ANSWERS FOR TAXATION PLEASE

Solwezi Mining Corporation (SMC) Plc is a Zambian resident company engaged in the extraction of copper on the Copperbelt Province of Zambia. The following is the statement of profit or loss for the year ended 31 December 2020: Additional information 1. The amount of revenue in the statement of profit or loss is the norm value for mineral royalty tax purposes. The copper prices as quoted by the London Metal Exchange avaraged US\$5,800 per tone throughout the tax year 2020. 2. Cost of sales include mineral royalty tax, Depreciation charges k1,400,000 and amortization of intangible assets k300,000. The balance consists of revenue expenses which are all allowable for tax purposes. 3. The operating expenses include the following: 4. The interest expenses were incurred on loans from Zambian financial institutions which are not related to SMC Plc. The interest expenses amounted to 20.53% of the profit before interest, tax, depreciation and amortization. 5. Other income include profit on disposal or old mining equipment K120,000, royalties of K340,000 (net) and dividends from Zambian non-mining companies K140,000 (net). Withholding tax has been deducted at source where appropriate. 6. The amount of income tax expenses represents the provisional income tax paid during the year ended 31 December 2020. 7. On 1 January 2020, SMC Plc has a tax adjusted loss incurred during the year ended 31 December 2019 amounting to k3,600,000. 8. On 1 January 2020, SML Plc held the following assets qualifying for Capital allowances. All of the assets we're acquired locally from Zambian suppliers: During the year ended 31 December 2020, the company entered into the following capital transactions: The Toyota car and Toyota Prado car used by the Chief Executive Officer and Operations Director respectively on personal-to-holdrr basis. The private usage in the motor cars is estimated to be 45% by each individual. 9. The following are the Bank of Zambia average mid rates: 10. The following indexation formula may be used where applicable: 1+(R2R1)/R1 REQUIRED (a) Compute the taxable mining profits for SMC Plc for the year 2020. (16 marks) (b) Calculate the amount of company income tax payable by SMC Plc for the tax year 2020. marks) Solwezi Mining Corporation (SMC) Plc is a Zambian resident company engaged in the extraction of copper on the Copperbelt Province of Zambia. The following is the statement of profit or loss for the year ended 31 December 2020: Additional information 1. The amount of revenue in the statement of profit or loss is the norm value for mineral royalty tax purposes. The copper prices as quoted by the London Metal Exchange avaraged US\$5,800 per tone throughout the tax year 2020. 2. Cost of sales include mineral royalty tax, Depreciation charges k1,400,000 and amortization of intangible assets k300,000. The balance consists of revenue expenses which are all allowable for tax purposes. 3. The operating expenses include the following: 4. The interest expenses were incurred on loans from Zambian financial institutions which are not related to SMC Plc. The interest expenses amounted to 20.53% of the profit before interest, tax, depreciation and amortization. 5. Other income include profit on disposal or old mining equipment K120,000, royalties of K340,000 (net) and dividends from Zambian non-mining companies K140,000 (net). Withholding tax has been deducted at source where appropriate. 6. The amount of income tax expenses represents the provisional income tax paid during the year ended 31 December 2020. 7. On 1 January 2020, SMC Plc has a tax adjusted loss incurred during the year ended 31 December 2019 amounting to k3,600,000. 8. On 1 January 2020, SML Plc held the following assets qualifying for Capital allowances. All of the assets we're acquired locally from Zambian suppliers: During the year ended 31 December 2020, the company entered into the following capital transactions: The Toyota car and Toyota Prado car used by the Chief Executive Officer and Operations Director respectively on personal-to-holdrr basis. The private usage in the motor cars is estimated to be 45% by each individual. 9. The following are the Bank of Zambia average mid rates: 10. The following indexation formula may be used where applicable: 1+(R2R1)/R1 REQUIRED (a) Compute the taxable mining profits for SMC Plc for the year 2020. (16 marks) (b) Calculate the amount of company income tax payable by SMC Plc for the tax year 2020. marks)