Answer the questions below

Question 2 (a) (b) (C) (d) Describe the ways of obtaining relief for foreign tax charged on income subject to tax under domestic law. (6 marks) Discuss the ways of obtaining relief for foreign tax charged on income subject to tax under the Uganda Income Tax Act. (5 marks) In October 2015 the Economic Cooperation and Development (DECD) released its final report on Base Erosion and Profit Shifting (BEPS) action plan which included mandatory disclosure rules. Required: (i) Explain action DOit under WhiCh the mandatory diSCIOSUI'B I'UIBS did lie. (3 marks) (ii) Explain the obiective and requirement of the action point above and how it intends to achieve that obiective. (4 marks) The Uganda minister of finance is considering the possibility of reviewing the country's tax system and policy to one that will attract foreign investment. The proposals involve using low or zero rates of tax for inward investment. But while mooting the idea, his permanent secretary hints that he hopes Uganda does not turn into a tax haven. Required: AS a certified advisor, advise the minister on the main features that the country Will "68d 10 be COI'ISidBTBd as a tax haven. (7 marks) (Total 25 marks) Question 3 (a) Distinguish between 'tax competition' and 'harmful tax competition'. (8 marks) (b) (i) Explain the BEPS approach to tackling harmful tax practices. (3 marks) (ii) Explain what the approach is intended to achieve and how it will be achieved. (4 marks) (c) As all countries use the \"source" concept in asserting their iurisdiction to tax persons regardless of residence. domicile or citizenship. this concept should be used exclusively in determining taxing rights in cross border transactions. Required: Prepare a report in relation to this statement: (i) Defining the concepts of source and residence taxation, which country has prior taxing rights and the remedy to double taxation. (6 marks) (ii) Explaining the advantages and disadvantages of source taxation. (4 marks) (Total 25 marks) Question 4 The Impala group is a multinational group of companies headquartered in Kampala. The group includes a chain of companies incorporated in the East and Central African region. The group is mainly into cement manuiacturing but also does some trading and distribution. The group manufactures and distributes the Impala brand of cement. The group relies on the group centralised technical expertise in Kampala for a range oi services both technical and support. The headquarter office charges the group companies for the intra-group services. From time to time the parent company acquires iinancing for the other group companies. The parent company hosts the group research and development (R&D) department. The group RM) department carries out research in the development of the Impala brand of cement which information it passes on to Impala cement factories in Kenya and Tanzania. The parent company charges the iactories for this iniormation. Required: Advise management on the group's transfer pricing policy and: (a) Discuss the benefits of preparing contemporaneous documentation oi related-party pricing decisions. from a tax risk management perspective. (6 marks) (b) Explain the requirements of the three-tiered approach to transier pricing documentation. (8 marks) (c) "Customs valuations are a very good indicator oi arm's length pricing between associated enterprises in a multinational enterprise (MNE) group." Discuss this statement. justifying your position. (5 marks) ((1) Discuss the approaches that can be taken to valuation of intangible property. (6 marks) (Total 25 marks) (d) (i) Shs 1.5 billion as income from renewal of billing software licence in Kenya. Tax paid on the income in Kenya was Shs 637.5 million. (ii) Shs 1 billion as income from renewal of billing software licence in Tanzania. Tax paid on the income in Tanzania was Shs 300 million. (iii) Shs 1.2 billion as interest earned on a fixed deposit bank account in South Africa. Tax withheld on the interest was Shs 400 million. Required: Compute the amount of the foreign tax credit allowed for the tax paid on the foreign-source income and the balance of income tax payable to the Uganda Revenue Authority. (6 marks) The new finance director confides in you that the real reason he was transferred to Uganda was because Quantum GmbH was planning to transfer ownership of QU from Quantum Holdings Nederland B.V. to another group subsidiary Quantum Nederland B.V. to prepare it for eventual disposal to another group within a year or so. Required: (i) Advise the finance director on the potential tax implications of the impending reorganization and the planned disposal; and the precautions that can be made to make sure the two transactions are fully tax compliant. (10 marks) (ii) The issue of business restructuring is a major concern for many tax authorities. given the significant erosion of the tax base that it can create. Advise the finance director on the potential considerations that the Uganda Revenue Authority will make on the planned reorganization and disposal. (6 marks) (Total 50 marks) Question 1 Quantum Uganda B.V. (0U) is a company incorporated in the Netherlands. u is a 100% owned subsidiary of Quantum Holdings Nederland B.V. whose parent company is Quantum GmbH in Hannover, Germany. Quantum Uganda B.V. is the Ugandan branch of QU located in Kampala, Uganda. QU is a telecommunications company which on sells internet bandwidth to its customers in Uganda where it is established, which activities require that it is licensed by the Uganda Communications Commission, the regulator of the communication industry. QU has no operations in Netherlands but that is where its board of directors sits. QU's other main source of income is its interconnection billing software. Two Global System for Mobile communication (GSM) companies pay for the right to use the software on a renewable annual basis. The software is maintained and activated by QU branch but the payment for its use is made to the head ofce in the Netherlands. Required: You are the tax manager of 0U Uganda branch. A new finance director who you report to directly has been transferred to your branch. He has requested you to write a report explaining to him the following: (a) Where the tax residence of Quantum Uganda B.V. is and how it is arrived at. (12 marks) (b) The tax treatment of the income earned from the billing software. (8 marks) (i) The 2019/20 Income Tax Amendment Act defined the concept of \"Beneficial owner". Required: Define the term \"beneficial owner" as per the Income Tax Act cap 340 and explain to him the impact the concept might have on QU. (5 marks) (ii) Explain the meaning of the concept possession of economic substance by a legal person in their country of residence in relation to QU. (3 marks) (c) During the year 2018. 0U branch earned income as follows: 1. Total chargeable income Shs 17 billion. 2. Inclusive in the total chargeable income is