Question 1 (a) Define the term 'depreciable asset'. (b) Goldhand Shake (Uganda) Ltd (GSUL) was incorporated in July, 2015 to engage in the business of processing fish for export to the European market. On 1 January, 2016 GSUL acquired the following assets which were immediately put to use: Item 10 Dell computers each at 60 Filleting tables each at Twelve 4-ton refrigerated trucks each at ML Mercedes Benz for MD at Shs '000' 2,000 700 30,000 120,000 Construction of the fish processing plant was completed on 1 July, 2016 at a cost of Shs 860,000,000 and was put to use on 1 July, 2016. The plant was equipped with the following items to make it operational: Deboning machine Fillet cooler Packaging machine For the year ended 31 December, 2016 GSUL reported a profit before tax of Shs 303,000,000 after deducting administrative expenses of Shs 6,200,000, which were arrived at as follows: Annual subscription to the Uganda Institute of Accountants Traffic fines on a company vehicle Entertainment for prospective fish suppliers not accounted for by the managing director Shs '000' 1,000 200 5,000 (1 mark) 6,200 Note: The number of days in the year for purposes of this question was 366.

Required: (i) Compute all the capital allowances available to GSUL for the year ended 31 December, 2016. (12 marks) (ii) Determine GSUL's chargeable income for the year ended 31 December, 2016. (iii) Compute the tax payable by GSUL.

Question 2 (a) Mr. Bakatunga has been employed as the chief mechanical engineer at Uganda Construction Company Ltd (UCCL) since 1 January, 2002. The company is involved in various construction works spread out in the major towns of Uganda. His employment contract provides for the following monthly cash payments. The following information relates to the year ended 31 December, 2016: Salary Housing allowance Lunch allowance Transport allowance Shs '000' 15,000 2,000 400 200 In addition, he is entitled to: 1. A subsistence allowance of Shs 250,000 per night and a company car with a driver whenever he travels to supervise works in upcountry locations. 2. The driver is entitled to subsistence allowance of Shs 200,000 when he travels with the chief mechanical engineer. He spent 20 nights upcountry on company business during the year. 3. Medical insurance for him, his spouse and four children below the age of 18. The company paid an annual premium of Shs 1,000,000 to the insurance company during the year. 4. The company pays 10% of his gross monthly salary in addition to the 5% that is to be deducted from his gross pay to the National Social Security Fund (NSSF). 5. The company pays electricity and water bills at his home, provided they do not exceed Shs 200,000 and Shs 60,000 per month respectively. The bills for electricity and water were Shs 250,000 and Shs 50,000 per month respectively during the year.

Required:

Compute Mr Bakatunga's chargeable employment income for the year ended 31 December, 2016. (13 marks) (b) In was of the view that his skills were no longer required. Management decided to terminate his contract with effect from 31 January, 2017. His contract provided for payment of one month's salary in lieu of notice as well as an additional compensation for termination of the contract January, 2017 Mr. Bakatunga's contract was reviewed and management

computed as Shs 2,500,000 for each full year worked. He was paid all his compensation in a lump sum on 20 February, 2017.

Required: (i) Explain the tax treatment of an amount derived as compensation for termination of any contract of employment. (2 marks) (ii) Compute the tax payable by Mr. Bakatunga on his lump sum receipt on termination of his contract. Question 3

(a) Describe the particulars of a tax invoice as per VAT Act Cap 349. (6 marks) (b) As per the Tax Procedures Code Act 2014, state the timelines within which a VAT return should be amended. (2 marks) (c) Describe the taxable supplies or imports on which a taxable person may not qualify for input tax credit as per section 28 of the VAT Act. (6 marks) (d) Explain the circumstances under which the Commissioner General may allow an input tax credit to a taxpayer who is not in possession of a tax invoice as evidence of the input tax. Question 4 (a) Kface (Uganda) Ltd (KUL) was incorporated in 2002 and owns 15 residential houses in Kiwatuke, a Kampala suburb. KUL recently incurred the following expenditure to improve its properties following a directive from the director of Kiwatule Urban City Authority on beautification of the area. Item 20 litres of paint Labour charges for painting Replacement of old gate Minor repairs to the perimeter wall Landscaping and interior designs Shs '000' 1,200 300 5,000 2,456 1,340 Each residential unit is let out at Shs 1,000,000 per month.

The monthly expenses paid by KUL include the following: Shs '000' Utility bills 2,000 Night guard 400 One unit was occupied for 9 months only in the year ended 30 June, 2016. Mr. Kawuma who stays in the 15th unit paid rent for 18 months (from 1 July, 2015 to 31 December, 2016) on 30 June, 2016. KUL also runs a mobile money kiosk from the veranda of one of its residential units and as at 30 June, 2016 the mobile money business recorded a net profit of Shs 50,000,000.

Required:

Determine KUL's rental tax liability for the year ended 30 June, 2016. (14 marks) (b) Mbikke is a famous politician subscribing to the PP political party, one of the oldest parties in Uganda. Mbikke currently represents Uganda in the East African Law Association (EALA). Over time Mbikke has invested heavily in rental properties as he plans to retire from active politics. He owns both commercial and residential properties in various upscale markets in Kololo, Muyenga, Mutundwe and Luzira. In the year ended 31 December, 2016, Mbikke received rental income from commercial and residential properties of Shs 100,000,000 and 230,000,000 respectively. He contracted Alert Security Company Ltd to provide security on all his properties at Shs 5,000,000 per month. Given the rampart car vandalism cases in Uganda's upscale residential areas, Mbikke acquired dogs to guard all his properties and incurs Shs 100,000 on dog food. The dog attendant is paid a monthly salary Shs 200,000.

Required:

Compute Mr. Mbikke's rental tax liability for the year ended 31 December, 2016. (6 marks) (Total 20 marks)

Question 5 Mr. Byabagye imported a used motor vehicle from Japan in the month of February, 2017. The motor vehicle was a Toyota Land cruiser model 2004 invoiced at USD 17,000, free on board (FOB) Tokyo, Japan. Shipment costs from Japan to Mombasa were USD 3,000 and insurance of USD 800 on board Mombasa. The values on his invoice were equivalent to the Revenue Authority indicated values for motor vehicles manufactured in 2004. Bawaya Transporters Ltd charged Shs 3,000,000 to transport the vehicle from Mombasa to Kampala. Additional information relating to the transaction is as below: (i) The Revenue Authority (RA) exchange rate for customs purposes for the month of February, 2017 was 1 USD equivalent to Shs 3,629.41. (ii) Import duty is 25% (iii) Environmental levy for used vehicles over 10 years from date of manufacture is 50% (iv) Infrastructure levy is 1.5% (v) The registration fees will be Shs 1,200,000

Required:

(a) Compute the total tax payable on the registration of the motor vehicle in February, 2017. (14 marks) (b) List six examples of goods that may not be kept in a bonded warehouse.

Question 6

(a) (i) (ii) Explain factors influencing tax compliance in Uganda. (b) (i) State the legal requirements of a valid objection. Distinguish between tax avoidance and tax evasion. (ii) Describe the appeals procedure as per the Tax Procedures Code Act, 2014.