(c) Katoko Bus ServicesLimited (KBS) is a company operating a long distance luxurybus service from Kampala to different parts of the country with destinations includingGulu,Kabale, Kasese and Abimdistricts.l{BS has two classes of tickets.There is a business class ticket which is a seat only ticket without any extras added. There is also a first class ticket which includes a meal and drink of the customer's choice served during the journey. The customer is at liberty to choose a package of their taste. Total ticket sales for the year ended 31 December 2017 were Shs 756 million with Shs 250 million resulting from sale of meals and drinks to in-transit first class passengers while Shs 506 million relates to transport charges for both business and first class passengers. KBS is seeking advice on the applicability of VAT on all their sales. Required: With reference to case law and the VAT Act, advise KBS. (5 marks) (Total 25 marks) Question 4 With examples and reference to the Value Added Tax (VAT) Act. write short notes on the following: (a) (hi (0) (d) (e) De minimis rule in VAT apportionment. (5 marks) VAT liability and refunds to diplomats and diplomatic (5 marks) missions Remission of VAT. (5 marks) Taxable value of goods and services. (5 marks) Time of supply of goods and services. (5 marks) (Total 25 marks) Question 3 (a) (M Mr. John Owens. a Briton. intends to enter the real estate business in Uganda. He is currently negotiating a business deal in which he wants to purchase the following properties from KAK Investments. a value added tax (VAT) registered company in Uganda. ELQDt A prime piece of land located in Muyenga with a residential house on it. The residential house is currently unoccupied. Mr. Owens intends to demolish the house on the preperty and erect a hotel immediately after the transfer. The purchase price is Shs 250 million. Property 2 Is a one acre piece of land located along Entebbe road.There is no building on the land. However. the land has been well graded. with electricity and piped running water installed on the property. Proposed purchase price is Shs 220 million. Prrt Is a plot located in Kololo with a commercial warehouse on it.However. the warehouse is currently out of use because it is too old. Mr. Owens intends to demolish the warehouse upon purchase of the property so that he can erect his residential house on it. The proposed purchase price is Shs 460 million. All the prices indicated are exclusive of VAT. Mr. Owens has hired you as a tax consultant for expert advice onhis business affairs. Required: Advise Mr. Owens on the likely VAT consequences of each of the transactions and advise him on the resulting total VAT liability he is likely to incur if he succeeds with the purchase of the three properties. (10 marks) You are a tax policy analyst with the Ministry of Finance, and you have been asked by your supervisor to consider a proposal to change the VAT rate for computers and printers. which are currentlystandard rated under the VAT Act. As a tax expert, you have been asked to assess whether these products should be left at the standard rate. be given a zero rating or exempt status. Required: Prepare a memo to your supervisor discussing the merits and demerits of each VAT classification and make recommendations. (10 marks) (c) Discuss the circumstances under which a taxpayer may be eligible for voluntary registration for VAT (Smarks) (d) Determine the total output tax for the month of September 2017 for KMCL. Comment on each item included or excluded. (12 marks) (e) Calculate the input tax credit that KMCL is entitled to for the month of September 2017. Comment on each item of input tax included or excluded. (11 marks) (f) Determine the overall VAT liability for the month of September 2017 and advise on when it is payable. (5 marks) (Total 50 marks) SECTION B Attempt any two of the three questions in this section Question 2 (a) Tale-computers Limited (TL) is a Ugandan company that deals in the sale (b) of microchips for computers and mobile phones and is registered for value added tax (VAT). TL imports the microchips from Europe and has a customer base spread all over East Africa. The finance director of TL has approached you for advice. Required: Advise TL on the VAT implications as well as the documentary and procedural requirements in Uganda for selling its products to customers in Kenya and Tanzania. (13 marks) You are further informed that TL has recently been given a notice of assessment for VAT of Shs 200 million and that it has been 52 days since the company was served with this notice. The finance director informs you that the notice was sent by Uganda Revenue Authority (URA) to the registered e-mail of the company which is no longer active. He tells you that no physical copy of the notice has ever been received by the company.The finance directorfurther informs you that the tax is disputed as it was erroneously assessed on items which do not attract VAT.URA is about to start enforcement measures against the company. Required: Advise TL on the requirements and procedure to object to the assessment until the dispute is resolved. (12 marks) (Total 25 marks) (ii) Invoice to Fina Hydro Limited, a hydro power company in Kasese for advance of Shs 4 millionfor construction of a feeder road to theKasese hydro power project which is not yet commissioned. (iii) Invoice to Kato and Sons Limited Shs 34 million for supply of construction equipment and equipment repair services. You are further informed that the company incurred the following expenses for the month of September: (i) Purchase of computer software license from Taiwan for use in the finance department of the business. invoice value Shs 10 million. The company accesses the software via the Worldwide Web. (ii) Repair and service costs for company car (Pajero) used by the managing director Shs 6 million.The supplier (garage) is not VAT registered. (iii) Write off of invoice to MCLShs 13 million issued in July 2017 as a bad debt. since the company has just gone into liquidation due to inability to pay its debts. (iv) Write off of acompany car (Pajero) with abook value Shs 23 million.lt was given to the managing director for his personal use as a reward for his role in winning the UETCL contract.The market value of the Pajero is Shs 30 million. (v) The company also hired the services of a Dubai based firm. Tech Training Solutions (TTS) to give professional training services to their staff in Uganda.The training was conducted entirely online at a cost Sh58.5 million. (vi) The company imported spare parts for their construction equipment during the month. The cost. insurance and freight (CIF) value of the spare parts was Shs 21 million and the applicable import duty rate was 10%. You have been approached for advice on tax matters relating to case above. Required: (a) Determine the period In which KMCL was liable to register for VAT and the effective date of registration. (10 marks) (b) Advise on the penalty that KMCL is liable to pay for failure to register for VAT in time.Assume that the company was forcefully registered by URA on 1 September. 2017 and that the company did not have creditable input tax for the period up to 31 August. 2017. (6 marks) Question 1 You are a tax auditor working for Uganda Revenue Authority (URA). You have been assigned to audit Kamanda Mobile Contractors Limited (KMCL) or (the company) which is based in Kampala. It was incorporated in January 2016. The company primarily deals in provision of construction and engineering services both in the public and private sectors. The company also deals in importation and sale of construction and engineering machinery and equipment. The following information relating to the company's business is available: The company is currently not registered for value added tax (VAT). 2 . In December 2016, the company signed a four year contract with Uganda Electricity Transmission Company Limited (UETCL) to supply and install electrical equipment for a power plant in Mukono. The first invoice for the project was raised in January 2017, when the project commenced. 3. The company's sales revenue for the months of January to September 2017 were as follows: Month Shs '000' January 10,000 February 15,000 March 13,500 April 24,000 May 13,000 June 15,000 July 13,000 August 21,000 September 90,000 4. The company's sales for the period January to August (except July) were to UETCL under the signed contract for the power plant project. The project is 100% funded by a grant from the government of Denmark through the Ministry of Energy. 5. The sales revenue for Julyrelates to sale of construction equipment to a local contractor, MCLimited. 6. For the month of September, the sales revenue consists of the following supplies: (i) Invoice to UETCL Shs 52 million for engineering services on the power project in Mukono