A VAT registered person declares Rs 500,000 as taxable input and takes credit for input tax amounting to Rs 65,000 in his VAT return for the month of August 2021, same filed to Mauritius Revenue Authority. A thorough tax audit on the taxpayer's file reveals that the taxable supplies and exempt supplies for the preceding accounting year amounted to Rs 3M and 2M respectively. Additional discrepancy is also noted whereby declared taxable inputs correspond to both his taxable supplies and exempt supplies. REQUIRED: State with possible reasons whether the credit for input tax claimed is correct? (7 Marks)

QUESTION 1 : PART B

No claim for VAT repayment has been made by an Airline Company on input VAT paid against its crew accommodation invoices charged by hotels, nor on passenger accommodations due to delayed flights. Provision of crews and passengers (i.e due to delays in flight) accommodation are part of the normal operating activity of the airline company .15% VAT payments against the hotel invoices issued, represent significant cost to the company when becomes payable. REQUIRED: State whether the 15% VAT charged by Hotels, against accommodation invoices issued in respect of crews' and passengers' during delayed flights can be claimed as input tax by the airline company? (6 Marks)

QUESTION 1: PART C

IFS Ltd is a company wholly engaged in supplying outsourced services to foreign clients. It was registered for VAT at Mauritius Revenue Authority on 1 October 2019. In its first VAT return filed at MRA, a claim for VAT repayment in excess of Rs 4 m was made as follows:-

Input VAT Rs

Capital goods imported 3,000,000

Other imports 700,000

Other goods and services purchased locally 300,000

4,000,000

REQUIRED:

(i) State with reasons if company IFS Ltd has made the correct claim for VAT amount

(ii) What are the tax implications for making a wrong claim of VAT repayment? (7 Marks)

QUESTION 2

Employment v/s Self Employment

Gig Bowen left university in July 2021 at the age of 22. He lives with her parents. On 01 August 2021, he was approached by his cousin, a guitarist in a rock band, who has asked him if he would be willing to organise the band's touring arrangements for the next 12months, starting on 01 January 2022.

The band has offered to pay Mr Gig Bowen a lump sum of Rs.30,000 under a contractual agreement , together with additional pay-outs of Rs.40,000 monthly over the period. Mr Gig Bowen has recently acquired a new 1600 cc car, list price Rs.700,000 and the band has agreed to pay him a mileage allowance as he will be required to commute to various sites around Mauritius island. The mileage allowance is estimated to be at least Rs.200,000 for the year under review.

Required

(a) Describe the criteria which are used to distinguish between employment and selfemployment. (8 Marks)

(b) Draft a report setting out the principal income tax implications for Mr Gig Bowen if he were to be regarded as: (i) employed; and (ii) self-employed. (12 Marks)