In order to increase its stated capital, XYZ Ltd transferred an amount from Income surplus account.
Required:
As a tax advisor, identify the types of taxes XYZ Ltd is exposed to on the above arrangement. (4 marks)
View Solution
A transfer from income surplus account to stated capital is an arrangement that is deemed dividend in taxation.
The tax exposure on this arrangement are as follows:
- Withholding tax on dividend at the rate of 8%
- Stamp duty payment at the rate of 0.5%