Principles of Public Finance and Taxation – KASNEB Syllabus

PAPER NO. 11 PRINCIPLES OF PUBLIC FINANCE AND TAXATION

GENERAL OBJECTIVE

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply principles of public financial management and taxation in practice.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

Comply with the regulatory framework in public financial management (PFM)
Compute tax for various entities
Manage the budgetary process, public revenue and control public expenditure in national and county governments
Apply the written tax law in addressing various tax

CONTENT

Introduction to Public Financial Management Legal Framework

General overview of Public Financial Management as envisaged by the Constitution( Chapter 12 of the constitution)
Financial regulations
Treasury Circulars
Process of developing county government finance bills

Public budget process for public bodies

General definition of budgets terms
Role of budget officers in budget preparation and execution
Responsibilities of The National and County treasury’s in relation to budget preparation
Budget process for both national, county and Public entities
Budgetary and fiscal policy tools

Oversight function in public finance management

The role of National Assembly
The role of Senate
The role of County Assembly
The role of Auditor General
The role of Internal Audit
Role of Controller of Budget in relation to disbursement of public funds as envisaged by the Constitution and PFM Act, 2012

Introduction to taxation

History of taxation
Types of taxation
Principles of an optimal tax system
Single versus multiple tax systems
Classification of tax systems
Tax shifting
Factors that determine tax shifting
Tax evasion and tax avoidance
Taxable capacity
Fiscal policies
Revenue authority –history ,structure and mandate

Taxation of income of persons

Sources of taxable incomes
Meaning of residence
Significance of residence
Withholding tax

Employment Income:

taxable and non taxable employment benefits
allowable deductions against employment income
taxation of employment income
tax credits against gross tax

Business Income

definition of business
circumstances under which taxable business income is deemed to have accrued.
reasons why accounting profit and taxable profits are different
taxation of sole proprietorship, partnership and incorporated entities

Other incomes

royalties
rental
farming
investment (interest and dividends)
pension income

Turnover tax

rationale behind introduction of turnover tax
incomes exempted from turnover tax
payment of turnover tax
benefits of turnover tax

Capital deductions

Rationale for capital deductions
Investment deductions
Industrial building deductions
Wear and tear allowances
Diminution in value
Farm works deductions

Administration of income tax

Overview of the income tax act
Identification of new tax payers
Assessments and returns
Operations of PAYE systems: Preparation of PAYE returns, categories Of employees
Notices, objections, appeals and relief of mistake
Appellant bodies
Collection, recovery and refund of taxes
Offences, fines, penalties and interest
Application of ICT in business; iTax, simba system

Administration of value added tax

Introduction and development of VAT
Registration and deregistration of businesses for VAT
Taxable and non taxable supplies
Privileged persons and institutions
VAT rates
VAT records
Value for VAT, tax point
Accounting for VAT
VAT returns
Remission, rebate and refund of VAT
Changes to be notified to the commissioner
Offences fines, penalties and interest
Enforcement
Objection and appeals: Requirements and procedure

Customs taxes and excise taxes

Customs procedure
Import and export duties
Prohibitions and restriction measures
Transit goods and bond securities
Excisable goods and services
Goods subject to customs control
Circumstances under which duty may be refunded
Purposes of customs and excise duties