Question 1 (a) DeclanUganda Limited (DUL)is an IT hardware solutions vendor and contractor incorporated in Uganda with two corporate shareholders; Declan Holding N.V Netherlands (DH) and DeclanGmbH (Germany) (DG). The two shareholders, DG and DH, have invested 5 million Euros as equity in DUL. In 2014 DUL won a 3 year contract to build an optical fibre network from the port of Dar-es-Salaam, Tanzaniathrough Arusha, and finally to Kampala-Uganda through Lake Victoria. During the construction of the fibre network between 2015 and 2017, DGprovided technical services to DUL in Uganda in order to optimise the performance of the optical fibre network through the management of a service-intensive supply chain. In order to complete the required works and settle outstanding costs by December 2017, DULwasoffered three financing options: 1 . A three year13 million euro (EUR) loan from DH at 10% interest per annum. 2. A five year 15 million USdollar USD) loan,6% interest secured by a debenture issued by DUL, at apublic money market in London, United Kingdom. 3. Issuance of 1 million redeemable preference shares to DH and DG at Shs50,000 per share, for preference shares with a par value of Shs 54,000. Upon redemption, a distribution of Shs 6,000 over and above the par value is to be made. Required: (i) Advise DUL on the potential tax implications surrounding each of the financing options above. (12 marks) (ii) Discuss the financial and tax implications of the adjustment relating to a re-negotiation of the joint DH and DG loan, where the payment of interest on the loan is to be deferred and paidtogether with the principal. (3 marks) (b) DG is considering venturing into the insurance sector. It has identified Stead Fast Insurance Company Limited (SFICOL) as a potential target. SFICOLis part of a group of three subsidiaries owned by SFICOL Kenya, a