A211 BKAT3023
ADVANCED TAXATION
TUTORIAL QUESTIONS
, CHAPTER 2: DOUBLE TAX RELIEF
QUESTION 1:
Bunga Raya Cargo Bhd (BRCB) is a resident company carrying on a business of air transportation.
The following are incomes generated for the year of assessment 2021:
RM’000
Malaysia:
Gross business income 160,000
Net dividend income 83,911
Gross rental income 70,000
Country A:
Gross business income 320,000
Gross interest income 1,200
Country B:
Gross commission income 5,700
Net royalty income 2,800
Additional information:
1. Double Tax Agreement (DTA) status:
Country (Tax rate) DTA Status
Country A (10%) Yes
Country B (20%) No
2. Expenses incurred for the year 2021 related to the income generated are as follows:
Item RM’000
Capital allowance 16,000
Allowable expenses related to business income 20,000
Allowable expenses related to rental income 850
REQUIRED:
(a) Compute tax liability for Bunga Raya Cargo Berhad (BRCB) for the year of assessment
2021 after taking into consideration the available relief for foreign tax suffered.
(b) Advise BRCB on how to minimise its tax liability in the future.
QUESTION 2:
Bumi International Shipping Bhd (BISB) is a resident company carrying on a business of
transporting goods by sea. The following are incomes generated for the year of assessment 2021:
1
, RM’000
Gross Business Income:
Malaysia 106,000
Cambodia 83,911
Net Dividend Income:
Malaysia 467
Indonesia 1,388
Gross Rental Income:
Cambodia 5,732
Yemen 2,820
Additional information:
1. Double Tax Agreement (DTA) status:
Country DTA Status
Indonesia Yes
Cambodia No
Yemen No
2. Expenses incurred for the year 2020 related to the income generated are as follows:
Item RM’000
Capital allowance 7,800
Allowable expenses related to business income 46,650
Allowable expenses related to rental income 720
Tax paid in Indonesia 519
Tax paid in Cambodia 20,978
Tax paid in Yemen 86
REQUIRED:
Compute tax liability for Bumi International Shipping Bhd (MISB) for the year of assessment
2021 after taking into consideration the available relief for foreign tax suffered. Advise MISB on
any possibility to reduce tax liability in the future.
QUESTION 3:
(a) Under the e-commerce environment, computer equipment such as server could constitute as
permanent establishment (PE). However, certain activities will not constitute as PE although
server is in Malaysia. State THREE (3) activities that will not constitute PE under the e-
commerce environment and justify your answer.
(b) Explain how double tax agreement can be misused in the cross-border activities by
multinational companies.
2
ADVANCED TAXATION
TUTORIAL QUESTIONS
, CHAPTER 2: DOUBLE TAX RELIEF
QUESTION 1:
Bunga Raya Cargo Bhd (BRCB) is a resident company carrying on a business of air transportation.
The following are incomes generated for the year of assessment 2021:
RM’000
Malaysia:
Gross business income 160,000
Net dividend income 83,911
Gross rental income 70,000
Country A:
Gross business income 320,000
Gross interest income 1,200
Country B:
Gross commission income 5,700
Net royalty income 2,800
Additional information:
1. Double Tax Agreement (DTA) status:
Country (Tax rate) DTA Status
Country A (10%) Yes
Country B (20%) No
2. Expenses incurred for the year 2021 related to the income generated are as follows:
Item RM’000
Capital allowance 16,000
Allowable expenses related to business income 20,000
Allowable expenses related to rental income 850
REQUIRED:
(a) Compute tax liability for Bunga Raya Cargo Berhad (BRCB) for the year of assessment
2021 after taking into consideration the available relief for foreign tax suffered.
(b) Advise BRCB on how to minimise its tax liability in the future.
QUESTION 2:
Bumi International Shipping Bhd (BISB) is a resident company carrying on a business of
transporting goods by sea. The following are incomes generated for the year of assessment 2021:
1
, RM’000
Gross Business Income:
Malaysia 106,000
Cambodia 83,911
Net Dividend Income:
Malaysia 467
Indonesia 1,388
Gross Rental Income:
Cambodia 5,732
Yemen 2,820
Additional information:
1. Double Tax Agreement (DTA) status:
Country DTA Status
Indonesia Yes
Cambodia No
Yemen No
2. Expenses incurred for the year 2020 related to the income generated are as follows:
Item RM’000
Capital allowance 7,800
Allowable expenses related to business income 46,650
Allowable expenses related to rental income 720
Tax paid in Indonesia 519
Tax paid in Cambodia 20,978
Tax paid in Yemen 86
REQUIRED:
Compute tax liability for Bumi International Shipping Bhd (MISB) for the year of assessment
2021 after taking into consideration the available relief for foreign tax suffered. Advise MISB on
any possibility to reduce tax liability in the future.
QUESTION 3:
(a) Under the e-commerce environment, computer equipment such as server could constitute as
permanent establishment (PE). However, certain activities will not constitute as PE although
server is in Malaysia. State THREE (3) activities that will not constitute PE under the e-
commerce environment and justify your answer.
(b) Explain how double tax agreement can be misused in the cross-border activities by
multinational companies.
2
