QUESTION TWO (20 MARKS) (a) Describe four tax policy challenges that the government is facing in the taxation of digital economy in your country. (8 marks) (b) TK Ltd. deals in both taxable and non-taxable supplies. The following transactions were extracted from the company's records for the month of September 2020. Sh. "000 Purchases from local market 912,000 Sales to local market 1.710,000 Imports (exclusive of customs duty) 600,000 Export sales - South Africa 700,000 Nigeria 350.000 Purchase of Lubricants 456,000 Restaurant services paid 63,840 Tax consultancy fees 45,600 Printing and stationery 17,100 Electricity bills paid 31,920 Exempt sales 480,000 Ambulance services 20.000 Audit fees 8,000 68,400 Additional information 1. Sales to the local market include goods supplied to Marine Fisheries and Fish Process Ltd. for Sh.114,000 2. Goods purchased at standard rate could not be directly identified from exempt sales. 3. The company received debit notes and credit notes of sh.22,800 and Sh.36,480 respectively from suppliers. 4. The customs duty for imported goods was at 20% 5. The company issued debit notes of Sh.74,100 in respect to sales at standard rate 6. Sales and purchases to and from the local market were inclusive of VAT at the rate of 14% plus other transactions where applicable. 7. A debtor of goods valued at Sh.28,500 was declared bankrupt and a debt relief waiver granted Note: Assume transactions are quoted as inclusive of VAT at the rate of 14%, unless otherwise specified. Required: Assuming that company did have proper records to identify standard purchases sold as exempt sales and therefore restricted deductible input-tax, compute the value added tax payable or refundable for the month of September 2020 (12 marks)