CA23 Public Finance and Taxation PDF notes

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PAPER NO. 6 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 comply with and implement public financial management regulations and compute taxes for various entities.

     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 issues
  • Manage non-complex public financial management issues in public



CONTENT

Introduction to public financial management

  • Nature and scope of public finance
  • General overview of public financial management as envisaged the Constitution
  • Role of the national and county treasuries
  • Overview of the Public Financial Management Act
  • Financial regulations
  • Treasury circulars; meaning and application
  • Process of developing national and county government finance bills
  • Role of budget officers in budget preparation and execution
  • Responsibilities of the national and county treasuries in relation to budget preparation
  • Budget process for both national, county and public entities

Establishment of public funds in the public sector

  • Provision of establishing public funds
  • Rationale of creation of public funds
  • The Consolidated Fund
  • The establishment and administration of contingency funds
  • The establishment and administration of equalisation funds
  • County revenue sources



Supply chain management in public entities

  • Definitions and terminologies
  • General overview of Public Procurement and Disposal (PPD) Act
  • Procurement guidelines as envisaged PPD Act
  • Committees responsible for procurement
  • Procurement process National, County and other public entities
  • Tendering process and selection of suppliers in public sector
  • Concept of e-procurement

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 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
  • The Revenue Authority; history, structure and mandate



Taxation of income of persons

  • Taxable and non-taxable persons
  • Sources of taxable incomes

Employment income:

  • Taxable and non-taxable benefits
  • Allowable and non-allowable deductions
  • Tax credits (withholding tax, personal and insurance relief, others)
  • Incomes from past employment

Business income:

  • Sole proprietorship
  • Partnerships (excluding conversions)
  • Incorporated entities (excluding specialised institutions)
  • Turnover tax

  • Income from use of property- rent and royalties
  • Farming income
  • Investment income
  • Miscellaneous taxes and other revenues
    • Stamp duty
    • Catering levy
    • Motor vehicle advance tax
    • Capital gains tax

Capital deductions

–           Rationale for capital deductions

  • Investment deductions: ordinary manufacturers
  • Industrial building deductions
  • Wear and tear allowances
  • Farm works deductions
  • Shipping investment deduction
  • Other deductions

Administration of income tax

–           Registration and deregistration of tax payers


–           Assessments and returns

  • Operations of PAYE systems: Preparation of PAYE returns, categories of employees
  • Statutory deductions (NSSF and NHIF)
  • Notices, objections, appeals and relief for mistakes

–           Tax decisions; objections and appeals

  • Collection, recovery and refund of taxes
  • Administrative penalties and offences
  • Application of ICT in taxation: iTax

Customs taxes and excise taxes

  • Customs procedure
  • Import and export duties
  • Prohibitions and restriction measures
  • Transit goods and bond securities
  • Purposes of customs and excise duties
  • Goods subject to customs control
  • Import declaration form, pre-shipment inspection, clean report of findings
  • Excisable goods and services
  • Application for excise duty (licensing)
  • Use of excise stamps
  • Offences and penalties
  • Excisable goods management system

Emerging issues and trends



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