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(i) Royalties
- Royalty income is taxed on the basis of residence.
- Resident tax payer
- He is taxed in two stages that is a withholding tax of 5% which is not final tax.
- Net royalties that is gross royalties less expenses are added to other incomes.
- A tax relief is granted for withholding tax earlier paid.
- Nonresident tax payer, royalties are taxed at 20%. This tax is a final tax
(ii) Dividends from a co-operative society
- These are non-qualifying dividends.
- A withholding tax of 15% is levied which is not final tax.
- Gross dividends are added to other incomes of the taxpayer.
- A tax relief is granted for withholding tax earlier deducted
(iii) Pension income
- Monthly pension income is exempt to tax up to Sh.25, 000; and in case of lump-sum pension income, Sh.600,000 is exempt from taxation
(iv) Interest from housing development bonds.
-The first interest of Sh.300, 000 deposited in the bond will attract withholding tax of 10% and thereafter normal rate of 15%.
Wilfykil answered the question on February 15, 2019 at 10:44
- With respect to the Income Tax Act, explain the treatment of the following incomes received by a resident company
i) Dividend income
ii) Interest income
iii)Rent income(Solved)
With respect to the Income Tax Act, explain the treatment of the following incomes received by a resident company
i) Dividend income
ii) Interest income
iii)Rent income
Date posted: February 15, 2019. Answers (1)
- Explain the taxation of each of the following incomes received by a resident person:
i) Pension income.
ii) Interest on housing development bonds.
iii)Dividends from co-operative societies(Solved)
Explain the taxation of each of the following incomes received by a resident person:
i) Pension income.
ii) Interest on housing development bonds.
iii)Dividends from co-operative societies
Date posted: February 15, 2019. Answers (1)
- Potea Limited has received an assessment of sh. 260,000 from the tax authority representing fines and penalties for failure to comply with tax regulations during...(Solved)
Potea Limited has received an assessment of sh. 260,000 from the tax authority representing fines and penalties for failure to comply with tax regulations during the year ended 31 December 2007 Information available from the company‘s records for year 2007 revealed the following:-
1. The company failed to deduct sh. 300,000 as pay as you earn (PAYE) from allowances paid to the directors of the company during the year
2. The company underestimated the installment tax for year 2007 by sh. 200,000
3. The balance of the corporation tax for the year ended 31 December 2006 amounting to sh. 180,000 was due for payment on 30 April 2007. However, this tax had not been paid as at 31 December 2007
4. The company had not displayed the value added tax (VAT) registration certificate as required under the VAT Act (Cap 476)
Verify the accuracy of the above assessment by the tax authority as at 31 December 2007 and advice Potea Limited as appropriate
Date posted: February 15, 2019. Answers (1)
- With reference to the customs and Excise Act (Cap, 272), distinguish between the following terms
i) Customs warehouse and bonded warehouse
ii) Prohibited goods and restricted goods(Solved)
With reference to the customs and Excise Act (Cap, 272), distinguish between the following terms
i) Customs warehouse and bonded warehouse
ii) Prohibited goods and restricted goods
Date posted: February 15, 2019. Answers (1)
- The entries in the sales ledger and purchases ledger of Jamaa traders for the months of March and April 2008 were as follows:-
Any value added...(Solved)
The entries in the sales ledger and purchases ledger of Jamaa traders for the months of March and April 2008 were as follows:-
Any value added tax (VAT) due to the tax authorities is remitted by Jamaa Traders on the Interest date specified in the VAT Act (Cap 476).
Note: Entries in the ledger accounts were exclusive of VAT. The standard rate of VAT is 16%
Determine A VAT account showing separately the VAT payable (or refundable) for the months of March and April 2008
Date posted: February 15, 2019. Answers (1)
- Biashara Limited is registered for VAT
In August 2008, the company imported goods costing sh. 2,400,000 excluding freight charges of sh. 60,000
The company then incurred sh....(Solved)
Biashara Limited is registered for VAT
In August 2008, the company imported goods costing sh. 2,400,000 excluding freight charges of sh. 60,000
The company then incurred sh. 400,000 to transport the goods from the port to its warehouse
The processing costs were 20% of the relevant costs incurred up to the point of processing The goods were subsequently at a profit margin of 33 1/3%
Determine The VAT payable on the above transaction (Use a VAT rate of 16% and customers duty rate of 25%)
Date posted: February 15, 2019. Answers (1)
- The following transactions represent the sales and purchases of Thurugen Traders for the six months period ended 30 June 2008
Determine The total VAT payable by...(Solved)
The following transactions represent the sales and purchases of Thurugen Traders for the six months period ended 30 June 2008
Determine The total VAT payable by (or refundable to) Thurgem Traders for six month period ended 30 June 2008
Date posted: February 15, 2019. Answers (1)
- State four conditions under which import duty may be offset against income tax(Solved)
State four conditions under which import duty may be offset against income tax
Date posted: February 15, 2019. Answers (1)
- With reference to the operations of the customs and Excise Act, write brief notes on the following
i) Duty free shop
ii) Excusable goods
iii) Bonded warehouse(Solved)
With reference to the operations of the customs and Excise Act, write brief notes on the following
i) Duty free shop
ii) Excusable goods
iii) Bonded warehouse
Date posted: February 15, 2019. Answers (1)
- Sabina and Associates, a consultancy firm, provided vatable services to the following clients over the eight month period ended 31 August 2009. The terms of...(Solved)
Sabina and Associates, a consultancy firm, provided vatable services to the following clients over the eight month period ended 31 August 2009. The terms of contract allowed clients to pay for the services either before or after the provision of service
Determine VAT payable by (or refundable to) Sabina and Associates for each of the months shown above. Although VAT contributes significantly to government revenue, it has limitations which impact on the government, taxpayers and the economy at large.
Explain six of these limitations.
Date posted: February 15, 2019. Answers (1)
- Explain the tax treatment of income received by life assurance companies(Solved)
Explain the tax treatment of income received by life assurance companies
Date posted: February 15, 2019. Answers (1)
- As a tax specialist, briefly explain how you would treat the following issues for tax purposes:
(i) Mr Jan Philips is an expatriate working for a...(Solved)
As a tax specialist, briefly explain how you would treat the following issues for tax purposes:
(i) Mr Jan Philips is an expatriate working for a non-resident company in your country. During the year ended 31 December 2008, he received a passage allowance of Sh400,000 to enable him visit his family in his horn country. He did not include the passage allowance as part of his employment income for the year ended 31 December 2008.
(ii) Trans Country Bus Services Ltd. runs a public service transport business in your country. The bus company also undertakes transport business across the borders to the neighbouring countries. The company did not include the revenue arising from cross- border transport amounting to Sh.2,000,000 in its tax returns for the year ended 31 December 2008.
(iii) During a business trip to Dubai, Mrs Agnes Latoya, a resident of your country, purchased ten suits for her husband's use at a cost of Sh.300,000. However, upon her return the husband did not like the suits.
Mrs Agnes Latoya thereafter sold the suits and realised a profit of Sh.50,000. She included this profit with her other income for the year ended 31 December 2008.
(iv) Rahani Hotels Ltd. offered the following services to foreign tourists for which it did not charge VAT:
- Restaurant services.
- Game drives.
(v) The revenue authority has written to the hotel demanding payment of the VAT on the above services.
Date posted: February 15, 2019. Answers (1)
- Outline the grounds upon which a taxpayer may appeal to the Court of Appeal in a tax dispute(Solved)
Outline the grounds upon which a taxpayer may appeal to the Court of Appeal in a tax dispute
Date posted: February 15, 2019. Answers (1)
- Explain Goods liable to forfeiture under the Customs and Excise Act(Solved)
Explain Goods liable to forfeiture under the Customs and Excise Act
Date posted: February 15, 2019. Answers (1)
- The following transactions were reported by Abdi Wholesalers for the three months period ended 31 December 2008
Determine Total VAT payable (or refundable) for the three...(Solved)
The following transactions were reported by Abdi Wholesalers for the three months period ended 31 December 2008
Determine Total VAT payable (or refundable) for the three months period (ignore restrictions on input tax deduct-able)
Date posted: February 15, 2019. Answers (1)
- The VAT Act requires a registered person to notify the Commissioner of changes in certain particulars of a business within 14 days of their occurrence.
Identify...(Solved)
The VAT Act requires a registered person to notify the Commissioner of changes in certain particulars of a business within 14 days of their occurrence.
Identify six of these business particulars
Date posted: February 15, 2019. Answers (1)
- With reference to the Income Tax Act (Cap.470), explain the term "incorrect returns".(Solved)
With reference to the Income Tax Act (Cap.470), explain the term "incorrect returns".
Date posted: February 15, 2019. Answers (1)
- The following transactions were extracted from the books of IB Trader; for till: month of September 2009:
Determine:
i) Value added tax payable by (or refundable to)...(Solved)
The following transactions were extracted from the books of IB Trader; for till: month of September 2009:
Determine:
i) Value added tax payable by (or refundable to) JB Traders tor the month of September 2009.
ii) Comment on any information that you have oat used in your computations under (i) above.
Date posted: February 15, 2019. Answers (1)
- Section 24 (a) of the Value Added Tax (VAT) Act (Cap.476) requires certain documents to be attached to a claim for refund of VAT.
Briefly explain...(Solved)
Section 24 (a) of the Value Added Tax (VAT) Act (Cap.476) requires certain documents to be attached to a claim for refund of VAT.
Briefly explain four of these documents.
Date posted: February 15, 2019. Answers (1)
- Describe three types of tax assessments that may originate from the Commissioner for Domestic Taxes.(Solved)
Describe three types of tax assessments that may originate from the Commissioner for Domestic Taxes.
Date posted: February 15, 2019. Answers (1)