Question 1 Chwa Chwu Ltd (COL) is a new entrant into the poultry business in Uganda and started operations in February 2019. COL deals in the supply of oneday old chicks. poultry feeds and dressed chicken for sale to final customers. In regard to the dressed chicken. CCL slaughters the chicken. defeathers the chicken. adds preservatives. and packages the chicken ready for sale. The value added to the dressed chicken is estimated to be about 8%. As a tax consultant. you have been approached by CCL's Chief Finance Officer (CFO) to review the company's transactions for October 2019 and with reference to the VAT Act. to advise on the VAT compliance of CCL. The CFO has provided you with the following information regarding the month of October 2019. COL is currently registered for VAT. Sales of one-day old chicks of UShs 1.2 billion (exclusive of VAT). Sales of poultry feeds of UShs 950 million (exclusive of VAT). Revenue from sale of dressed chicken of UShs 1 billion (exclusive of VAT). CCL received consultancy services of a UK based firm. Poultry Services Ltd (PSL) to provide professional poultry services to the business and also train the local staff to international poultry standards in order to produce quality products for the market. PSL was contracted at a fee of UShs 150 million (exclusive of VAT). 6. CCL paid VAT of UShs 30 million at importation of equipment for the abattoir in October 2019. 7. In October 2019. COL was charged VAT of UShs 5 million on telephone invoices for the period. 8. The company also disposed of a company car in October 2019 for UShs 40 million. 9. Write off of invoice to Kente Ltd of UShs 13 million. issued in July 2019. as a bad debt. since COL could not trace Kente Ltd at its registered and known address. 10. Serena Hotel Kampala issued CCL a tax invoice of UShs 8 million (exclusive of VAT) for the accommodation of the board members that came from the UK for the quarterly board meeting held on 20 October 2019. Loam- F\" (0) Required: Advise the CFO of PICL on whether the company: (i) would be liable to VAT on the supply of life insurance policies issued to its customers. (2 marks) (ii) would be liable to VAT on the supply of re-insurance services provided to its customers of other insurance companies. (2 marks) (iii) is required to account for VAT on the supply of group personal accident covers issued out to its customers. (3 marks) Mr. Ken Okwa. a Ugandan but UK-based resident is considering investing in real estate business. He has been approached by PAP Properties Ltd. a VAT registered entity in Uganda with the following real estate business options; (i) A prime piece of land located in the heart of Kampala city that can be leased out or let out for parking of cars. The purchase price for this land is UShs 1 billion (exclusive of VAT). (ii) 5 acres of land located in Munyonyo which has a hotel built on it. The proposed purchase price is UShs 1.40 billion (exclusive of VAT). (iii) A plot of unimproved land located in Buwate. The purchase price of this plot is UShs 200 million (exclusive of VAT). (iv) A plot of land located in industrial area with a commercial warehouse on it. The purchase price is UShs 500 million (exclusive of VAT) You have been approached as a tax consultant tor advice on his prospective investment. Required: Advise Mr. Ken Okwa on the likely VAT treatment on each of the properties listed above. (12 marks) (Total 25 marks) Question 2 You have recently been recruited as a Legal Assistant in the Litigation department of Uganda Revenue Authority (URA). During the departmental weekly meeting, the Assistant Commissioner. Litigation department was informed of the recent decision of Tax Appeals Tribunal (TAT) in the case of URA vs Uganda Electricity Transmission Company Limited (UETCL). Required: As your first assignment, prepare a memo to your supervisor highlighting the following; (i) the brief facts of the case. (ii) the issues determined by TAT. (iii) the ruling of TAT. and (iv) grounds of appeal by URA (if any). (Total 25 marks) Question 3 (a) Byensi Farm Ltd (BFL) is a tax resident in Uganda that deals in agriculture producing a variety of produce. As a future expansion plan. BFL intends to engage in the growing and milling of rice in Uganda. The value chain to be followed by BFL will be growing the rice. drying. milling. grading. sorting and packaging the rice ready for sale to final customers. But on the other hand. instead of growing the rice in Uganda. BFL is considering the option of importing the rice from Kenya and selling it from within Uganda As a tax consultant. you have been approached by the Financial Controller of BFL on the VAT treatment of the two prospective future business options. Required: Advise BFL on the most VAT efficient business option. (6 marks) (b) Premium Insurance Company Ltd (PICL) is a VAT registered entity in Uganda and deals in insurance business. The insurance products offered by PICL include life insurance packages. medical insurance packages on an individual and corporate arrangement. group personal accident insurance packages. re-insurance services among others. Question 4 Write short notes on the following concepts as applied to the VAT Act; (a) The taxable value of a hire purchase or finance lease agreement. (5 marks) (b) Simplified tax invoices. (5 marks) (c) Discounts. (5 marks) (d) Mixed supplies. (5 marks) (e) Taxable value for goods supplied for reduced consideration. (5 marks) (Total 25 marks) 11. 12. 13. 14. On 3 October 2019. CCL entertained its premium customers at Sheraton Hotel. VAT of UShs 3 million was charged on meals and refreshments taken during the function. Repair and service cost for a company car (Pajero) used by the CEO of UShs 7 million (exclusive of VAT). All purchases of COL are made from VAT registered suppliers who issued valid tax invoices to the company. COL has neither filed the VAT return nor paid the VAT for June 2019 to date. COL management has approached you as a tax consultant in a bid to address various tax issues. Required: (a) Determine the output tax for the month of October 2019, indicating the basis of your treatment. (15 marks) (b) Discuss whether CCL is entitled to claim any input VAT incurred for the month of October 2019 and comment on each item on which VAT was incurred. (25 marks) (c) Determine the VAT payable/claimable for October 2019. (5 marks) (d) Advise on the penalty arising from non-filing and non-payment of VAT for the month of June 2019. (5 marks) (Total 50 marks)