Practical Question 8- Tax On Profit for Service Company

PTT Consulting Company Co., Ltd is a new service company incorporated in Cambodia in 2015. Under the tax regulations, PTT Consulting Company Co., Ltd is required to calculate and pay annual Tax on Profit.

Revenues from each month for 2016 as follows:

Month

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Revenue

–

11,710

11,090

7,750

7,720

–

–

4,900

–

–

–

4,864

48,034

VAT Output

–

1,171

1,109

775

772

–

–

490

–

–

–

486

4,803

Prepayment of Profit Tax

–

117

111

78

77

–

–

49

–

–

–

49

480

 

Expenses and Payments from each month for 2016 as follows:

Month	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Total
Salary Expense	3,350	3,350	3,350	3,350	3,350	3,350	3,350	3,350	3,350	3,350	3,350	3,350	40,200
Tax on Salary	125	125	125	125	125	125	125	125	125	125	125	125	1,494
Net Expense for Office Rental (Note 1)	1,200	300	300	300	300	300	300	300	300	300	300	300	4,500
Net Expense for Car Rental (Note 2)			500										500
Purchase Car				15,000									15,000
Purchase Printer		190											190
Purchase Computers		3,600											3,600

Additional Expenses as follows:

• Fuel expenses of $2,000
• Office supplies expense of $500
• Other Expenses of $700
• Registered costs at Ministry of Commerce (MOC) are assumed $450 during Oct 2015.
• Registered costs at General Department of Taxation (GDT) are assumed $650 during 2015.
• Registered capital of $40,000.

The notes as follows:

1. PTT Consulting Company Co., Ltd paid withholding tax for office rental on behalf of lessor.
2. PTT Consulting Company Co., Ltd paid withholding tax for car rental on behalf of lessor.
3. PTT’s policy recognized preliminary and formation expenses as expenses.
4. Withholding tax rate of 10%.
5. Withholding tax, tax on salary, prepayment of profit tax and VAT output occurred during months are paid to tax admin the following months.

PTT Consulting Company Co., Ltd is subject to profit tax rate of 20%.

Required:

Because cost of services supplied (B 5.1) is difficult to classify which costs are direct expenses related with services earned from customers, so company decided to ignore B 5.1.

Declare tax on profit and complete financial figures (2016) accordance with tax form requirement from page 3/16 to 13/16.