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Taxation I - Assignment
Taxation I - Assignment
To calculate the taxable profits for the year 2023, we need to adjust the financial results provided
by Milungu Plc. The adjustments include adding back non-taxable items, deducting non-
deductible expenses, and making necessary adjustments for tax purposes. We start by subtracting
the total expenses from the gross trading profit and then add any other income earned during the
year, such as dividends received and interest income. Additionally, we subtract any losses
incurred from the disposal of assets. Next, we adjust for non-taxable items by removing
dividends received and discounts from the calculation. Then, we deduct non-deductible
expenses, such as NAPSA contributions, PAYE deductions, and penalties for late remittance of
NAPSA contributions and VAT returns.
Net Profit before Tax= Gross Trading Profit − Expenses + Other Income − Loss on Disposal of
Assets
=1,990,780−506,490−214,270−149,050−22,860−94,780−58,720−50,640−2,750−357,260+221,3
40+3,650+136,800+40,630+5,830=942,210
Dividends Received (Net) from Lukupa (Z) Ltd: Already taxed dividends, not taxable again.
Bank Interest Received from Luombe (Z) Bank Ltd (Gross): Taxable.
Taxable Profits:
Taxable Profits=407,030+136,800+40,630+5,830−590−65,650−5,730−137,170=381,150
Tax Payable
Using the standard corporate tax rate for Zambia, which is 30% as of January 2022:
Milungu Plc's taxable profits for the year 2023 amount to K376,150,000, and the tax payable on
these profits is K112,845,000.
QUESTION TWO
(a) (i) To calculate the total capital allowances claimable by Chombo Ltd, we need to determine
the capital allowances claimable on each asset. Capital allowances are calculated based on the
original cost of each asset and the period in use.
2. Manufacturing equipment:
3. Mitsubishi Center:
1. Manufacturing plant:
3. Computers:
Summing up all the capital allowances to find the total capital allowances claimable by Chombo
Ltd.
- Computers: K2,417
Total capital allowances claimable: K2,500 + K14,167 + K23,200 + K8,700 + K6,264 + K4,000
+ K2,417 = K61,248
ii) To calculate Income tax payable by Chombo Ltd for the charge year 2023, we consider the
following:
1. Deduct the total capital allowances claimed (K61,248) from the tax-adjusted profit (K392,906)
to find the taxable income.
2. Apply the applicable tax rate to the taxable income to determine the income tax payable.
Income tax payable = Income tax payable - Provisional income tax paid
So, the income tax payable by Chombo Ltd for the charge year 2023 is K37,157.40.