CIMAPRA19-F01-1 Exam - Topic 6 Question 26 Discussion

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

Question #: 26
Topic #: 6

Country X charges corporate income tax at the rate of 20% on all income irrespective of whether it is paid out as a dividend. Country Y charges corporate income tax at the rate of 25% on all income.

An entity, AA, which is resident in Country X pays a dividend of $100,000 to another entity, BB, which is resident in Country Y.

Countries X and Y have a double taxation treaty which adopts the exemption method in respect of this type of transaction.

What is BB's liability to tax in Country Y in respect of the dividend income received?

ANo tax will be payable.

BTax will be payable at 20%.

CTax will be payable at 25%.

DTax will be payable at 25% less a credit given for the 20% already paid by AA in Country X.

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Suggested Answer: A

by Refugia at May 08, 2022, 03:19 PM

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7 months ago

This seems like a pretty straightforward shared VPC design question. I think I'll go with option A - creating two shared VPCs and using firewall rules to control the inter-department communication.

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I've studied this topic before, and I'm pretty confident that the answer is D. None of the above. The options provided are all valid roaming architectures, so there isn't a clear "not valid" choice here.

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CIMAPRA19-F01-1 Exam - Topic 6 Question 26 Discussion

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