You are a newly appointed Finance Minister for Nordatia, a country adopting the Malaysian tax

system. Nordatia is a country that is presently a tax haven, however due to the decline in reserves
the government has decided to implement taxation in the country. The criteria for a good tax
system stem from the principle of the Canons of Taxation.
Your country wishes to adapt a territorial basis of taxation, whereby the source of income
concept in determining whether business profits should be subject to income tax in Nordatia with
the exception of businesses such as banking, insurance, sea and air transport, which will be
subjected to international source of income. In international taxation, countries agree through
double taxation agreements not to tax business profits unless those profits are attributable to
permanent establishments within their borders.
Nordatia is also planning to adapt the same incentive provided by Malaysia to attract investors as
the infrastructure and labor cost from the neighboring countries is competitive.
Your country is also planning to impose consumption tax and income tax simultaneously
REQUIRED:
Write a report that discusses:
(i)

(ii)

(iii)
(iv)
(v)

The merits and demerits of taxes on consumption as compared to taxes on income based
on the Canons of Taxation. In your consideration, explain and substantiate which Canon
you believe is the most important in the design of a tax system.
Evaluates, in the context of the various business models in the digital economy with
regards to the bases of territorial bases and whether these principles will or will not lead
to an erosion of Nordatias corporate income tax base.
Suggest and explain the benefits of the various incentives and allowances that can be
introduce in order to attract investors.
Suggest and explain the various options of consumption taxes and the benefit of
introducing this tax.
As a conclusion a summary of the suggested tax system should be outlined.

As a reference you may use Adam Smiths popular publication, An Inquiry into the Nature and
Causes of the Wealth of Nations: Volume V, the Malaysia Income Tax Act 1967and the latest
circular on Goods and Service Tax in Malaysia.

Marks Allocation
APU Level 3

Asia Pacific University of Technology & Innovation

201501

Written presentation
Assessment Criteria
Weight
Clarity about the purpose of the assignment
5%
Format clear writing in an appropriate style, with proper formatting and 5%
paragraphing
Language appropriate application of grammar and sentence structure
10%
Analysis critical analysis and discussion with proper use of concept and 60%
principles
Conclusion a conclusion which draws application from the foregoing and 20%
summaries the main purpose of the discussion
Total
100%

Marks
5
5
10
60
20
100

Assignment Assessment Criteria

1.
2.

3.

4.

5.
6.

7.

To address the subject satisfactorily, a typed format is mandatory. Pass assignments are
expected to be legible, tidy, well organized and written in clear understandable English.
High grades(70%, 75%, +80%) need to demonstrate sustained coherent analytical ability.
A systematic approach to analysis and evaluation is required for grades 60% to 85%, for
grades at the higher end of the scale, integration and synthesis is a requirement. The
quality of the arguments used to develop and support prescriptions/recommendations are
the essential test of integration.
Evidence of reading and some understanding of models and concepts are needed to
achieve a pass grade(50%). Integration of theory and practice is expected for any grade
above 65%.
You are expected to clearly state any assumptions you make and support statements and
theories by referencing to appropriate sources. (This is essential for higher grades but
does not necessarily prejudice a pass mark(50%) if it is missing).
The assignment is to be submitted as a single written report.
As well as submitting a hard copy of your assignment you are required to submit the
electronic version. Unless both, hard copy and electronic versions are provided it will not
be counted as submitted.
The length of the written assignment should not be more than 2000 words.

Grade
80% - 100%

APU Level 3

Description of performance level

There were mature and interesting points based on your research and
reading. Each point supported with valid explanation. Shows
Asia Pacific University of Technology & Innovation

201501

60% - 79%
40% - 59%
Below 40%

APU Level 3

understanding of subject matter. Adequate reference given. No

grammatical errors or spelling mistakes.
There were sufficient points raised with valid explanation provided. There
is adequate understanding of subject matter. Minor grammatical errors and
spelling mistakes.
No clear understanding of research subject. Insufficient points given and
explanations are unclear or not helpful in clarifying points. Not enough
reference given. Major grammatical and spelling mistakes.
You did not display any understanding of the subject matter. Points are
off-topic and do not tie back to research. No understanding of theories and
concepts taught. Not enough reference given. Numerous grammatical and
spelling mistakes.

Asia Pacific University of Technology & Innovation

201501