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

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?
A) No tax will be payable.
B) Tax will be payable at 20%.
C) Tax will be payable at 25%.
D) Tax will be payable at 25% less a credit given for the 20% already paid by AA in Country X.

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

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 26
Topic #: 6
[All CIMAPRA19-F01-1 Questions]

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?

Show Suggested Answer Hide Answer
Suggested Answer: A

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

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Justine
9 months ago
I thought there would be some tax on dividends regardless.
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Fausto
9 months ago
The exemption method really works in this case.
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Sharee
9 months ago
Wait, are you sure? That seems too good to be true.
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Wade
9 months ago
Totally agree, no tax liability here!
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Alline
10 months ago
BB won't pay any tax due to the treaty.
upvoted 0 times
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Trinidad
10 months ago
I feel pretty confident about this one. AI/ML solutions typically provide a lot of the capabilities listed here, like distributed caching and GPU monitoring. I'll select the ones I'm most sure about.
upvoted 0 times
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Rosalind
10 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.
upvoted 0 times
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Glory
10 months ago
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.
upvoted 0 times
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