SCHOOL OF BUSINESS, ECONOMICS AND MANAGEMENT AFIN208: PRINCIPLES OF TAXATION Page 1 of 6
UNIVERSITY OF LUSAKA BACHELOR OF ACCOUNTANCY PROGRAMME AFIN208 TAXATION COURSE OBJECTIVES The objectives of this course are to give students an understanding of the concepts of taxation and how these are applied in the implementation and administration of tax. Page 2 of 6
CONTENTS 1.0 Introduction to Taxation Definition of taxation The role of taxation Canons of a good taxation system Types of taxes in Zambia Direct Vs Indirect Byrates (Progressive, Regressive and Proportional taxation systems) Capital Vs Revenue Tax regulation in Zambia The Structure and functions of the Zambia Revenue Authority Sources of taxation law Residence of persons Residence of individuals Residence of persons other than individuals Taxable and Exempt Persons Taxable/Exempt income 2.0 Personal Income Taxation Taxation of Individuals Meaning of an Office Taxation of Self Employed Individuals Tests on employment The Pay-As-You-Earn (PAYE) System Meaning of emoluments Principles of PAYE Computation of PAYE Tax refunds Cash benefits Vs Fringe benefits 3.0 Taxation of business profits Meaning of business Badges of trade Taxable business profits Accounting profits Vs Taxable profits Capital Expenditure Vs Revenue Expenditure Wholly & Exclusively Principle Rules on Expenditure Allowable and Disallowable expenses Page 3 of 6
Treatment of certain expenses such as depreciation, renewals and repairs, bad debts, travel, subscriptions, gifts and entertainment etc Rules on income Taxable and non-taxable income Treatment of certain income lines such as dividends, interest income and profits on disposal 4.0 Capital Allowances Accounting profits Qualifying and Non-Qualifying Expenditure Plant, Equipment and Machinery Finance and Operating Leasing Hire purchase Buildings Industrial Buildings Low Cost Housing Commercial Buildings Disposal of capital items Balancing Allowances Balancing Charges (Capital Recoveries) 5.0 Basis of assessment Basis period Accounting period Vs Charge year Basis of assessment Change in accounting dates Overlap profits Commencement rules Cessation rules 6.0 Taxation of Partnerships Definition of a partnership Legal partnership agreement Liability of a partnership Mutual participation Division of profits and losses Changes in the partnership agreement Treatment of Capital allowances Computation of Partners Tax liability Page 4 of 6
7.0 Taxation of Farming Businesses Sources of income Aggregation of income Capital allowances Farming implements Farm works Farm improvements Development allowance Computation of tax liability for farming enterprises 8.0 Taxation of Small & Medium Enterprises Qualification Rules for SME s Applicable Income Sources SME Taxation Regimes Presumptive Taxes & turnover Taxes Property Transfer Tax (PTT) Turnover Tax Tax Reliefs 9.0 Customs & Excise Value for Duty Purposes Administration of Customs & Excise Duties Customs duties Excise duties Import VAT Advance Income Tax Tariffs and Quotas Assessment of tax liability 10.0 Value Added Tax (VAT) Basic Principles Scope of VAT Benefits of VAT System Tax point Rates of VAT Standard rated Zero rates Exempt supplies Registration Statutory registration Voluntary registration Page 5 of 6
Cash accounting Vs Invoice accounting Tax invoices Features of a tax invoice 11.0 Company Income Taxation Sources of income Taxable business profits Investment income Rules on expenditure Free accommodation benefits Personal to holder vehicle benefits Differently abled persons allowance Taxation of investments Rental income Interest Income Dividends Grossing-up Income Computation of Tax Liability 12.0 Tax Planning Outline of Issues in Tax Planning Tax Avoidance Vs Tax Evasion COURSE OUTCOMES At the end of this course, candidates are expected to be able to demonstrate knowledge and understanding of taxation concepts and compute tax liabilities for incorporated and unincorporated businesses. Recommended Reading Taxation, Principles and Practices by Abraham C Mulolani Income Tax in Zambia by MD Kamanga Taxation in Zambia by Mohamed Mulenga Zambian Tax Acts (Income Tax, VAT Act, Customs & Excise Act and Investment/ZDA Act) ZRA Website (Practice notess & Guides on Income Tax, VAT, Customs & Excise and other taxes) ASSESSMENT CRITERIA Tests & Assignments 40% Final Examination 60% Page 6 of 6