General Principles of Taxation

Question 1

What are the 5 powers that Tax Authorities have?

Answer 1

1.) Power to review and query filed returns submitted to them
2.) Power to request special reports or reports
3.) Power to examine records which support returns made
4.) Power to enter and search a business
5.) Permission to exchange information with tax authorities in other jurisdictions.

Question 2

What is the definition of tax evasion?

Answer 2

It is a way of paying less tax by illegal methods.

Question 3

What is the definition of tax avoidance?

Answer 3

Is a way of arranging your affairs to take advantage of the tax rules to minimise the level of tax that is payable. It is legal and is often referred to as tax planning.

Question 4

Name 5 income or expenses which are not deductible/allowable when it comes to taxation?

Answer 4

1.) income from government grants
2.) Depreciation and amortisation grants
3.) Entertaining expenses
4.) Expenses relating to donations to political parties
5.) Expenses relating to taxes paid to other public bodies

Question 5

When does the OECD Model Tax convention define residency for an entity as being liable to tax in a country?

Answer 5

1.) If it is the place of incorporation (domicile)
2.) Place of effective management
3.) Place of permanent establishment