i. Distinguish between a tax refund and a tax credit
A tax refund, also called a tax rebate, is an-amount payable to a taxpayer when the tax liability is less than the tax paid. Taxpayers can often get a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid. Tax refunds are given back at the end of the financial year.
A tax credit is a sum deducted from the total/amount a taxpayer owes to the state. Most tax credits are set off a t source before remission of tax to the state. Tax credits may be granted in recognition of taxes already paid and cover various taxes including income tax, property tax and value added tax (VAT).
ii. Fundamental role of tax credits and tax refunds
Tax credits and refunds are mainly offered as incentives to achieve a government goal, such as to promote investments or to encourage" people to pay taxes . For instance, multinational companies may be given tax credits in relation to taxes paid on their credits in relation to taxes paid on their foreign operations as a way of encouraging foreign direct investments. In addition, companies that may have overpaid taxes in one year may be given the confidence of taxpayers on the tax administration system as an efficient, accountable and transparent system.
Wilfykil answered the question on February 25, 2019 at 12:08
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In the year ended 31 December 2011. Malipo Ltd. earned a profit before tax of Sh. 400 million from its main operation.
(Solved)
In the year ended 31 December 2011. Malipo Ltd. earned a profit before tax of Sh. 400 million from its main operation.
In addition, the company earned an investment income of Sh. k60 million. Dividend paid to members for the year amounted to Sh. 98 million.
The corporation tax rate is 30%
Required:
Shortfall tax, inclusive of penalties (if any) payable by the company for the year ended 31 December 2011.
Date posted:
February 25, 2019
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Answers (1)
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Justify the imposition of shortfall tax on companies
(Solved)
Justify the imposition of shortfall tax on companies
Date posted:
February 25, 2019
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Answers (1)
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A number of countries, particularly in the developing world, have rest fact urea their revenue authorities to provide for large taxpayer units (LTUs).
(Solved)
A number of countries, particularly in the developing world, have rest fact urea their revenue authorities to provide for large taxpayer units (LTUs).
Required;
i) Explain three reasons that have motivated the formation of LTUs.
ii) As a tax consultant in a country that intends to form an LTU, describe three key functional areas of an LTU.
Date posted:
February 25, 2019
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Answers (1)
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Discuss three reasons that related parties may give to justify the continued use of transfer pricing systems.
(Solved)
Discuss three reasons that related parties may give to justify the continued use of transfer pricing systems.
Date posted:
February 25, 2019
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Answers (1)
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Describe ways in which related parties could be transfer pricing systems to avoid tax
(Solved)
Describe ways in which related parties could be transfer pricing systems to avoid tax
Date posted:
February 25, 2019
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Answers (1)
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Briefly explain how firms or individuals could mitigate tax exposure through.
i) Stock dividends
ii) Share repurchases programmes.
iii) Registered venture capital entities.
(Solved)
Briefly explain how firms or individuals could mitigate tax exposure through.
i) Stock dividends
ii) Share repurchases programmes.
iii) Registered venture capital entities.
Date posted:
February 25, 2019
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Answers (1)
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Discuss four tax incentives that could "have contributed to the growth of financial markets in your country.
(Solved)
Discuss four tax incentives that could "have contributed to the growth of financial markets in your country.
Date posted:
February 25, 2019
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Answers (1)
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The following information was provided by Chamka Ltd. for the year ended 31 December 2011.
(Solved)
The following information was provided by Chamka Ltd. for the year ended 31 December 2011.
Date posted:
February 25, 2019
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Answers (1)
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Savana Holdings Ltd. is a foreign controlled company operating in your country.
The following information was extracted from the financial statements for the year ended 31...
(Solved)
Savana Holdings Ltd. is a foreign controlled company operating in your country.
The following information was extracted from the financial statements for the year ended 31 December 2011:
Required:
i) Justify the argument that the company was thinly capitalized.
ii) Compute the company's interest tax shield.
Date posted:
February 25, 2019
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Answers (1)
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Mr. Maji Mengi knows very little about double taxation agreements. He is a consultant, who works in many countries and in many cases, he has...
(Solved)
Mr. Maji Mengi knows very little about double taxation agreements. He is a consultant, who works in many countries and in many cases, he has ended up paying taxes on the same income more than once.
Required:
Explain to Mr. Maji Mengi the concept of double taxation treaty.
Date posted:
February 25, 2019
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Answers (1)
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Having read in the press about the benefits accruing to Kenya businessmen as a result of regional initiatives such as the East African Community and...
(Solved)
Having read in the press about the benefits accruing to Kenya businessmen as a result of regional initiatives such as the East African Community and COMESA, Mr. Jitendra Kumar, a prominent foreign businessman has contacted you seeking your advice on how he could reduce his liability to tax arising from expansion of his business operations into Kenya
Required:
A report addressing in clear and concise details, the following matters raised by Mr. Jitendra Kumar.
(a) The tax objectives under the COMESA treaty.
(b) Rules of origin provisions under the COMESA treaty.
Date posted:
February 25, 2019
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Answers (1)
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Kenya has entered into double taxation agreements with a number of countries. Explain the meaning and implications of a double taxation relief.
(Solved)
Kenya has entered into double taxation agreements with a number of countries. Explain the meaning and implications of a double taxation relief.
Date posted:
February 25, 2019
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Answers (1)
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Outline the benefits which may accrue to a country from being a signatory to the most favored nation's status agreement
(Solved)
Outline the benefits which may accrue to a country from being a signatory to the most favored nation's status agreement
Date posted:
February 25, 2019
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Answers (1)
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Daniel Otwori, a resident of Kenya earned income from the countries listed below during the year ended 31 December 2006. Income from Kenya: ksh 1,765,000
(Solved)
Daniel Otwori, a resident of Kenya earned income from the countries listed below during the year ended 31 December 2006. Income from Kenya: ksh 1,765,000
Income from United Kingdom (UK) UK £4,800 net Tax deducted amounted to UK £960. The average exchange rate during the year was 1 UK £ = 140 KSH, .A double taxation agreement exists between Kenya and United Kingdom.
Required:
The double taxation relief (in Kenya shillings) due to Daniel Otwori for the year ended 31 December 2006.
Date posted:
February 25, 2019
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Answers (1)
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A few countries and regions in the world have established themselves as tax havens. However, the anticipated inflow of investments has not been as high...
(Solved)
A few countries and regions in the world have established themselves as tax havens. However, the anticipated inflow of investments has not been as high as expected by these countries and regions:
Required:
i. Briefly describe the concept of ‘tax havens’
ii. Summarize three benefits that might accrue to an investor in a tax haven
Date posted:
February 25, 2019
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Answers (1)
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Hodari Nkan is resident of Kenya. During the year ended 31 December 2010, he received the following income:
(Solved)
Hodari Nkan is resident of Kenya. During the year ended 31 December 2010, he received the following income:
From Kenya: Sh. 720,000
From Zambia Sh. 540,000 (net of tax of sh. 78,000)
Assume that Kenya has a double taxation agreement with Zambia
Required:
The double taxation relief due to Hodari Nkan for the year ended 31 December 2010
Date posted:
February 25, 2019
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Answers (1)
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A generalized system of preference (GSP) applies where a country grants preferential treatment to goods and services received from another country.
(Solved)
A generalized system of preference (GSP) applies where a country grants preferential treatment to goods and services received from another country.
Required:
Describe three general conditions to be fulfilled for goods or services from one country to benefit from a GSP.
Date posted:
February 25, 2019
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Answers (1)
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Explain how the tax legislation in your country attempts to prevent creative accounting by multinational companies
(Solved)
Explain how the tax legislation in your country attempts to prevent creative accounting by multinational companies
Date posted:
February 25, 2019
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Answers (1)
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“Many objectives of the Common Market for Eastern and Southern African (COMESA) treaty remain elusive due to emerging challenges”. Highlight four such challenges
(Solved)
“Many objectives of the Common Market for Eastern and Southern African (COMESA) treaty remain elusive due to emerging challenges”. Highlight four such challenges
Date posted:
February 25, 2019
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Answers (1)
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Identify and explain instances when a capital statement may be required.
(Solved)
Identify and explain instances when a capital statement may be required.
Date posted:
February 25, 2019
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Answers (1)