customs tariff rate is 40%<br>(2) The consumption tax rate for cosmetic goods is 30%<br>(3) The USD:RMB exchange rate is 1:7·5<br>(b) List the methods by which Customs may assess the dutiable value of an import if it considers the value declared to be too low and without proper justification. (5 marks)<br>5.<br>Company C and its overseas branch, Branch D, both started business in 2010. Company C had a taxable loss of RMB 1,000,000 for the year 2010 and income of RMB 3,000,000 for the year 2011, while Branch D had taxable income of RMB 1,000,000 and paid foreign tax of RMB 300,000 for each of the years, 2010 and 2011. Both Company C and Branch D are subject to an income tax rate of 25%.<br>Required:<br>(a) In relation to foreign tax paid by a Chinese taxpayer, state the general tax treatment and the limitations on the amount of credit available. (3 marks)<br>(b) Calculate the enterprise income tax (EIT) payable by Company C for each of the years 2010 and 2011, clearly identifying the foreign tax credit used in each year and the unused tax credit carried forward, if any. (5 marks)<br>(c) Briefly explain the EIT provisional and annual filing requirements for a domestic registered enterprise with branches registered in different regions in China. (2 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest RMB.<br>2. Apportionments should be made to the nearest month.<br>3. All workings should be shown.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.<br>1.<br>(a) The following is the statement of enterprise income tax (EIT) payable prepared by the accountant of Company P for the year 2010:<br>Notes:<br>(1) The union has not yet been set up and the expense is a general provision.<br>(2) The original cost of the fixed asset was RMB 150,000 and the accumulated depreciation was RMB 105,000, while the accumulated tax allowances claimed were RMB 120,000.<br>(3) The creditor had been liquidated three years ago.<br>(4) Last year (2009) was the first year a debtors provision was made. A general provision of RMB 500,000 was made but the whole amount was disallowed by the tax bureau. This year the management decided to write back part of provision amounting to RMB 150,000.<br>Required:<br>(i) Briefly comment on the correctness of the accountant’s treatment of the 12 items marked with an asterisk (*) in the income tax calculation sheet; (17 marks)<br>(ii) Calculate the correct amount of enterprise income tax (EIT) payable by Company P for the year 2010. (6 marks)<br>(b) Briefly explain the term ‘arm’s length principle’ in the context of transactions between associated enterprises pursuant to the enterprise income tax law, together with the adjustment methods that may be used by the tax bureau in cases where this principle is not complied with. (6 marks)<br>(c) Company C, a limited company with equity of RMB 1,000,000, borrowed two loans from related companies:<br>– RMB 1,000,000 at a 7% annual interest rate from Company A; and<br>– RMB 2,000,000 at an 8% annual interest rate from Company B.<br>The market interest rate for the equivalent loans is a 6% annual interest rate.<br>In 2010, the interest paid to Company A and Company B was RMB 70,000 and RMB 160,000 respectively. The total amount of interest of RMB 230,000 was allocated RMB 140,000 to interest expense and RMB 90,000 to construction in progress in Company C’s accounts.<br>Required:<br>Calculate the amount of interest that will be disallowed for enterprise income tax under each of the account headings: interest expense and construction in progress. (6 marks)<br>2.<br>(a) Mr Y, a local Chinese national, a professional writer and artist, had the following income during 2010:<br>(1) Received income of RMB 45,000 for publishing the first edition of a book, and of RMB 15,000 for the second edition of the same book. The book was also published in a newspaper and he was paid RMB 5,250 for this.<br>(2) Sold one of his paintings for RMB 5,400.<br>(3) Gave a speech and was paid RMB 28,500.<br>(4) Acted as a translator for a movie and was paid RMB 60,000.<br>(5) Gave a speech in overseas country M and was paid the gross equivalent of RMB 27,000, from which the equivalent of RMB 6,750 in overseas tax was deducted at source.<br>(6) Sold one of his paintings in overseas country H, and was paid the gross equivalent of RMB 15,000, from which the equivalent of RMB 2,250 in overseas tax was deducted at source.<br>(7) Received interest of RMB 7,500 on a loan he had made to a domestic enterprise.<br>Required:<br>(i) Calculate the individual income tax (IIT) payable by Mr Y in respect of each of the items (1) to (7); (12 marks)<br>(ii) State how and when any IIT due on Mr Y&39;s overseas income will be reported and paid. (3 marks)<br>(b)<br>(i) State when a withholding agent must report and pay the individual income tax (IIT) deducted on a monthly basis from employment income; (1 mark)<br>(ii) List ANY FOUR situations in which an individual taxpayer needs to do self-reporting for IIT purposes. (4 marks)<br>3.<br>(a) Enterprise G, a general value added tax payer incorporated in Shenzhen for more than 20 years, had the following transactions in the month of May 2010. Some of the enterprises sales are subject to the standard value added tax (VAT) rate, while others are exempt (VAT) activities. All figures are stated including any applicable VAT:<br>(1) Sold product A (a standard VAT rate item) for RMB 400,000 and product B (a VAT exempt item) for RMB 350,000.<br>(2) In addition to the sales in (1) above, distributed product A with a market value of RMB 20,000 for staff welfare benefit.<br>(3) Purchased RMB 500,000 production materials, of which RMB 50,000 was used for a self-constructed building.<br>(4) Purchased RMB 200,000 agriculture product, of which RMB 20,000 was used for staff welfare benefit.<br>(5) Purchased a production machine for RMB 100,000 and sold a used machine for RMB 10,000. The used machine had been bought in May 2009 and used by the enterprise ever since then.<br>Required:<br>Calculate the value added tax (VAT) payable by Enterprise G for the month of May 2010. (7 marks)<br>(b) Enterprise H, a small-scale value added tax payer, had the following transactions in the month of May 2010. All figures are stated including VAT:<br>(1) Sold product for RMB 20,000.<br>(2) Purchased RMB 500,000 of production materials.<br>(3) Purchased a production machine for RMB 100,000 and sold a used machine for RMB 10,000. The used machine had been bought in May 2009 and used by the enterprise ever since then.<br>Required:<br>Calculate the value added tax (VAT) payable by Enterprise H on each of the above transactions, giving brief explanations of their treatment. (4 marks)<br>(c) Company X, a property developer, had the following transactions in 2010:<br>(1) Donated a new building to a high school. The cost of construction of the building was RMB 500,000 and the deemed profit rate is 10%.<br>(2) Contributed an office building as part of a capital contribution. The cost of the building was RMB 600,000 and the market value RMB 800,000.<br>(3) Sold an equity holding of unlisted stock for RMB 900,000. The equity holding had been obtained by the contribution of a factory building by Company X which had cost RMB 300,000.<br>(4) Obtained a six-month bank loan of RMB 2,000,000 from 1 July 2010 with the pledge of a shop owned by the company. During the loan period, the bank did not charge any interest, but instead the bank had the right to use the shop rent free. The market interest rate for a similar loan is 6% per year. At the end of the loan period, Company X sold the shop for a price which gave it RMB 1,000,000 more than the amount needed to repay the bank loan.<br>Required:<br>Calculate the business tax (BT) payable by Company X as a result of each of the above transactions (1) to (4), giving brief explanations of their treatment. (6 marks)<br>(d) State the THREE conditions that must be met for a transportation fee paid by the seller to be excluded from the sale consideration for the purposes of value added tax (VAT). (3 marks)<br>4.<br>(a) Company K carried out the following transactions:<br>(1) Imported a vehicle costing RMB 300,000 and paid transportation costs of USD 10,000 for the journey from the overseas supplier to the port in China.<br>(2) Shipped a machine with a value of RMB 500,000 overseas for repair and paid for materials of USD 10,000 and a repairing fee of USD 30,000. The machine was shipped back to China in the same month.<br>(3) Subcontracted some domestic raw materials valued at RMB 200,000 to an overseas company. The related fee and transportation costs were USD 100,000 and USD 20,000 respectively.<br>(4) Imported raw materials costing RMB 30,000,000 and paid transportation costs of USD 50,000 for the journey from the overseas supplier to the port in China. After the arrival of the materials, Company K discovered that 20% of the materials had a quality problem. The supplier agreed to ship a further 20% replacement materials at no cost to Company K in the same month. Both parties agreed that the quality problem goods should be kept in China.<br>Required:<br>Calculate the customs tariff, consumption tax (CT) and value added tax (VAT) payable by Company K as a result of each of the above transactions.<br>Note: for the purposes of your calculations you should assume that:<br>(1) The customs tariff for all kinds of imported goods is 20%.<br>(2) The rate of consumption tax (CT) is 10%.<br>(3) The USD:RMB exchange rate is 1:6·6<br>(b) Briefly explain the procedures, including any time limits, for the declaration and payment of the customs<br>5.<br>Briefly explain the consequences of the following actions, including any fines or other penalty that may be imposed:<br>(a) Failure to keep or maintain proper accounting records/vouchers. (2 marks)<br>(b) Failure to file a return within the prescribed time limit. (2 marks)<br>(c) Failure to file a return and hence not paying or paying less tax than is duly payable. (1 mark)<br>(d) Failure to pay tax by concealment of property. (3 marks)<br>(e) Refusal to pay tax by violence or menace. (2 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest RMB.<br>2. Apportionments should be made to the nearest month.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.3. All workings should be shown.<br>1.<br>(a) Company F is a manufacturing joint venture enterprise, which was established and started operations on 1 January 2010.<br>Company F’s statement of enterprise income tax (EIT) payable for the year 2010, as prepared by the company’s accountant is summarised below:<br>Notes:<br>(1) The management and finance expenses included the following:<br>(2) The investment income included the following:<br>(3) The original cost of the fixed assets written off was RMB 600,000, the accumulated depreciation was RMB 420,000, and the accumulated tax allowances claimed were RMB 480,000.<br>Required:<br>(i) Briefly explain the treatment of each of the 13 items referred to in notes 1 to 3 for the purposes of enterprise income tax (EIT); (13 marks)<br>(ii) Calculate the correct amount of enterprise income tax (EIT) payable by Company F for the year 2010. Note: you should start your computation with the taxable profit calculated by the accountant of RMB 39,105,000 and indicating by the use of ‘0’ any items for which no adjustment is required. (7 marks)<br>(b) For the purposes of enterprise income tax (EIT) define the term ‘non-resident enterprise’ and explain the scope of such an enterprises EIT assessment. (4 marks)<br>(c) An overseas underground train building company, Company H is a non-resident enterprise for enterprise income tax (EIT) purposes. Company H signed a sales contract for RMB 100,000,000 for the supply of ten underground trains with a PRC company, Company K. The amount also included after-sales services (such as, installation, technical training, etc) but the service fee is not separately specified in the sales contract. The training will last two years and will be provided in China by Company H personnel from overseas.<br>Required:<br>Explain the enterprise income tax (EIT) and business tax (BT) implications in China for Company H and Company K if the tax bureau applies the lowest deemed income and profit rates that are specified in the relevant EIT laws and regulations. (7 marks)<br>(d) State the withholding tax rate for enterprise income tax (EIT) applicable to the following items paid to a non-resident enterprise:<br>(i) Dividends paid out of both pre-2008 and post-2008 retained earnings; (2 marks)<br>(ii) Interest; (1 mark)<br>(iii) Royalties on the licensing of trademarks, copyright, etc. (1 mark)<br>2.<br>(a) Mr Wu, a Chinese citizen, is a photographer for a newspaper. He had the following income for the month of September 2010:<br>(1) Monthly employment income of RMB 15,000 and a bonus for the year 2009 of RMB 20,000.<br>(2) Income of USD 5,000 (gross) from which tax of USD 750 was withheld from publishing an album overseas.<br>(3) Income of RMB 5,000 for publishing five of his photos as a postcard.<br>(4) A net gain of RMB 15,000 from trading in the A-shares market.<br>(5) Received RMB 200,000 from the sale of a property (50 square metres) that he had lived in for four years, which he had acquired for RMB 160,000.<br>(6) Gross interest income of RMB 6,000 from a bank deposit.<br>(7) Received RMB 11,000 as insurance compensation.<br>(8) Received RMB 50,000 as net proceeds from the sale of an antique, which he had originally acquired in 2004 for RMB 20,000.<br>(9) Income of Euro 300 for giving a lecture at a university during his visit to France. Individual income tax equivalent to RMB 400 was paid in France on this income.<br>Required:<br>Calculate the individual income tax (IIT) payable by Mr Wu on each of items (1) to (9) for the month of September 2010, clearly identifying any amounts which are tax exempt and briefly explaining any reliefs available.<br>Note: the following exchange rates are to be used:<br>1 1 USD = 7 RMB<br>2 1 Euro = 9·5 RMB (12 marks)<br>(b) Explain the treatment for individual income tax (IIT) of directorship fees. (3 marks)<br>(c) Explain the criteria used to determine whether an individual is a resident taxpayer in the PRC. (5 marks)<br>3.<br>(a) During the month of November 2010, Company Z, a food producer company, carried out the following transactions:<br>(1) Acquired five tons of wheat for RMB 50,000 (excluding value added tax (VAT)) from a farmer and paid RMB 1,200 (including VAT) to a manufacturing company, Company A, for flouring services.<br>(2) Purchased production tools for RMB 5,000 (including VAT) from a small-scale tools company.<br>(3) Produced eight tons of corn flour; sold seven tons of the corn flour for RMB 140,000 (excluding VAT), and distributed the remaining one ton to its own staff.<br>(4) Sold biscuits to several commercial entities by issuing general invoices and received RMB 80,000 (excluding VAT).<br>(5) Some wheat acquired in the previous month rotted due to improper keeping. The stock loss cost (excluding VAT) was RMB 6,000 including gross freight charges of RMB 800.<br>(6) Sold a used machine for RMB 7,000 (including VAT), which had been bought in June 2009 for RMB 9,000.<br>Required: Calculate the input and output value added tax (VAT) in respect of each of the above transactions and the VAT payable by Company Z for the month of November 2010. (12 marks)<br>(b) Company B had the following events during December 2010:<br>(i) stock costing RMB 12,000 (including transportation of RMB 6,000) was damaged in Warehouse A due to an earthquake; and<br>(ii) stock costing RMB 32,000 (including transportation of RMB 2,000) was damaged in Warehouse A due to mismanagement.<br>All figures are stated excluding any applicable value added tax (VAT)<br>Required:<br>Explain the treatment for value added tax (VAT) and enterprise income tax (EIT) of each of these stock losses, and calculate any deductible/non-deductible amounts. (5 marks)<br>(c) State the time limits (deadlines) for the reporting and payment of value added tax (VAT) for a taxpayer with:<br>(i) an assessable period of one month; and (1 mark)<br>(ii) an assessable period of less than one month. (2 marks)<br>4.<br>A representative office, Office X has agreed with the tax bureau to use the cost-plus basis for its enterprise income tax (EIT). The accountant of Office X prepared the following EIT calculation for the year 2010, the first year of Office X’s operation:<br>Notes:<br>1 The original cost of the office machinery was RMB 300,000 with a ten year economic life and no residual value.<br>2 The original cost of the office car was RMB 100,000 with a five year economic life and no residual value.<br>3 The original cost of the office decorations was RMB 30,000 with a three year economic life and no residual value.<br>Additional information:<br>The following payments, not included by the accountant when preparing the calculation above, were made in the year 2010:<br>RMB 100,000 for the purchase of goods from Office X’s head office, located overseas;<br>RMB 6,000 for samples of goods from Office X’s head office overseas; and<br>RMB 4,000 for the hire of a translator for the visit of head office staff to China.<br>Required:<br>Calculate the enterprise income tax (EIT) payable by Office X if the correct deemed profit rate is 15%, giving brief explanations of any items which were incorrectly treated by the accountant.<br>5.<br>(a) A property developer, Company R, had the following transactions in 2010:<br>(1) Sold a land use right for RMB 56 million, which had cost it RMB 42 million and with related legal costs of RMB 1 million.<br>(2) Sold a factory building for RMB 180 million, which had the following associated costs:<br>Required:<br>Calculate the land appreciation tax (LAT) payable on the above transactions by Company R. (6 marks)<br>(b) List the preferential enterprise income tax (EIT) treatment that applies to each of the following types of project:<br>(i) income derived from an agricultural/forestry/animal husbandry project;<br>(ii) income derived from a cultivation of flower/tea/sea farming project;<br>(iii) income derived from an approved infrastructure project; and<br>(iv) income derived from an approved environmental protection/energy/water conservation project. (4 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

SUPPLEMENTARY INSTRUCTIONS<br>1. Calculations and workings need only be made to the nearest ￡.<br>2. All apportionments should be made to the nearest month.<br>3. All workings should be shown.<br>TAX RATES AND ALLOWANCES<br>The following tax rates and allowances are to be used in answering the questions.<br>ALL FIVE questions are compulsory and MUST be attempted<br>1.Auy Man and Bim Men have been in partnership since 6 April 2000 as management consultants. The following information is available for the tax year 2009–10:<br>Personal information<br>Auy is aged 32. During the tax year 2009–10 she spent 190 days in the United Kingdom. Bim is aged 56. During the tax year 2009–10 she spent 100 days in the United Kingdom. Bim has spent the same amount of time in the United Kingdom for each of the previous five tax years.<br>Profit and loss account for the year ended 5 April 2010<br>The partnership’s summarised profit and loss account for the year ended 5 April 2010 is as follows:<br>(1) The sales figure of ￡142,200 is exclusive of output value added tax (VAT) of ￡21,600.<br>(2) The expenses figures are exclusive of recoverable input VAT of:<br>Motor expenses ￡180<br>Other expenses ￡140<br>(3) The figure of ￡4,100 for motor expenses includes ￡2,600 in respect of the partners’ motor cars, with 30% of this amount being in respect of private journeys.<br>(4) The figure of ￡1,800 for other expenses includes ￡720 for entertaining employees. The remaining expenses are all allowable.<br>(5) The figure of ￡50,900 for wages and salaries includes the annual salary of ￡4,000 paid to Bim (see the profit sharing note below), and the annual salary of ￡15,000 paid to Auy’s husband, who works part-time for the partnership. Another part-time employee doing the same job is paid a salary of ￡10,000 per annum.<br>Plant and machinery<br>On 6 April 2009 the tax written down values of the partnership’s plant and machinery were as follows:<br>Motor car [1] has a CO2 emission rate of 185 grams per kilometre. It is used by Auy, and 70% of the mileage is for business journeys.<br>Motor car [4] purchased on 21 November 2009 has a CO2 emission rate of 135 grams per kilometre. Motor car [5] purchased on 14 January 2010 has a CO2 emission rate of 200 grams per kilometre. These two motor cars are used by employees of the business.<br>Profit sharing<br>Profits are shared 80% to Auy and 20% to Bim. This is after paying an annual salary of ￡4,000 to Bim, and interest at the rate of 5% on the partners’ capital account balances. The capital account balances are:<br>VAT<br>The partnership has been registered for VAT since 6 April 2000. However, the partnership has recently started invoicing for its services on new payment terms, and the partners are concerned about output VAT being accounted for at the appropriate time.<br>Required:<br>(a) Explain why both Auy Man and Bim Men will each be treated for tax purposes as resident in the United Kingdom for the tax year 2009–10.<br>(b) Calculate the partnership’s tax adjusted trading profit for the year ended 5 April 2010, and the trading income assessments of Auy Man and Bim Men for the tax year 2009–10.<br>Note: Your computation should commence with the net profit figure of ￡82,000, and should also list all of the items referred to in notes (2) to (5) indicating by the use of zero (0) any items that do not require adjustment. (15 marks)<br>(c) Calculate the class 4 national insurance contributions payable by Auy Man and Bim Men for the tax year 2009–10.<br>(d) (i) Advise the partnership of the VAT rules that determine the tax point in respect of a supply of services; (3 marks)<br>(ii) Calculate the amount of VAT paid by the partnership to HM Revenue & Customs throughout the year ended 5 April 2010;<br>Note: you should ignore the output VAT scale charges due in respect of fuel for private journeys. (2 marks)<br>(iii) Advise the partnership of the conditions that it must satisfy in order to join and continue to use the VAT flat rate scheme, and calculate the tax saving if the partnership had used the flat rate scheme to calculate the amount of VAT payable throughout the year ended 5 April 2010.<br>Note: you should assume that the relevant flat rate scheme percentage for the partnership’s trade was 11% throughout the whole of the year ended 5 April 2010. (5 marks)<br>2.(a) You should assume that today’s date is 28 March 2010. Mice Ltd commenced trading on 1 July 2006 as a manufacturer of computer peripherals. The company prepares accounts to 31 March, and its results for the first three periods of trading were as follows:<br>The following information is available in respect of the year ended 31 March 2010:<br>Trading loss<br>Mice Ltd expects to make a trading loss of ￡180,000.<br>Business property income<br>Mice Ltd lets out three office buildings that are surplus to requirements.<br>The first office building is owned freehold. The property was let throughout the year ended 31 March 2010 at a quarterly rent of ￡3,200, payable in advance. Mice Ltd paid business rates of ￡2,200 and insurance of ￡460 in respect of this property for the year ended 31 March 2010. During June 2009 Mice Ltd repaired the existing car park for this property at a cost of ￡1,060, and then subsequently enlarged the car park at a cost f ￡2,640.<br>The second office building is owned leasehold. Mice Ltd pays an annual rent of ￡7,800 for this property, but did not pay a premium when the lease was acquired. On 1 April 2009 the property was sub-let to a tenant, with Mice Ltd receiving a premium of ￡18,000 for the grant of an eight-year lease. The company also received the annual rent of ￡6,000 which was payable in advance. Mice Ltd paid insurance of ￡310 in respect of this property for the year ended 31 March 2010.<br>The third office building is also owned freehold. Mice Ltd purchased the freehold of this building on 1 January 2010, and it will be empty until 31 March 2010. The building is to be let from 1 April 2010 at a monthly rent of ￡640, and on 15 March 2010 Mice Ltd received three months rent in advance. On 1 January 2010 Mice Ltd paid insurance of ￡480 in respect of this property for the year ended 31 December 2010, and during February 2010 spent ￡680 on advertising for tenants. Mice Ltd paid loan interest of ￡1,800 in respect of the period 1 January 2010 to 31 March 2010 on a loan that was taken out to purchase this property.<br>Loan interest received<br>On 1 July 2009 Mice Ltd made a loan for non-trading purposes. Loan interest of ￡6,400 was received on 31 December 2009, and ￡3,200 will be accrued at 31 March 2010.<br>Overseas dividend<br>On 15 October 2009 Mice Ltd received a dividend of ￡7,400 (net) from a 3% shareholding in USB Inc, a company that is resident overseas. Withholding tax was withheld from this dividend at the rate of 7？5%.<br>Chargeable gain<br>On 20 December 2009 Mice Ltd sold its 3% shareholding in USB Inc. The disposal resulted in a chargeable gain of ￡10,550, after taking account of indexation.<br>Required:<br>(i) Calculate Mice Ltd’s property business profit for the year ended 31 March 2010; (8 marks)<br>(ii) Assuming that Mice Ltd claims relief for its trading loss as early as possible, calculate the company’s profits chargeable to corporation tax for the nine-month period ended 31 March 2007, and each of the years ended 31 March 2008, 2009 and 2010. (7 marks)<br>(b) Mice Ltd has owned 100% of the ordinary share capital of Web-Cam Ltd since it began trading on 1 April 2009. For the three-month period ended 30 June 2009 Web-Cam Ltd made a trading profit of ￡28,000, and is expected to make a trading profit of ￡224,000 for the year ended 30 June 2010. Web-Cam Ltd has no other taxable profits or allowable losses.<br>Required:<br>Assuming that Mice Ltd does not make any loss relief claim against its own profits, advise Web-Cam Ltd as to the maximum amount of group relief that can be claimed from Mice Ltd in respect of the trading loss of ￡180,000 for the year ended 31 March 2010. (3 marks)<br>(c) Mice Ltd has surplus funds of ￡75,000 which it is planning to spend before 31 March 2010. The company will either purchase new equipment for ￡75,000, or alternatively it will purchase a new ventilation system for ￡75,000, which will be installed as part of its factory.<br>Mice Ltd has not made any other purchases of assets during the year ended 31 March 2010, and neither has its subsidiary company Web-Cam Ltd.<br>Required:<br>Explain the maximum amount of capital allowances that Mice Ltd will be able to claim for the year ended 31 March 2010 in respect of each of the two alternative purchases of assets.<br>Note: You are not expected to recalculate Mice Ltd’s trading loss for the year ended 31 March 2010, or redo any of the calculations made in parts (a) and (b) above. (4 marks)<br>(d) Mice Ltd is planning to pay its managing director a bonus of ￡40,000 on 31 March 2010. The managing director has already been paid gross director’s remuneration of ￡80,000 during the tax year 2009–10, and the bonus of ￡40,000 will be paid as additional director’s remuneration.<br>Required:<br>Advise the managing director as to the additional amount of income tax and national insurance contributions (both employee’s and employer’s) that will be payable as a result of the payment of the additional director’s remuneration of ￡40,000.<br>Note: You are not expected to recalculate Mice Ltd’s trading loss for the year ended 31 March 2010, or redo any of the calculations made in parts (a) and (b) above. (3 marks)<br>3.Problematic Ltd sold the following assets during the year ended 31 March 2010:<br>(1) On 14 June 2009 16,000 ￡1 ordinary shares in Easy plc were sold for ￡54,400. Problematic Ltd had originally purchased 15,000 shares in Easy plc on 26 June 1994 for ￡12,600. On 28 September 2006 Easy plc made a 1 for 3 rights issue. Problematic Ltd took up its allocation under the rights issue in full, paying ￡2？20 for each new share issued. The relevant retail prices indexes (RPIs) are as follows:<br>(2) On 1 October 2009 an office building owned by Problematic Ltd was damaged by a fire. The indexed cost of the office building on that date was ￡169,000. The company received insurance proceeds of ￡36,000 on 10 October 2009, and spent a total of ￡41,000 during October 2009 on restoring the office building. Problematic Ltd has made a claim to defer the gain arising from the receipt of the insurance proceeds. The office building has never been used for business purposes.<br>(3) On 28 January 2010 a freehold factory was sold for ￡171,000. The indexed cost of the factory on that date was ￡127,000. Problematic Ltd has made a claim to holdover the gain on the factory against the cost of a replacement leasehold factory under the rollover relief (replacement of business assets) rules. The leasehold factory has a lease period of 20 years, and was purchased on 10 December 2009 for ￡154,800. The two factory buildings have always been used entirely for business purposes.<br>(4) On 20 February 2010 an acre of land was sold for ￡130,000. Problematic Ltd had originally purchased four acres of land, and the indexed cost of the four acres on 20 February 2010 was ￡300,000. The market value of the unsold three acres of land as at 20 February 2010 was ￡350,000. Problematic Ltd incurred legal fees of ￡3,200 in connection with the disposal. The land has never been used for business purposes.<br>Problematic Ltd’s only other income for the year ended 31 March 2010 is a tax adjusted trading profit of ￡108,055.<br>Required:<br>(a) Calculate Problematic Ltd’s profits chargeable to corporation tax for the year ended 31 March 2010. (16 marks)<br>(b) Advise Problematic Ltd of the carried forward indexed base costs for capital gains purposes of any assets included in (1) to (4) above that are still retained at 31 March 2010. (4 marks)<br>4.You should assume that today’s date is 30 June 2011.<br>You are a trainee Chartered Certified Accountant and are dealing with the tax affairs of Ernest Vader.<br>Ernest’s self-assessment tax return for the tax year 2009–10 was submitted to HM Revenue & Customs (HMRC) on 15 May 2010, and Ernest paid the resulting income tax liability by the due date of 31 January 2011. However, you have just discovered that during the tax year 2009–10 Ernest disposed of a freehold property, the details of which were omitted from his self-assessment tax return. The capital gains tax liability in respect of this disposal is ￡18,000, and this amount has not been paid.<br>Ernest has suggested that since HMRC’s right to raise an enquiry into his self-assessment tax return for the tax year 2009–10 expired on 15 May 2011, no disclosure should be made to HMRC of the capital gain.<br>Required:<br>(a) Briefly explain the difference between tax evasion and tax avoidance, and how HMRC would view the situation if Ernest Vader does not disclose his capital gain. (3 marks)<br>(b) Briefly explain from an ethical viewpoint how you, as a trainee Chartered Certified Accountant, should deal with the suggestion from Ernest Vader that no disclosure is made to HMRC of his capital gain. (3 marks)<br>(c) State the action HMRC will take should they wish to obtain information from Ernest Vader regarding his capital gain. (1 mark)<br>(d) Explain why, even though the right to raise an enquiry has expired, HMRC will still be entitled to raise an assessment should they discover that Ernest Vader has not disclosed his capital gain. (2 marks)<br>(e) Assuming that HMRC discover the capital gain and raise an assessment in respect of Ernest Vader’s capital gains tax liability of ￡18,000 for the tax year 2009–10, and that this amount is then paid on 31 July 2011:<br>(i) Calculate the amount of interest that will be payable; Note: you should assume that the rates for the tax year 2009–10 continue to apply. (2 marks)<br>(ii) Advise Ernest Vader as to the amount of penalty that is likely to be charged as a result of the failure to notify HMRC, and how this could have been reduced if the capital gain had been disclosed. (4 marks)<br>5.For the year ended 31 January 2010 Quagmire plc had profits chargeable to corporation tax of ￡1,200,000 and franked investment income of ￡200,000. For the year ended 31 January 2009 the company had profits chargeable to corporation tax of ￡1,600,000 and franked investment income of ￡120,000.<br>Quagmire plc’s profits accrue evenly throughout the year.<br>Quagmire plc has one associated company. Required:<br>(a) Explain why Quagmire plc will have been required to make quarterly instalment payments in respect of its corporation tax liability for the year ended 31 January 2010. (3 marks)<br>(b) Calculate Quagmire plc’s corporation tax liability for the year ended 31 January 2010, and explain how and when this will have been paid. (3 marks)<br>(c) Explain how your answer to part (b) above would differ if Quagmire plc did not have an associated company. Your answer should include a calculation of the revised corporation tax liability for the year ended 31 January 2010. (4 marks)<br>请帮忙给出每个问题的正确答案和分析，谢谢！

Alpha Trading Ltd (Alpha) is a value added tax (VAT) general taxpayer. On 1 January 2014, Alpha lent RMB200,000 to Beta Ltd at an interest rate of 10% per annum.<br>What is the type and amount of turnover tax which Alpha Trading Ltd will pay on the interest income received for the year 2014？

A. Business tax of RMB1,053
Business tax of RMB1,000
C. Value added tax of RMB3,400
D. Value added tax of RMB1,200

Section A – ALL 15 questions are compulsory and MUST be attempted<br>Which government authorities promulgated the Enterprise Income Tax Law and the Consumption Tax Provisional Regulations？

A. The Standard Committee of the National People’s Congress and the State Council
B. The State Council and the Ministry of Finance
C. The Ministry of Finance and the State Administration of Taxation
D. The State Administration of Taxation and the Standard Committee of the National People’s Congress

Cora made a cash gift of ￡300,000 to her niece on 30 April 2010.<br>She then made a cash gift of ￡500,000 to her nephew on 31 May 2011.<br>Both of these amounts are stated after deducting available exemptions.<br>Cora subsequently died on 31 October 2015.<br>What amount of inheritance tax was payable as a result of Cora’s death in respect of the cash gift of ￡500,000 to her nephew？

A. ￡190,000
B. ￡110,000
C. ￡114,000
D. ￡105,000

A Chinese company has borrowed a USD500,000 loan from an overseas bank. Interest on the loan is accrued and paid annually at the rate of 12% per annum. The relevant business tax rate is 5% and neither surcharges nor treaty relief apply.<br>What is the amount of enterprise income tax (EIT) the Chinese borrower needs to withhold from the annual interest paid to the overseas bank？

A. USD6,000
B. USD15,000
C. USD5,700
D. USD14,250