Basic principles of taxing co-operatives Taxed on incomes from independent activities e.g. rent The basic notion underlying the new code of taxation is that a co-operative society is a body Corporate having its own existence, separate from that of its members. A co-operative society is, therefore, deemed to have its own income, regardless of the
Briefly explain the rationale behind the “benefit theory” of taxation
Benefit Theory: Maintains that justice in taxation is secured by taking each citizen in proportion to the benefits he derives from the activity of the state.
Purpose of Import declaration form
Import declaration form Import declaration form is a form supplied by the customs department for the importer to fill in order to ensure that: He declares/shows the goods he is importing, and that He indicates the correct value of the goods he is importing Show country of origin and destination Name/address of importer and exporter
Circumstances under which commissioner of customs and excise may Refund of duty paid on imported goods
Refund of duty paid on imported goods The commissioner of customs and excise may refund duty paid on imported goods under the following circumstances: Where goods are returned to seller Re-assessment leads to lower duty Where goods are lost or destroyed in an accident while under customs control Where goods are used in production of
Giving appropriate examples, differentiate between customs duty and excise duty
Customs duty is the tax paid on goods imported through the ports of Kenya. The goods subjected to customs duty are specified in the first schedule of the Customs and Excise Act (Cap.472) Examples of such goods include: Machinery Motor vehicles Electronics Textiles Food commodities, etc. Excise duty is the tax imposed on goods manufactured
Reverse charge This refers to VAT charged on imported services. The VAT in this case is paid by the person importing the service since the provider of the service is outside the scope of VAT. The importer of the service also claims the tax paid as input tax.
With the introduction of the self-assessment system in 1992, the Commissioner of Income Tax does not raise assessments or send notices to taxpayers except in two circumstances. Explain these two circumstances
Three circumstances under which CIT can send notices or raise assessments: A person has not submitted a return of income and the CIT considers that the person has income chargeable to tax for that years CIT considers that a person has been assessed or has assessed himself at a less amount in relation to income
What problems are experienced in attempting to achieve justice in taxation? Support your answer with the four main theories which explain why it is difficult to exercise justice in taxation
Problems in achieving justice in taxation Recommendations: Distribution of taxation can be considered and treated as payment for public services and a payment equal to the cost of the services rendered. People can pay tax in proportion to benefits derived from the state activity. Sacrifice by the tax-payer should be taken into account. Problems experienced:
Explain the reasons why, for a particular year of income, the total income received is usually different from total taxable income.
Why accounting income is different from taxable income. Some income of capital nature e.g. capital gain is not taxable but it is part of accounting profits. Accounting profits are determined after deducting depreciation but from taxable income, we deduct capital allowances. Some accounting expenses are not allowable for tax purposes e.g. general provision for bad
Taxation of members’ clubs
Provided ¾ or more of club income (i.e. entrance fees and subscriptions) comes from members, the club income will not be taxable. This excludes investment income such as dividends, interest and rent. They pay tax at corporate tax rate.