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CIMA Exam CIMAPRA19-F01-1 Topic 4 Question 80 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 80
Topic #: 4
[All CIMAPRA19-F01-1 Questions]

Entity T operates within several countries, but its country of residence is Country F. In 20X5, Entity T made $8.4 million in Country M. Country M has a flat rate corporation tax of 5.9%.

Country F and Country M operate a double taxation treaty which uses a foreign tax credit system. In Country F, there is a tax of 10% tax on all foreign income.

Taking into account the credit, what is the total tax liability that Entity T owes on its Country M income, in Country F?

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Suggested Answer: A

by Stephaine at Jan 22, 2024, 06:21 AM

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Rima
4 days ago
I'm not sure, but I think the total tax liability is calculated by applying the 10% tax on foreign income in Country F first, then applying the 5.9% tax in Country M. So, I would go with C) $840,000.
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Latanya
10 days ago
I disagree, I believe the correct answer is B) $495,600.
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Alesia
12 days ago
I think the answer is A) $344,400.
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Wenona
15 days ago
But if we calculate the foreign tax credit, it should be A) $344,400. That's why I chose that option.
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Layla
16 days ago
I disagree, I believe the correct answer is B) $495,600.
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Wenona
17 days ago
I think the answer is A) $344,400.
upvoted 0 times
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