Nyaga, Mogire and kamau are partners, operating a supermarket in Kimbaa town. They share profits and losses in the ratio 2:2:1 respectively. During the year ended 31 December 2020, the partners reported a loss of Sh.4,425,000 after deducting the following:

Sh.

Interest on capital: Nyaga Mogire Kamau Salaries to partners: Nyaga Mogire Kamau Motor vehicle running expenses Repairs and maintenance Office expenses Goodwill Loss on investment Postage and telephone Water and electricity Subscriptions to Kenya National chamber of Commerce Salaries and wages Donations Bad debts written off Rent, rates and licences Professional fees Depreciation Purchase of lorry Dividend receive (Net) Insurance recovery on motor vehicle

232,000 232,000 348,000 400,000 420,000 576,000 304,000 96,000 240,000 400,000 600,000 170,000 136,000 128,000 712,000 300,000 346,000 160,000 960,000 1,760,000 1,331,000 264,000 520,000

Notes:

1. Offices included cost of office cabinet of Sh.110,000.

2. Travelling expenses amount to Sh.12,000 per month related to personal use.

3. Provision for bad and doubtful debts account

	Sh.		Sh.
Bad debts Specific (c/f) General (c/f)	246,000 192,000 390,000 828,000	General b/f) Specific (b/f) Profit and loss account	330,000 152,000 346,000 828,000

4. Mogire had taken goods worth Sh.70,000 for his own use.

5. Wear and tear allowances agreed with the commissioner amounted to Sh.706,000.

6. Included in repairs and maintenance is Sh.80,000 paid for office partitions in 2018.

Required:

The taxable profit (loss) from the partnership business and show the distribution among the partners as at 31 December 2020 and tax payable thereon. (15 marks)

b) Explain taxation of insurance companies in Kenya (5 marks)

c) Owing to the high incidences of dumping goods in the country, the tax authority in your country has sought your professional advice on how to end this vice. Outline some of the measures that the authority can utilize in preventing dumping of goods. (5 marks)