Paper 16

(S1) ADVANCED TAXATION

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to solve complex tax issues, implement tax planning initiatives and administer tax in various business environments.

On completion, a candidate should be able to

Compute the tax liability of enterprises, entities and specialised business activities.
Handle all value added tax matters
Apply the procedure for conducting a tax investigation
Explain the tax dispute resolution mechanism
Explain the tax implications for cross border business activities.
Develop tax policies

Content

1
Taxation of business income and specialized business activities
1. 1.1
  Partnership business
  1. 1.1.1
    Admission of a new partner and retiring partners during the year
  2. 1.1.2
    Conversion of partnerships into liability companies
  3. 1.1.3
    Incomplete records pertaining to partnership businesses
  4. 1.1.4
    Case law on taxation of partnership businesses
2
Limited companies
1. 2.1
  Taxation of companies, including holding company, subsidiaries, branches and related parties
2. 2.2
  Incomplete records pertaining to limited companies
3. 2.3
  Minimum tax
4. 2.4
  Shortfall tax computation
5. 2.5
  Taxation of dividends
6. 2.6
  Case law on taxation of limited companies
7. 2.7
  Rental income, including residential rent income, Commercial rent income and Real estate investment trusts (REITS)
8. 2.8
  Charitable institutions
9. 2.9
  Leasing entities, including hire purchase lease agreements
10. 2.10
  Co-operative societies, Saccos
11. 2.11
  Trade associations, amateur sporting association and clubs
12. 2.12
  Trust bodies, settlements and estates under administration
13. 2.13
  Financial institutions: Banks, insurance companies
14. 2.14
  Sea and air transport undertakings
15. 2.15
  Collective investment schemes
16. 2.16
  Professional, training, management, agency, and consultancy fees
17. 2.17
  Property developers and contractors
18. 2.18
  Taxation of extractive industries
19. 2.19
  Capital gain tax
20. 2.20
  Digital service tax
21. 2.21
  Application of relevant case law
3
Value added tax administration
1. 3.1
  Obligations of a taxable person and offences relating to VAT
2. 3.2
  Value added tax computation
3. 3.3
  Restriction of input tax claimable
4. 3.4
  Imported services and VAT withholding agents
5. 3.5
  VAT refunds and bad debt relief computation
6. 3.6
  VAT Accountant certificate
7. 3.7
  Value added tax automated assessments
8. 3.8
  I tax significance and application in value added tax administration
9. 3.9
  Application of relevant case law
4
Tax investigations
1. 4.1
  Tax fraud
2. 4.2
  Civil and criminal tax investigation
3. 4.3
  Events which may trigger an investigation
4. 4.4
  Back duty and in-depth examination
5. 4.5
  Customs and excise investigations
6. 4.6
  Negotiation for settlement: Tax amnesty, Tax Penalties and Enforcement for outstanding taxes
7. 4.7
  Types of tax audit and their significance
8. 4.8
  Application of relevant case law
5
Tax dispute resolution mechanism
1. 5.1
  Tax disputes
2. 5.2
  Stages of tax dispute resolution process
3. 5.3
  Tax dispute resolution process cycle
4. 5.4
  Legal framework and objectives of Alternative Dispute Resolution
5. 5.5
  Types of tax disputes eligible for Alternative Dispute Resolution
6. 5.6
  Benefits of Alternative Dispute Resolution
7. 5.7
  Parties to Alternative Dispute Resolution and their roles
8. 5.8
  Issues exempted from Alternative Dispute Resolution
9. 5.9
  Alternative Dispute Resolution agreement terms and timelines
10. 5.10
  Termination of alternative dispute resolution
6
Taxation of cross border activities
1. 6.1
  Distinction between trading in and trading with a country
2. 6.2
  Double taxation agreements; theory, design and application
3. 6.3
  Regional perspective with reference to the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA)
4. 6.4
  Most favored nation status
5. 6.5
  Nature, characteristics and significance of One Stop Border Posts (OSBPs)
6. 6.6
  Generalized system of preference and AGOA
7. 6.7
  Tax havens and treaty shopping
8. 6.8
  Tax information exchange agreements (TIEAS)
9. 6.9
  Transfer pricing: oecd guidelines
10. 6.10
  Application of relevant case law
7
Tax planning
1. 7.1
  Tax planning for individuals: By way of Tax exempt activities, transactions that are allowable expenses and transactions attracting tax setoffs
2. 7.2
  Tax planning for body corporates
3. 7.3
  Identifying opportunities to alleviate, mitigate or defer the impact of direct or
4. 7.4
  indirect taxation
5. 7.5
  Evaluating remuneration packages
6. 7.6
  Tax avoidance and anti-tax avoidance provisions in the tax Act, short-fall distributions of dividends
7. 7.7
  Sectoral tax incentives
8. 7.8
  Disposal of business operations and restructuring of activities
9. 7.9
  Tax risk management
8
Tax systems and policies
1. 8.1
  Types of tax systems
2. 8.2
  Role of taxation in economic development; tax base expansion, efficiency in tax systems
3. 8.3
  Design of a tax policy
4. 8.4
  Criteria for evaluation of a tax system
5. 8.5
  Tax reforms and modernisation of tax systems under various Acts
6. 8.6
  KRA structure – Large Tax Payer and Medium Tax Payer organisations
9
Professional practice in taxation
1. 9.1
  Forms of tax practice and matters relating thereto
2. 9.2
  Matters relating to new clients
3. 9.3
  Handling of client work
4. 9.4
  Disclosures in tax returns, computations and correspondence with the Revenue Authority
5. 9.5
  Moral and ethical issues in taxation
6. 9.6
  Tax agents, appointment, obligations, professional liability
7. 9.7
  Cancellation of tax agents license
8. 9.8
  Role of tax agents in appeals procedure
9. 9.9
  Tax health check