Revenue Authority has recently set up a unit to deal with tax issues of large taxpayers, who are currently producing about 60% of the total tax revenue.

Required:

List any four categories of taxpayers falling under the Large Taxpayer Unit (LTU). ( 2marks)

(b) The management of Doshi (K) Ltd. has furnished you with the following statement in respect of its profits for the year ended 31 December 2000.

Summary of profits for the year 2000

	Sh.
Profit from manufacturing Interest from a south African Bank Dividends from Associated Company Royalty received from Zambia Interest from Barclays Bank Ltd (net)	36,000,000 1,000,000 12,000,000 8,000,000 425,000 57,425,000

Additional information:

1. Profit from manufacturing has been arrived at after charging:

(i) Legal expenses amounting to Sh.1,000,000 which comprised the following:

Transfer of shares from a subsidiary Sh.200,000

Prosecution of one of the companys managers involved in bank fraud Sh.350,000.

Collecting bad debts sh.150,000

Obtaining a bank overdraft Sh.180,000

Preparation of a business agreement with a distributor sh.120,000.

(ii) Expenditure on scientific research of sh.400,000 paid to a public university to perfect a product design.

(iii) Depreciation of Sh.7,200,000 on the following assets:

Asset Factory building Factory machinery Factory extension Computers 4 tonne transport trucks New machinery Furniture

Year 2004 2005 2006 2005 2005 2006 2005

Cost in Sh. 9,000,000 (including store Sh.4,000,000) 3,000,000 4,000,000 800,000 3,600,000 (one sold for Sh.1,000,000 in the year 2006) 2,000,000 1,400,000 (Excess sold for Sh.400,000 in the year 2006)

The factory extension and new machinery were brought into use with effect from 1 January 2006.

Doshi (K) Ltd. owns 22% of shares of the company that paid the dividends

The royalties were paid by Doshi (K) Ltd.s subsidiary in Zambia

in 1999 Doshi (K) Ltd.s tax liability was Sh.9,500,000.

Required:

(i) The capital allowances due to Doshi (K) Ltd in the year 2000. (6 marks)

(ii) The profit (loss) chargeable to tax for the year 2000. (4 marks)

(iii) Tax payable by Doshi (K) Ltd. for the year 2000 indicating when it is payable. (3 marks)

(iv) Assuming that the management of Doshi (K) Ltd. did not pay the tax computed

in (iii) above by the due dates, calculate the late filing return penalty, late payment

penalty and late payment interest payable by 30 November 2001. (5 marks