- 15 Marks
Question
Kanbus Nigeria Plc is a company incorporated to manufacture and distribute food products that are widely accepted in many homes in Nigeria. It has operated for over 15 years since taking over the business of JHN Nigeria Limited. The main business of JHN Nigeria Limited was distribution of food items and other agricultural produce in the South-West geographical zone of Nigeria.
The Chief Executive Officer (CEO) of Kanbus Nigeria Plc, Mr. Babadada, was a former staff of Collinson India Limited for several years and thus brought into Kanbus Nigeria Plc a wealth of experience. Earlier in his working career, Mr. Babadada, had worked with Kong Manufacturing Limited, a Chinese company, where he imbibed the culture of collaboration with staff in the decision making process. Mr. Babadada, is assisted by a formidable team of managers recruited from major food and beverage companies in the country.
The management of Kanbus Nigeria Plc. engaged different consultants to handle professional issues, including consultancy matters in respect of law, medical, finance, tax, accounting, etc. which were outsourced to different, well-known and competent hands.
Your firm, Kassman and Co. (Chartered Accountants), were engaged to handle both corporate and personal income tax matters.
Required: As the consultant, you have been requested by the Managing Partner, Kassman and Associate, to explain to the Chief Executive Officer of Kanbus Nigeria Plc., the following:
a. Professional issues that can be handled by your firm (5 Marks)
b. FIVE main sources of Nigerian tax laws (5 Marks)
c. FIVE allowable expenses in the ascertainment of assessable profits of companies (5 Marks)
Answer
a. Professional issues that can be handled by a firm of Chartered Accountants include:
(i) Filing of tax returns;
(ii) Tax planning and management;
(iii) Ensuring compliance with the tax laws;
(iv) Tax dispute resolution;
(v) Registration of a company with both FIRS and SIRS;
b. The main sources of Nigerian tax laws include:
(i) Personal Income Tax Act (PITA) Cap P8 LFN, 2004 as amended;
(ii) Companies Income Tax Act (CITA) Cap C21 LFN, 2004 as amended;
(iii) Capital Gains Tax Act Cap C1 LFN, 2004 as amended;
(iv) Value Added Tax Act Cap V1 LFN, 2004 as amended;
(v) Petroleum Profits Tax Act Cap P13 LFN, 2004 as amended;
c. Allowable expenses in the ascertainment of assessable profits of companies include:
(i) Salaries and wages;
(ii) Cost of purchase of raw materials;
(iii) General repairs and maintenance;
(iv) Interest paid on loans for business purposes;
(v) Bad debts written off;
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