Basic Taxation Principles and Practice

Submitting the Annual Taxable Return (ATR) entails detail taxable income computation showing clearly what are the taxable incomes and what are the deductible expenditures of a business. It also involves the reconciliation of the Audited Financial Statement to the ATR to be in line with the provisions of the Income Tax Act 1967.

Gaining knowledge of what revenue is taxable, what expenses in deductible from the taxable revenue in, how does withholding tax works and what capital and balancing allowance and charge are, is always important in the business operation planning.

Hence, Taxation knowledge will forever be an extreme asset and vital aspects to one’s career, business and organization success. It is a “NEED TO KNOW” subject matter.

Objectives:

• Enhance their understanding of the Business Tax Principles and Concepts
• Gain knowledge on what income is taxable, what expenditure is deductible
• Gain knowledge on the various capital expenditure allowances, such as initial allowance, annual allowances, balancing allowance & balancing charge, Small Value Assets Allowances, IBA, etc.
• Gain knowledge on withholding tax, compliance

Module Outline:

• Module 1: Fundamentals of Income tax
• • Scope of Chargeable Income and treatment of foreign source income.
• • Tax Residents concept
• • Commencement of Business dates
• • Double Taxation Agreement and Withholding Tax concept.
• • E-Invoice
• Module 2: Organization’s Taxable Income
• • Section 4(a) – Business Income and Badges of Trade definition by the ITA.
• • Section 4(b) – (e) Non Business Income:
• • Section 4(f) – other incomes not mentioned in Sec. 4(a) to (e).
• • Waiver of Debt as Taxable income
• • Creation of Debt as Income
• • Special Class of Income for Withholding Tax
• • Deemed Income – interest, Goods for Own Use
• • Situation of Advance Payment from Customer as Income
• Module 3: Deductible Expenditure Principles
• • General provision governing Deductible and Non-Deductible Expenditure under the Income Tax Act
• • Deduction Prohibition and Restriction
• • Special Deductions
• • Treatment of Entertainment and Legal Expenses
• • Deductibility of Interest Expense and Interest Restriction
• • Bad Debt Qualifying Criteria
• • Deductibility of Certain Pre-Operating Expenses, Secretarial and Tax Fees
• • What Expenses is entitled for Double Deduction.
• • Treatment of Unabsorbed Business Loss and Unabsorbed Capital Allowances
• • Inter-Company Loss Relief
• • Earning Stripping Avoidance Compliance
• Module 4: Capital Allowance
• • Qualifying Expenditure and meaning of Property, Plant and Equipment
• • Initial and Annual Allowances
• • Deferred Tax, Balancing Allowance and Balancing Charge
• • Small Value Assets Allowance and its restrictions
• Qualifying Value for Fixed Assets under Control Transfer, Uncontrol Transfer and other Kind of Transfer
• • Accelerated Capital Allowances
• • Industrial Building Allowances
• Module 5: Withholding Tax Concepts
• • Understanding Double Taxation Agreement
• • Principles and Type of Expenditures paid to Non Tax Resident subject to Withholding Tax, such as: Interest; Royalties and Licensing Fee; Contract Fees and its Workers Salary; Installation and Commissioning of Plants; Advisory & Management Fee, etc.; Technical and Consultancy; Rental of Moveable Equipment; Entertainer, Speaker, Lecturers Remuneration, etc
• • Parties Involved and the Concept of Where does the Expenditure Occurred
• • Permanent Establishment and Business Presence
• • Allocation of HQ Expenses and Treatment of Reimbursement and Disbursements
• • Bilateral Credit and Unilateral Credit
• Module 6: Basics of Transfer Pricing
• • The Concept of Transfer Pricing
• • The TP Rules and Guides
• • The Advance Pricing Arrangement Rules
• • Transfer Pricing Document
• • 5 TP Methods for Comparison & Evaluation of Arms Length Pricing
• • Meaning of Arms Length Price – Median and inter-Quartile
• • Enhancement of Enforcing Transfer Pricing Compliance
• • Country by Country report for Qualifying MNEs.
• Appendix Notes for Self Reading and Reference
• • Appendix 1 – General Compliance
• • Appendix 2 – Audit and Investigations