DIY Sdn Bhd is a Malaysian tax resident company. DIY is involved in manufacturing bricks. DIY needs to know regarding sales tax implications in the manufacturing business. The company plans to import special high-grade stones and carry out a change in the nature and quality of the materials by glazing them before sale. DIY’s current sales is RM350,000 and is projected to be around RM400,000 for the next few years a(i) Explain whether DIY Sdn Bhd activities will fall within the scope of manufacturing activities for sales tax purposes. a(ii) Discuss on the sales tax registration requirement and advice whether DIY need to be registered.
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DIY Sdn Bhd is a Malaysian tax resident company. DIY is involved in manufacturing
bricks. DIY needs to know regarding sales tax implications in the manufacturing
business.
The company plans to import special high-grade stones and carry out a change in the
nature and quality of the materials by glazing them before sale.
DIY’s current sales is RM350,000 and is projected to be around RM400,000 for the
next few years
a(i) Explain whether DIY Sdn Bhd activities will fall within the scope of manufacturing
activities for sales tax purposes.
a(ii) Discuss on the sales tax registration requirement and advice whether DIY need to be
registered.
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Solved in 2 steps
- Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the…XYZ Industries Company operates in Oman and supplies its products to the Omani and local market in addition to the Gulf markets.With the beginning of 2020, the Cocod-19 crisis appeared which affected the economies of all countries around the world. The impact of Cocod-19 on the work of companies varies according to the industrial sector in which the company operates.With the beginning of the year 2021, the government began applying value-added tax ( VAT) , which has a direct impact on the prices of goods and services provided in Oman.Based on what you have studied on the topic of risks and returns in the corporate finance course, answer the following questions: 1- What are the most important types of risks that XYZ Industries Company was exposed to in Oman? (Risks are: default, Inflation, Maturity, Liquidity)2- What are the most important measures that can be taken to reduce these risks?3- What is the potential impact of VAT on the company?Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…
- Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…New Life is a multinational distribution company that started operating a Branch in Barbados on 1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group which earns more than USD 850 million for the year. It employed some of its staff from Barbados and imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands. The company was of the view that for the first year of operation there was a window of no tax obligations. In December 2023, the company realized that their understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Required.Advice New Life of the tax matters that needs to be considered when operating in Barbadosincluding any tax benefits or incentives they may consider.
- Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Answer: 221,500 Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? Answer: 307.5K4. FIN Ltd is a manufacturing company based on a tax free Island. They are considering whether to invest in a technology that will improve production of the cardboard boxes and packaging it manufactures and sells. They have provided you with the following information and asked you to make a recommendation on whether they should invest in this new technology. The company has estimated that the investment will cost €1,000,000 and there will be no depreciation. The company further estimates that if it were to invest in the technology, cash flows from increased sales would be €225,000 in the first year. It is estimated that these cash flows will then increase by fifteen per cent per year. The company believes that the new technology will be obsolete in six years and will have no residual value. Assume that the initial cost is paid now and all revenues are received at the end of each year. If the company requires an 18% return on this investment, would you recommend that they invest in the…Alam Damai Sdn Bhd (Alam Damai), a well-known restaurant, hired an expert from Australia, Mr Andrew, in order to advice on work process and to give guidance on ways to improve the equipment used by Alam Damai in their kitchen, starting from 1 July 2013. In order to perform the service, Mr Andrew will be spending around 80 days in Malaysia. Alam Damai will be paying RM200,000 to Mr Andrew in 2013. There is no double tax agreement between Malaysia and Australia. Alam Damai closes its accounts annually to 30 June. 2(a)(i) With regard to Mr AndrewBy taking Mr Andrew resident status into consideration, discuss why the technical fee payable to him is derived from Malaysia 2(a)(ii) Discuss accordingly the tax mechanism and how much he will be taxed. 2(b)(i) With regard to Alam Damai Provide opinion on why fee payment made to Mr Andrew can be regarded as capital and revenue. 2(b)(ii) Alam Damai need to comply with certain tax requirement pertaining to the fee payment made to Mr Andrew, discuss…
- A company produces jackets for €20 each in Portugal, which has a corporate tax rate of 21%. It then transfers its products to its Irish subsidiary for resale to the Irish public at a sales price of €30 per jacket. The corporate tax rate in Ireland is 12.5%. Calculate the total after-tax profit in the two countries if the company uses a transfer price of €23 and it sells 10,000 jackets. ANSWERS: €84,950 €15,050 €66,500 €8,495 €8,750Pharma, Inc, manufactures and distributes pharmaceutical products. It is considering buying the rights to make and sell a new drug created by a drug development laboratory A&B Ltd., which develops new drugs but generally lets others manufacture and distribute them. A&B Ltd. Will send the rights to the products to Pharma for 1 billion. The net after-tax cash flow generated by the drug is expected to be P150 million in 1 year and to grow at 20% per year for the following four years, at which point (in year 5) the remaining value (or terminal value) of the drug is expected to be P500 million. Suppose the risk-free rate of return is 4% and Pharma has determined that 8% is the appropriate opportunity cost of funds for this project. Pharma needs to decide whether to go ahead and purchase the rights to the new drug. Should the company go ahead with the purchase? Why?Pharma, Inc, manufactures and distributes pharmaceutical products. It is considering buying the rights to make and sell a new drug created by a drug development laboratory A&B Ltd., which develops new drugs but generally lets others manufacture and distribute them. A&B Ltd. Will send the rights to the products to Pharma for 1 billion. The net after-tax cash flow generated by the drug is expected to be P150 million in 1 year and to grow at 20% per year for the following four years, at which point (in year 5) the remaining value (or terminal value) of the drug is expected to be P500 million. Suppose the risk-free rate of return is 4% and Pharma has determined that 8% is the appropriate opportunity cost of funds for this project. Pharma needs to decide whether to go ahead and purchase the rights to the new drug. Should the company go ahead with the purchase? Why? Pease show formula and solution. Not in spreadsheet calculation