A New Zealand resident company, Alkahol Ltd, wants to expand its business by selling wines to customers in China. The corporate income tax rate in China is 25%. The company is thinking of using one of the following three options:

Option A - Direct sale of wine to a retailer in China;

Option B - Sale of wine to customers in China through an agent acting on behalf of Alkahol Ltd;

Option C - Sale of wine to customers in China through Alkahol's subsidiary which will be incorporated in China.

Are there any differences in the tax treatment of the three options for Alkahol Ltd?

CONCLUSION

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REASONING

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ISSUE 5C

What is the main rationale behind the introduction of the transfer pricing and thin capitalization regimes?

EXPLANATION

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ISSUE

Kareful Moana is a New Zealand tax resident. In January 2019 she received a gross dividend from this investment in Foreign Country 1 of $2,000 (paid foreign tax of $200) and gross interest of $5,000 from Foreign Country 2 (paid foreign tax of $550). Assuming that she has no other income, what is the amount of foreign tax credit she can claim in New Zealand? Show all calculations.

CONCLUSION

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REASONING

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