CIMAPRA19-F01-1 Exam - Topic 1 Question 117 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 117
Topic #: 1

XY is an entity incorporated in Country B but operates in several countries. Monthly management meetings to decide on strategic matters take place in Country A, where the majority of its production happens. XY sells most of its goods to Country C.

In accordance with the Organization for Economic Co-operation and Development (OECD) rules on corporate residence which of the following statements is true?

AXY is resident in Country B because this is the country of its incorporation.

BXY is resident in Country C because this is the country where XY generates most of its revenue.

CXY is resident in Country A because this is the country of its effective management.

DXY is resident in Country A because this is the country where XY undertakes most of its production.

Show Suggested Answer

Suggested Answer: C

by Ivory at Oct 30, 2025, 09:04 AM

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Trinidad

2 months ago

But revenue in C is important! B has a point.

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Lynsey

2 months ago

D could be valid since production is in Country A.

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Johnetta

2 months ago

I feel A makes sense too. Incorporation is key.

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Tony

2 months ago

Not sure about this, seems complicated with all those countries involved.

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Layla

2 months ago

Wait, how can it be A just because of production?

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Dorinda

2 months ago

Definitely think it's C, effective management matters!

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Ngoc

3 months ago

XY is incorporated in Country B.

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Nicolette

3 months ago

Haha, I bet the accountants at XY are really scratching their heads over this one. C is the way to go!

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Nakita

3 months ago

I agree with C. The question clearly states that the management meetings take place in Country A.

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Elli

3 months ago

Definitely C. The OECD rules focus on the place of effective management, not just incorporation or revenue.

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Olen

3 months ago

I thought production location mattered, but I can't recall if that alone makes D true. This is tricky!

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Dannette

3 months ago

I practiced a similar question where revenue generation was key, but I think that was more about taxation, so I'm leaning towards C again.

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Sherill

4 months ago

I think C is the right answer. Effective management matters.

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Leslee

4 months ago

C) XY is resident in Country A because this is the country of its effective management.

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Elenore

4 months ago

Country C makes sense since that's where the sales are!

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Marcelle

4 months ago

I'm not entirely sure, but I feel like the incorporation country usually holds weight, which makes A a contender too.

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Nathan

5 months ago

I remember discussing how corporate residence is usually determined by where effective management occurs, so I think C might be correct.

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Werner

5 months ago

This is a classic corporate tax residency question. I'll make sure to carefully apply the OECD rules and consider all the relevant factors before selecting my answer.

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Jarvis

5 months ago

I've got a good feeling about option C. The question states that the monthly management meetings take place in Country A, so that seems to be the country of effective management.

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Nana

5 months ago

I'm a bit confused by the wording here. Is the question asking about the country of incorporation, revenue generation, production, or effective management? I'll need to re-read it a few times.

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Dana

5 months ago

Okay, let's think this through step-by-step. The key seems to be identifying the country of effective management, which is where the strategic decisions are made.

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