ACCA Advanced Taxation (ATX) Practice Exam

What should be quoted to explain the ownership percentage in a company group?

1. The actual percentage ownership

2. The required percentage from the rule

3. The total number of shares owned

4. The market value of the shares owned

The correct answer is: The required percentage from the rule

To explain the ownership percentage in a company group, the required percentage from the rule is the most relevant factor. In corporate tax law and regulations, ownership percentage can be influenced by specific rules or thresholds that determine control, consolidation, or the ability to influence decisions within a group of companies. These rules often dictate what percentage qualifies a company as a subsidiary, joint venture, or an associate, impacting how financial statements and tax liabilities are reported. While the actual percentage ownership, total number of shares owned, or market value of the shares can provide insights into ownership dynamics, they do not necessarily align with the regulatory frameworks that dictate how ownership should be categorized for tax or accounting purposes. Therefore, quoting the required percentage from applicable rules offers a clearer and more relevant basis for understanding the official classification of ownership within the context of company groups.