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(Solved): tax The WBHO Group ("WBHO*) is a JSE listed construction company who specialises in building constr ...
tax
The WBHO Group ("WBHO*) is a JSE listed construction company who specialises in building construction, civil engineering and road and earthworks. Over the past 50 years, WBHO has successfully completed various public and private projects across numerous sectors in Africa and the United Kingdom. The WBHO Group Annual Financial Statements for the year ended 30 June 2022 reported the following tax related figures: - Income tax paid of approximately R344 million. - Foreign taxation including withholding tax of approximately R141 milion. - Dividend tax of R4 793 million. - A provision for tax penalties in the previous financial year of R14 milion. Due to the nature and the extent of WBHO's business operations the company is exposed to specific tax related risks such as the non-adherence risk to relevant tax laws and the non-compliance risk of tax obligatons. You are provided with the following links for more information regarding WBHO's operations: WBHO Group Annual Financial Statements for the year ended 30 June 2022 - WBHO-Full-Audited-Einanciat-Statements-for-the-year-ended-30-June-2022-pdt The WBHO Group's official website Home I WEHO I South Africa.| Rely On Our Ability. Analyst presentation on WBHO's financial results for the year ended 30 June 2022 - Analyat-presentation-June-2022-EINAL.pdt
REQUIRED: (20 marks) With reference to chapter 34, Tax morality. Strategy, and Risk management, in your SILKE textbook, identify and discuss at least four (4) tax risks to which the WBHO Group is exposed. In addition, provide two (2) tax strategies per risk identified to mitigate the tax risk. Make sure that you specifically apply the relevant theory in chapter 34 to the WBHO Group.
Expert Answer
I can provide general information about tax risks and strategies, but I cannot directly apply them to the WBHO Group without access to the specific information mentioned in the links.However, I can give you an overview of common tax risks that construction companies like WBHO Group may face and general strategies to mitigate those risks. Please note that these are general suggestions and may not be directly applicable to WBHO Group without a detailed analysis of their specific circumstances.Transfer Pricing Risk: Transfer pricing refers to the pricing of transactions between related entities within a multinational company. The risk arises when transactions between different subsidiaries of the company are not priced at arm's length, leading to potential tax evasion or disputes with tax authorities. WBHO Group, operating in multiple jurisdictions, may face transfer pricing risks.Mitigation strategies:Adopt a transfer pricing policy that complies with local tax laws and international transfer pricing guidelines.Conduct transfer pricing studies to determine appropriate pricing methods and ensure documentation is in place to support the arm's length nature of transactions.