Elastic Rubber Sdn Bhd is registered Malaysian company with the paid-up capital of RM20 million. With...

 

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Elastic Rubber Sdn Bhd is registered Malaysian company with the paid-up capital of RM20 million. With the growing up demand of rubber related products, Elastic Rubber Sdn Bhd (ERSB) proposes to establish a manufacturing plant for the manufacturing of rubber related products in Kedah starting year 2020. Since the new project is listed by the Malaysian Industrial Development Authority (MIDA) as Resource Based Industries, the activity is qualified for either pioneer status or investment tax allowance. The projected adjusted income/(loss), capital expenditure and capital allowance for the first five (5) years of operation are as follows: Adjusted income/(loss) Land Factory building Machinery / Fixtures and Fittings Capital allowance 2020 RM'000 (400) 6,000 2,000 10,000 4,300 2021 2022 2023 RM'000 RM'000 RM'000 (3,000) 4,000 5,000 3,000 2,200 1,000 1,900 1,700 2024 RM'000 7,000 1,700 ERSB also has intention to expand its businesses by exporting his rubber products to the neighboring countries like Singapore and Indonesia started in the year 2024. ERSB expects to register export sales of RM1 million and RM3 million in the year 2024 and 2025 respectively. The value-added rate is estimated at 40%. REQUIRED: As a leader for the "Think-Thank Group", draft a report to ERSB on the following issues: 1. The eligibility and the selection of incentives available; pioneer status or investment tax allowance. Support your answer with appropriate computations. Assume that the income tax rate is 24% for the projected five (5) years. 2. 3. 4. Advise ERSB on the eligibility for the allowance for increased export (AIE). Support your answer with appropriate computation of tax savings. Besides AIE, advise ERSB on the potential incentives that the company can enjoy after the period of five (years) as asked in (a). Advise ERSB on the administration procedures for application of all the incentives above from MIDA. Elastic Rubber Sdn Bhd is registered Malaysian company with the paid-up capital of RM20 million. With the growing up demand of rubber related products, Elastic Rubber Sdn Bhd (ERSB) proposes to establish a manufacturing plant for the manufacturing of rubber related products in Kedah starting year 2020. Since the new project is listed by the Malaysian Industrial Development Authority (MIDA) as Resource Based Industries, the activity is qualified for either pioneer status or investment tax allowance. The projected adjusted income/(loss), capital expenditure and capital allowance for the first five (5) years of operation are as follows: Adjusted income/(loss) Land Factory building Machinery / Fixtures and Fittings Capital allowance 2020 RM'000 (400) 6,000 2,000 10,000 4,300 2021 2022 2023 RM'000 RM'000 RM'000 (3,000) 4,000 5,000 3,000 2,200 1,000 1,900 1,700 2024 RM'000 7,000 1,700 ERSB also has intention to expand its businesses by exporting his rubber products to the neighboring countries like Singapore and Indonesia started in the year 2024. ERSB expects to register export sales of RM1 million and RM3 million in the year 2024 and 2025 respectively. The value-added rate is estimated at 40%. REQUIRED: As a leader for the "Think-Thank Group", draft a report to ERSB on the following issues: 1. The eligibility and the selection of incentives available; pioneer status or investment tax allowance. Support your answer with appropriate computations. Assume that the income tax rate is 24% for the projected five (5) years. 2. 3. 4. Advise ERSB on the eligibility for the allowance for increased export (AIE). Support your answer with appropriate computation of tax savings. Besides AIE, advise ERSB on the potential incentives that the company can enjoy after the period of five (years) as asked in (a). Advise ERSB on the administration procedures for application of all the incentives above from MIDA.

Answer rating: 100% (QA)

1 Pioneer designation or a tax break for investments The firm is qualified for either pioneer status or an investment tax allowance based on the facts provided However there are a few factors to consi... View the full answer