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TX C Income tax liabilities of companies

Written by Saad Rahman (ACCA)

8 ACCA Taxation (Pakistan) questions with answers and explanations.

Printable worksheet with answer key

All questions with answers
  1. Taxable income of an ordinary company (not a small company or bank) is Rs. 10,000,000. What is the tax at the corporate rate in ACCA's 2026 to 2027 tables?

    • 1 Rs. 2,900,000
    • 2 Rs. 2,000,000
    • 3 Rs. 1,700,000
    • 4 Rs. 3,500,000
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    Correct answer: Rs. 2,900,000

    The rate for any other company is 29%.

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  2. A small company has taxable income of Rs. 10,000,000. What is the tax?

    • 1 Rs. 2,000,000
    • 2 Rs. 2,900,000
    • 3 Rs. 1,000,000
    • 4 Rs. 1,700,000
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    Correct answer: Rs. 2,000,000

    The small company rate is 20%.

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  3. A company has accounting income of Rs. 30,000,000 and normal tax of Rs. 4,000,000. The alternative corporate tax rate is 17 percent. What tax is payable?

    • 1 Rs. 9,100,000
    • 2 Rs. 900,000
    • 3 Rs. 4,000,000
    • 4 Rs. 5,100,000
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    Correct answer: Rs. 5,100,000

    The alternative tax (17% x 30,000,000 = 5,100,000) is higher than normal tax, so the higher amount is payable.

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  4. Which statement about a company's tax liability is correct?

    • 1 A company is liable to tax separately from its shareholders
    • 2 A company never pays income tax
    • 3 Shareholders pay the company's tax
    • 4 A company is taxed only on dividends paid
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    Correct answer: A company is liable to tax separately from its shareholders

    A company is a separate taxpayer.

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  5. What are thin capitalisation rules about?

    • 1 Restricting dividends
    • 2 Limiting the deduction of interest on high debt in a foreign-controlled company
    • 3 Increasing share capital
    • 4 Reducing the tax rate
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    Correct answer: Limiting the deduction of interest on high debt in a foreign-controlled company

    They apply to foreign-controlled resident companies and branches.

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  6. Where a company has a small and medium enterprise (SME) under the final tax regime, which rates are in ACCA's table?

    • 1 0.25 percent for Category-1 and 0.5 percent for Category-2
    • 2 7.5 percent and 15 percent
    • 3 20 percent and 29 percent
    • 4 17 percent for both
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    Correct answer: 0.25 percent for Category-1 and 0.5 percent for Category-2

    The 7.5 and 15 percent rates are for the normal law regime.

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  7. What is the general rate of withholding tax on dividends in ACCA's table?

    • 1 Nil
    • 2 25 percent
    • 3 7.5 percent
    • 4 15 percent
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    Correct answer: 15 percent

    7.5 percent applies to independent power producers and 25 percent to certain exempt or loss-making payers.

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  8. When is a company resident in Pakistan?

    • 1 When it has any customer in Pakistan
    • 2 When it has one employee in Pakistan
    • 3 When it has a bank account in Pakistan
    • 4 When it is incorporated in Pakistan, or its control and management are in Pakistan
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    Correct answer: When it is incorporated in Pakistan, or its control and management are in Pakistan

    Residence is decided by incorporation or control and management.

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