RATES OF TAX (Including wifes employment, self-employment and professional income rates of tax).

Year of income 2017.

Monthly taxable pay	Annual taxable pay	Rates of tax
		% in each shilling
Excess over38892	Excess over -466704
Personal relief Kshs. 1162 per month (Kshs.13,944 per annum)

Capital allowances:				Prescribed benefit rates of motor vehicles provided by employer
Wear and tear allowances:
	Class I							Monthly rates	Annual Rates
	Class I
	Class I
	Class I			Saloons, Hatch Backs & Estates
					Up to1200 cc
Industrial building allowances:
		Industrial buildings10%
Farm work allowances 100 %					Over 3000 cc
Shipping investment deduction 100%				Pick-ups, Panel Vans (Unconverted)
Mining allowance:					Up to 1750 cc				43,200
	Year 1-5 - 20% p.a.				Over 1750 cc
				Land Rovers/ Cruisers
				OR 2% of the initial capital cost of the vehicle for each month.
Commissioners prescribed benefit rates						Monthly rates	Annual rates
Services
Electricity (common or from generator)
Water (Communal or from a borehole)
Provision of furniture (1% of cost to employer) If hired, the cost of hire should be brought to charge
Telephone (Landline and mobile phones)						30% of bills
Agricultural employees
Water
Electricity

QUESTION ONE

Discuss five factors that could have led a number of countries to introduce capital gains tax in their economies

Citing relevant examples, explain the term tax arbitrage.

(i) Explain the meaning of the term tax tax planning

(ii) Outline four reasons why enterprises engage in tax planning

Describe the following approaches to adjusting the value of transactions for tax purposes in a transfer pricing environment:

Cost plus approach

Profit split approach

Resale price approach

Discuss six challenges faced by tax policy makers in developing countries in their efforts to achieve the desired objectives of taxation.