Lambda Ltd was set up in Guangzhou 12 years ago. The company has been continually loss making in recent years, and the shareholders decided to liquidate it in December 2014. The following assets were sold before the start of the liquidation process.
Calculate the amount of business tax and land appreciation tax (LAT) payable on the sale of the factory building.
Notes:
1. City maintenance and construction tax and education levy should be calculated at 12% of business tax.
2. Ignore stamp duty.
Disposal of the factory building
Calculate the consumption tax payable on the sale of the cosmetics packs.
Note: The consumption tax rate for cosmetics is 30%.
Sale of cosmetic products
Consumption tax of RMB117,949 (460,000 ÷ 1·17 x 30%)
State, giving reasons, if the expired cosmetic packs would be treated as a value added tax (VAT) abnormal loss.
Expired cosmetic products
This is not a value added tax (VAT) abnormal loss. An abnormal loss for VAT is the losses due to theft, spoilage and deterioration due to poor management. [Under Article 24 of VAT Regulations]
Calculate the output VAT on the sale of the inventories (finished goods and raw materials).
Sale of inventories
Output VAT is RMB95,897 ((460,000 + 200,000) ÷ 1·17 x 17%)
State whether Lambda Ltd can obtain a VAT refund on the liquidation of the company.
There is no VAT refund due on the liquidation of a company.