Enteb Express Manufacturers Ltd (EEM) produces iron roofing sheets and is located in Namanve industrial area. During the year ended 30 June, 2016 EEM recorded the following transactions:

Business income from Uganda Recovered from bad debts Total income

Expenses:

Capital assets expensed Depreciation

Cash lost

Salaries & wages

Employers' NSSF contribution Management fees

Penalties and fines

Interest expense

Income tax

Rent & rates

Valuation expenses

Marketing expenses

Repairs & maintenance Contribution to retirement fund Reimbursable expenses

Total expenses Net Profit

Note 2 7

3 10

9 8

4 5 6

Shs 656,900,000 314,150,000 971,050,000

7,060,000 45,000,000 30,140,000 52,130,000

2,213,000 150,000,000 4,324,000 51,112,000 3,323,400 3,215,000 23,278,000 4,487,000 163,134,500 4,232,000 6,635,000 550,283,900 420,766,100

Notes:

1. Tax written down values as at 1 July, 2015:

Class I Class II Class III Class IV

Shs '000' 35,000 57,000 122,000 441,000

EEM Ltd owns a storied building where the main stores and offices are located. This building cost Shs 2.5 billion to construct and was first put to use in 2014. During the year ended 30 June, 2016 a lift which cost Shs 500 million was installed in the building to transport senior staff to their offices.

An extension to the factory building was also constructed at a cost of Shs 150 million and put to use on 30 April, 2016.

Additions during the year:

Two 10-ton lorries each at

Computers

Range Rover car for the managing director

Shs '000' 104,000 50,000 250,000

1. The business income includes Shs 160 million for the managing director which was accidentally deposited on the company account.
2. The assets expensed were all below Shs 900,000, with the exception of a motor cycle, which was stolen and its full cost of Shs 4,500,000 was expensed through this account.
3. The valuation expense includes incidental expenses of Shs 20 million relating to the new lorries that were acquired while the balance relates to demarcation of a piece of land in industrial area which the company is planning to purchase.
4. Repairs and maintenance includes Shs 90 million which was used to construct a new boundary wall around the factory premises in Namanve. The construction of this wall was completed on 15 March, 2016. This account also includes the cost of two generators each at Shs 1.5 million, repair expenses of Shs 30 million and the balance relates to depreciation expense, posted to this account by mistake.
5. Reimbursable expenses were allowances advanced to the employees in the course of performing their duties.
6. Bad debts recoverable relate to business.
7. EEM drivers were fined Shs 4,324,000 for dangerous driving while
8. delivering raw materials to the factory.
9. Management fees expense relates to a handshake of Shs 150 million given
10. to well behaved and hardworking employees and from which PAYE was
11. not deducted.
12. Cash Shs 30,140,000 was misappropriated by the accountant.
13. Profit of Shs 200 million was carried to a reserve fund before the year end.
14. Note: Assume the number of days in a year is 365 days.

Required:

Compute the corporation tax payable by EEM for the period ended 30 June, 2016.

Question

1. (a)The East African Community Customs Management Act (EACCMA) prohibits the removal of any goods from the customs area before they have been duly reported and entered.
2. Required:
3. Identify any four reasons why goods are entered into the customs area. (4 marks)
4. (b)For any imported goods, list any ten documents that are required for
5. making a declaration to customs.
6. (10 marks)

(c) Describe three items that are only imported as duty free items by

passengers who have attained the age of eighteen years.

Question

Mr. Robert Onyango is the chief football instructor of Uganda AFCOM Entertainments Ltd (UAE) football club, a position he has held since 1 December, 2015. He previously worked for Uganda Soccer Premier Ltd (USP) as a footballer.

Mr. Onyango's previous employer (USP) paid him Shs 180 million on 30 March, 2016 being his package for helping the club win a major Africa champion's title.

Mr. Onyango's current terms of employment with UAE are as follows:

1. (i)A monthly salary Shs 24,500,000. His PAYE Shs 3,000,000 per month was
2. paid to URA with effect from the month of his appointment.
3. (ii)A Range Rover Sports car provided by the company for full time use which
4. was purchased on 30 November, 2015 at Shs 160 million.
5. (iii)The company incurred medical bills of Shs 4,250,000 in February, 2016 for
6. the treatment of Onyango's wife.
7. (iv)Accommodation in the company house in Ntinda, a surburb of Kampala
8. city. The annual market rental price of such houses in the area is Shs 14,400,000.

(v) The company provides him with the following monthly benefits:

Security guard Driver

House girl

Shs 300,000 Shs 500,000 Shs 100,000

1. (vi)UAE pays for him Shs 600,000 for gym and swimming per month to Cabila Club.
2. (vii)UAE provided him with a soft loan of Shs 20,000,000 at an interest rate of 10%. Because of his outstanding contribution to the club, the board of directors decided that he should not pay the interest accruing to the loan.
3. (viii)The club has a soccer academy and every youth that enrols into the academy pays Shs 800,000 per month for the training. Among the trainees, is Mr. Onyango's daughter who joined the academy at the same time as her father joined the club and does not pay for training.
4. (ix)Mr. Onyango earned the following additional income during the year ended 30 June, 2016:

• Treasury bill interest Shs 100,000,000 from Bank of Uganda.
• Shs 150,000,000 being income from the supply of football jerseys
• and soccer boots to various football clubs in Uganda.
• Required:
• (a) Compute Mr. Onyango's total tax payable for the year ended on 30 June, 2016.
• (b) Advise UAE on when Mr. Onyango's tax liability is due.