Paper 12: Public Finance and Taxation

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About Course

The Professional courses are administered at Foundation, Intermediate and Advanced Levels. Each level requires an average of one year, though candidates are advised to provide for an additional one year to meet requirements for internship/ practical experience.

A student must book for a minimum of three papers in a level in any order unless is exempted or has credits.

Prior to certification, candidates will be required to:

  • Attend workshops on ethics, soft skills and emerging issues organised by kasneb and ICPAK and earn IPD hours.
  • Obtain 1-Year practical experience, or alternatively attend workshops on work based simulation organised by kasneb and ICPAK.

This course is aimed at persons who wish to qualify and work or practice as professional accountants, auditors, finance managers, tax managers and consultants in related areas in both public and private sectors.

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Course Content

Overview

1. Introduction to Public Financial Management
1.1 Nature and scope of public finance 1.2 Sources of public finance 1.3 Objectives of the Public Financial Management Act and Financial regulations 1.4 Budget process for national, county and public entities, Development plan preparation, Treasury circulars, Cash flow projections, Budget estimates and revenue raising measures. 1.5 Role of the National Treasury and County Treasuries with respect to the management and control of public finance.

2. Relationship between National and County Governments on budget and economic matters
2.1 The process of sharing revenue between national and county governments and among the county governments: Factors considered and formula used 2.2 Division of revenue bill and county allocation of revenue bill 2.3 The role of the Commission on Revenue on Allocation (COR) 2.4 The role of the Council of Governors in county financial management 2.5 National Government public funds: The Consolidated Fund; The Contingency fund; The Equalisation fund and Other National Government public funds 2.6 County Government public funds; County Revenue Fund; County Government Emergency Funds and other county public funds 2.7 County government revenue sources.

3. Oversight Function in Public Finance Management
3.1 The role of National Assembly: Responsibilities of the National Assembly budget committee in public finance matters 3.2 The role of Senate: Responsibilities of the Senate budget committee in public finance matters 3.3 The role of Parliamentary Budget Office 3.4 The role of Auditor General 3.5 The role of Internal Audit 3.6 Role of Controller of Budget 3.7 The role of public sector accounting standards board

4. Procurement in public entities
4.1 Introduction to Public Procurement and Disposal (PPD) Act 4.2 Procurement guidelines as envisaged by PPD Act 4.3 Procurement process by National, County and other public entities: The role of the National Treasury, Public Procurement Regulatory Authority and Public Procurement Administrative Review Board 4.4 Tendering process and selection of suppliers in public sector 4.5 Concept of e-procurement

5. Public Private Partnerships Arrangements
5.1 Rationale and justification for Public Private Partnerships 5.2 Establishment of Public Private Partnerships (PPP) Unit in the National Treasury 5.3 Contract/project agreements, guidelines and standards 5.4 Composition and role of PPP petition committee 5.5 Establishment and role of PPP project facilitation fund

6. Public Debt Management
6.1 Establishment of debt management office 6.2 Objectives of debt management in public sector 6.3 Sources of public debt in Kenya 6.4 Management of debts by county governments and other public entities 6.5 Role of the Cabinet Secretary of the National Treasury in public debt management 6.6 Measures that can be adopted to reduce public debt

7. Introduction to Taxation
7.1 Definition of Tax, Taxation and Types of taxes in Kenya 7.2 History of taxation 7.3 Classification of taxes; Tax shifting and Factors that determine tax shifting 7.4 Principles of an optimal tax system 7.5 Types of tax systems; Single versus multiple tax systems 7.6 Purposes of taxation/Why the government levy taxes 7.7 Tax evasion and tax avoidance 7.8 Taxable capacity 7.9 Budgetary and Fiscal policies 7.10 The Revenue Authority; Structure, Functions, Large and Medium Taxpayers Office mandate

8. Taxation of Income
1.1 Introduction 1.1.1 Basis of charging tax in Kenya: Section 3 of the Income Tax Act 1.1.2 Concept of residency and Criteria of taxing income in Kenya. 1.1.3 Taxable and non-taxable persons 1.1.4 Specified Sources of income 1.1.5 Incomes exempted from taxation 1.2 Taxation of Employment income 1.2.1 Taxable cash and non-cash benefits/rewards received from employment 1.2.2 Non-taxable cash and non-cash benefits/rewards received from employment 1.2.3 Allowable deductions against employment income 1.2.4 Tax credits (withholding tax, personal and insurance relief, others) 1.2.5 Taxation of lumpsum payment for services rendered and services that would have been rendered; Gratuity, terminal dues, compensation for loss of office. 1.2.6 Operations of PAYE systems: Preparation of PAYE returns, categories of employees, multiple sources of income, irregularly paid employees, casual workers, PAYE audit and triggers 1.2.7 Other Statutory deductions (NSSF and NHIF) 1.2.8 All these should be illustrated with relevant computations including PAYE computations

9. Investment Allowances/deductions
9.1 Introduction to capital allowances and Rationale for capital deductions 9.2 Types of capital allowances; Theory and computations 9.3 Investment deductions; Ordinary manufacturers 9.4 Industrial building deductions 9.5 Wear and tear allowances 9.6 Farm works deductions 9.7 Shipping investment deduction 9.8 Other deductions

10. Administration of Income Tax and Tax Procedures
10.1 Registration and deregistration of tax payers 10.2 Personal identification number: Issue, uses, cancellation of a PIN 10.3 Taxpayer's tax representative: Appointment, liabilities and obligations 10.4 Tax Returns and Assessments: Self-assessment, Default assessment, Advance assessment, Amendment of assessments 10.5 Collection, recovery and refund of taxes 10.6 Tax Decisions, Objections, Appeals and Relief of mistakes 10.7 Voluntary Tax Disclosure Program 10.8 Administrative penalties and offences 10.9 Application of ICT in taxation: Practical use of iTax to file the returns

11. Administration of Value Added Tax (VAT)
11.1 Introduction to VAT, Basis of charging VAT and VAT rates 11.2 Rights and obligations of VAT taxable person 11.3 Registration and deregistration of businesses for VAT 11.4 Key terms in VAT: Input tax, Output tax, Supply, Time of supply/Tax point and Taxable value of a supply/Value for VAT supported with relevant calculations 11.5 Deduction of input tax 11.6 Accounting for VAT and VAT records 11.7 Taxable and non-taxable supplies: Zero rated supplies, Exempt goods and exempt services including restriction of input tax claim. 11.8 Privileged persons and institutions 11.9 Withholding VAT and withholding VAT agents 11.10 VAT returns and assessments including VAT Auto Assessments 11.11 Remission, rebate and refund of VAT 11.12 Changes to be notified to the commissioner 11.13 Offences, fines, penalties and interest

12. Customs Taxes and Excise Taxes
12.1 Purpose of customs and excise duties 12.2 Imposition of customs duty 12.3 Customs procedure 12.4 Bonded warehouse and bond securities 12.5 Goods subject to customs control 12.6 Refund of duty 12.7 The Simba System/Integrated Customs Management System 12.8 Imposition of excise duty 12.9 Excisable goods under excise control 12.10 Application for excise duty (licensing), issue of licences, Suspension and Cancellation of Licences 12.11 Excise stamps and Excisable goods management system 12.12 Refund of excise duty 12.13 Excise duty returns and payments 12.14 Offences and penalties

13. Miscellaneous fees and levies
13.1 Export levy 13.2 Import Declaration fee (IDF) 13.3 Railway Development Levy (RDL) 13.4 Stamp duty 13.5 Catering levy 13.6 Motor vehicle advance tax 13.7 Betting, Lotteries & Gaming taxes

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