To determine the annual company income tax for the business enterprise, we can follow these steps:
1. Identify the monthly profit: The business makes a profit of N500,000 each month.
2. Calculate the annual profit: Since there are 12 months in a year, the annual profit is given by:
[tex]\[
\text{Annual Profit} = \text{Monthly Profit} \times 12
\][/tex]
Substituting the given value:
[tex]\[
\text{Annual Profit} = 500,000 \times 12 = N6,000,000
\][/tex]
3. Determine the taxable income: For simplicity, let's assume the taxable income is equivalent to the annual profit. Therefore:
[tex]\[
\text{Taxable Income} = N6,000,000
\][/tex]
4. Identify the company income tax rate: It is given that the company income tax rate is 30% (or 0.30 as a decimal).
5. Calculate the annual tax: The annual tax to be paid is computed by applying the tax rate to the taxable income:
[tex]\[
\text{Annual Tax} = \text{Taxable Income} \times \text{Tax Rate}
\][/tex]
Using the given values:
[tex]\[
\text{Annual Tax} = 6,000,000 \times 0.30 = N1,800,000
\][/tex]
Therefore, the business enterprise is to pay N1,800,000 as company income tax per year to the Government.
