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Klaw 312: Tax Law Question Paper

Klaw 312: Tax Law

Course:Bachelor Of Laws (Llb)

Institution: Kabarak University question papers

Exam Year:2011

KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2011 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF LAWS
KLAW 312: TAX LAW
DAY: THURSDAY DATE: 22/03/2012
TIME: 2.00 – 4.00 P.M STREAM: Y3S1

INSTRUCTIONS
1. Answer Question 1 and any two other questions
2. Question 1 carries 30 marks. All other questions carry Equall(20) marks
3. No materials are to be brought into the examination room

QUESTION ONE
1. Mwanainchi is a business man of 35 years who was born and raised in the United
Kingdom. He was a Kenyan resident from 1999 to the year 2003. In 2004 he sold his
residential house in Kenya and moved to United Kingdom with the intention of living
there indefinitely. However in the year 2006 he set up an insurance company and an
advertising company in Kenya. He appointed Mr. Onyango to be the managing
director of the Company. Despite this he continued to reside in the United Kingdom
with his family and would frequently visit Kenya and check on the business progress
his visits in Kenya lasted for at least four months in a year between 2006 and 2009. In
the year 2010 he sold the companies to Wairimu and quit doing business so that he
could reside with his family at the United Kingdom. However he continued with his
four months visits in Kenya. In the year 2012 Mwanainchi was notified by the Kenya
Revenue authority that he has never remitted tax since 1999. Mwanainchi insists that
he remitted taxes form 1999 to 2009 to the Kenya Revenue Authority and currently he
is not liable to pay taxes as he is not a Kenyan resident. Mwanainchi has approached
you as his legal advisor, provide him appropriate guidance.
a. Explain the scope of liability to pay income tax under the Kenyan law and clarify
whether Mwanainchi is liable to pay income tax in Kenya (15 marks)
b. Identify any grounds of objection and describe the process for contesting the
assessment of income tax (15 marks)

QUESTION TWO
You are an officer in the legal department of the Kenya Revenue Authority; the Chief
Executive officer of the Kenya Revenue Authority has requested you to write a report on the
characteristics of a good tax system at the Kenya Revenue Authority. Draft a report on the
topic and explore the principles of a proper tax system. (20 marks)

QUESTION THREE
With appropriate examples explain the difference between direct versus indirect tax and
suggest the merits and weakness of each type of tax (20 marks)

QUESTION FOUR
Mwerevu has opened a hotel in Nairobi. He makes a profit of Kshs 1,000,000 in a year.
Mwerevu has ten employees to enable him to run his business. Mwerevu however does not
keep books of account as he is busy; once in a while he submits his tax return to the tax
authority. In the year 2011 a tax officer from the Kenya Revenue Authority approached
Mwerevu with regards to his failure to pay various taxes. Mwerevu bribed the officer and he
promised not to bother him any more. Mwerevu last paid his taxes in the year 2009/2010
accounting year.

a. Identify any offences committed by Mwerevu and explore any possible defences
(10 marks)

b. Explain the penalties that Mwerevu would be liable to if found guilty of the offences
indentified in part (a)(10 marks)

Klaw 312: Tax Law Question Paper

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