a) Company name: Magnum Berhad
Industry: Gaming
b) Company name: London Biscuits Berhad
Industry: Confectionery manufacturing
Comparisons of Tax-Related Format and Disclosure
Both Magnum Berhad (Magnum) and London Biscuits Berhad (LBB) are holding companies. Their respective group companies are Magnum Group of Companies and London Biscuits Berhad Group. Based on my observations, several comparisons can be made on the tax disclosure between the two chosen companies.
Firstly, the arrayed information on tax in the financial reports are more comprehensively done by Magnum compared to LBB. This is because the information and computation for the taxation in Magnum was more detailed and divided into several computations such as major components of income tax expense, reconciliation between tax expense and accounting profit and …show more content…
Distinct from Magnum, the statutory tax rate for the income assessable was 25% for LBB. To evaluate the influence of this rate towards the profitability of the company, let us assume that the tax rate was lower by 1%.
From Table 3, it is clear-cut that a 1% lower tax rate, has a profound effect on the income tax expense with regards to the same amount of PBT. The lower income tax expense would surge the financial year profit by RM 249,949 as recorded in Table 4. Although the amount is not large, the higher profit would impact the retained profits in the SoCIE, contributing to a rise in dividend allocation. This would proliferate LBB’s profitability as the shareholders would receive higher dividends, increasing their profitability as well. Undeniably, a decline in tax rate would affect the company’s profitability.
Consequently, a variation in the non-deductible expenses would also affect the profitability of LBB. For comparison purposes, let us assume that the non-deductible expenses decreased by