Answer Happy

SA Construction Limited currently operates in Trinidad. The
company is considering setting
up another location in either Barbados or Jamaica.
The Projected Income Statement for 2023 is as follows:
USD
Income
Sales 90,000
Interest Income 2,500
Dividend Income 6,000
Other Income (exempt) 2,000
Expenses
Depreciation 20,000
Interest Expenses (1) 7,000
Repairs & Maintenance 1,500
Legal & professional fees (2) 8,000
Salaries 30,000
Bad debts (3) 3,000
Other Expenses (4) 20,000
Taxation 2,250
Notes
1. All Interest was paid. There was no accrued interest at year
end.
2. Professional fees consist of:
• Audit and accountancy fees $3,600
• Legal fees recollection of bad debts $2,000
• Cost of setting up business in the selected location $900
• Architect’s fee for designing a warehouse that has not yet been
constructed $1,500
3. The Bad Debts expense represents a debt that was outstanding for
270 days.
4. Other expenses include $1,000 for expenses paid on behalf of
another company
owned by SA Construction Limited, $600 for fines and penalties,
$1,500 for course
fees of the directors, and expenses relating to exempt
income.
5. Capital Allowances of $15,000 was projected.
6. Estimated Tax of $700 was paid to the relevant Tax
Authority.
7. Assume Exchange Rates: J$ 150: 1 USD and TT$ 6 :1 USD
Required

i. From a corporate tax perspective, in which country would it be
more tax beneficial to
operate? Ignore Employment Tax Credits, Corporate tax Credits
available in Jamaica
and other similar credits in Barbados)
ii. Explain two main reasons why expenses may not be deductible for
income
tax/corporation tax purposes.
iii. What other factors, if any, should be considered when setting
up operations in these
countries?