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

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

Question #: 80
Topic #: 4

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?

A$344,400

B$495,600

C$840,000

D$450,000

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Suggested Answer: A

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

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Rima

13 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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