Introduction

Question 1

What is direct Tax and Indirect Tax

Answer 1

Direct Tax - paid directly to the government.
- individual’s earnings
- based on paying capacity
Indirect tax - paid indirectly
- imposed on goods
- uniform for all who buy goods

Question 2

Types of Indirect Taxes

Answer 2

VAT
Excise Duty
Customs Duty
Petroleum Products Tax

Question 3

Advantages of Indirect Tax

Answer 3

Universal
Are not obvious
Easy collection
Deterrent for harmful products

Question 4

What is VAT is charged on?

Answer 4

Taxable supply made by a registered person
importation of taxable goods
supply of imported taxable services

Question 5

Registration for VAT threshold? - Sec 34

Answer 5

Taxable supplies of KES 5M or more.

Application within 30 days of becoming liable

Question 6

which Taxable supplies are excluded when determining whether a person should be registered?

Answer 6

supply of a capital asset
selling of a person’s business
ceasing to carry on business

Question 7

circumstances where commissioner will register a person who applies for voluntary registration

Answer 7

Makes taxable supplies
Has a fixed place of business
Keeps proper records of business
complies with revenue laws

Question 8

3 circumstances leading to cancellation of registration?

Answer 8

person who ceased to make taxable supplies.
Commissioner on his own motion if satisfied person ceases to make taxable supplies.
person continues to make taxable supplies that do not exceed the threshold.

Question 9

Offences relating to registration

Answer 9

fails to apply for registration as required
applies for cancellation when still required to be registered
fails to apply for cancellation of registration
fails to display certificate
fails to cease to hold out that the person is registered
fails to submit a final return and pay tax due

Question 10

Penalty for offences relating to registration

Answer 10

Fine not exceeding 200K
imprisonment for 2 years
or both

Question 11

When is tax due

Answer 11

At the time of supply

May be deferred to the twentieth day of the month after the tax become due

Question 12

Conditions of a Supply of imported services

Answer 12

Made by any person
would have been a taxable supply if it had been made in Kenya
person would not have been entitled to a credit of full amount of input tax if the service had been acquired in a taxable supply

Question 13

Time of supply for a supply of imported services?

Answer 13

the earlier of:
Date of invoice
Date service is performed
Date of payment
Date a certificate is issued by architect, surveyor etc