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    ACCT 3050 Group Assignment S2 2023-2024

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    Princess Douglas
    New Life is a multinational distribution company with its head office in the Cayman Islands and a new branch in Barbados that started operations on January 1, 2023. The company believes there was a window of no tax obligations for the first year, but has now engaged a tax consulting firm to provide advice on Barbados tax matters and tax compliance services. The consulting firm was asked to advise New Life on tax matters to consider when operating in Barbados, including any available tax benefits or incentives.

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    ACCT 3050 Group Assignment S2 2023-2024

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    Princess Douglas
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    New Life is a multinational distribution company with its head office in the Cayman Islands and a new branch in Barbados that started operations on January 1, 2023. The company believes there was a window of no tax obligations for the first year, but has now engaged a tax consulting firm to provide advice on Barbados tax matters and tax compliance services. The consulting firm was asked to advise New Life on tax matters to consider when operating in Barbados, including any available tax benefits or incentives.

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    New Life is a multinational distribution company with its head office in the Cayman Islands and a new branch in Barbados that started operations on January 1, 2023. The company believes there was a window of no tax obligations for the first year, but has now engaged a tax consulting firm to provide advice on Barbados tax matters and tax compliance services. The consulting firm was asked to advise New Life on tax matters to consider when operating in Barbados, including any available tax benefits or incentives.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    77 views2 pages

    ACCT 3050 Group Assignment S2 2023-2024

    Uploaded by

    Princess Douglas
    New Life is a multinational distribution company with its head office in the Cayman Islands and a new branch in Barbados that started operations on January 1, 2023. The company believes there was a window of no tax obligations for the first year, but has now engaged a tax consulting firm to provide advice on Barbados tax matters and tax compliance services. The consulting firm was asked to advise New Life on tax matters to consider when operating in Barbados, including any available tax benefits or incentives.

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    of 2

    Group Assignment

    Principles of Caribbean Tax and Tax Management


    ACCT3010

    Part A

    New Life is a multinational distribution company that started operating a Branch in Barbados on
    1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group which
    earns more than USD 850 million for the year. It employed some of its staff from Barbados and
    imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life
    repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands.

    The company was of the view that for the first year of operation there was a window of no tax
    obligations. In December 2023, the company realized that their understanding was not correct
    and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax
    compliance services. Your Group was assigned this engagement.

    Required.

    Advice New Life of the tax matters that needs to be considered when operating in Barbados
    including any tax benefits or incentives they may consider.

    60 marks

    Part B
    The audited financial statements for New Life Manufacturing for year-end December 31, 2022,
    show an accounting profit after tax of $16,500,000 after charging the following:
    • Depreciation $2,500,000`
    • Tax for the year $500,000
    • Property Tax $1,000,000
    • Interest expense $15,000
    • Preference dividends of $40,000
    • Legal fees $1,110,000
    • Insurance of $750,000
    • Bad debts $40,000
    • Foreign Travel $20,000
    • Repairs and Maintenance $1,500,000
    • General expenses $600,000
    Other Information

    1. Property Tax of $600,000 was paid for the property on which the company’s factory is
    located; $300,000 for the office premises and $100,000 for the CEO’s home.
    2. The insurance was paid for the factory and office premises.
    3. Loss on disposal of fixed assets $350,000
    4. Income Tax Refund of $700,000 was included as part of the entity’s income.
    5. The bad debt expense includes a general provision of $10,000 and a specific provision of
    $30,000.
    6. The company paid final ordinary dividends totaling $100,000.
    7. Repairs and maintenance include $500,00 removing the office ceramic floor titles and
    replacing it with wooden flooring.
    8. Included in the company’s total assessable income is exempt income of $50,000.
    $16,500 relates to expenses incurred in earning this exempt income.
    9. Legal fees include:
    - $155,000 in respect of recovery of commercial debts for New Life Manufacturing.
    - $40,000 in respect of recovery of commercial debts for the head office in Cayman. The
    company was reimbursed this amount.
    - $415,000 in respect of recovery of commercial debts for the subsidiary company in the
    United States. The company was not reimbursed this amount.
    - $500,000 relating to the purchase of new company that will be located in Barbados.
    10. General expenses include $72,000 for the school fees of the CEO’s son.
    11. The capital allowances have been calculated at $1,330,500. Based on the items included
    in the fixed asset schedule.
    12. There was an increase in wages of $2,000,000 which qualifies for Employment Tax
    Credit (all other conditions to qualify for this credit were met).
    13. Assume capital allowance rate of 5 % p. A for building/ leasehold improvements.
    14. All amounts are in Barbadian currency.

    Required
    Calculate the Corporation Tax Payable for New Life using the Barbados Income Tax Act, or any
    other relevant document explain the treatment of the items included or omitted from the
    income tax computation. Your answer should include the reasons for all adjustments made.
    Explain the treatment of tax losses in Barbados.

    40 marks

    Total 100. Represents 25% of the Final Grade.

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