1.

0 SUBJECT CODE AND NAME: C04: ADVANCED TAXATION

2.0 LEVEL: FINAL LEVEL

3.0 PRE-REQUISITE SUBJECT: B04

4.0 CONTACT HOURS: 120

5.0 SUBJECT DESCRIPTION

Advanced Taxation builds on the knowledge gained from B4 and further develops aspects of tax
related competencies which allow students to ensure tax compliance and identify opportunities for
tax planning, where appropriate. Both Tanzania and international dimensions of taxation will be
considered with skills being developed from analysis and evaluation of complex scenarios.

6.0 PRINCIPAL LEARNING OUTCOME

Apply knowledge of Tax laws in managing the tax affairs and administering compliance with tax laws
for both local entities and multinational companies.

7.0 INDICATIVE CONTENT AND SUPPORTING LEARNING OUTCOMES

7.1. INCOME TAXATION RULES APPLICABLE TO PARTICULAR TYPESOF

PERSONS/BUSINESS

7.1.1. Corporate Business Income Learners will be able to:

(a) Explain the general and specific rules of deductions.

(b) Describe the realization of business assets and liabilities

(c) Explain the taxation treatment of changes in ownership of an entity.

(d) Calculate depreciation allowances according to the 3rd schedule.

(e) Explain types of loss reliefs and their treatments.

(f) State the income tax rates applicable to corporates and calculate corporate income tax
payable using the appropriate corporate income tax rates

7.1.2. Taxation of Banking Business Learners will be able to:

(a) Explain the meaning of banking business.

(b) Discuss the taxation principles of banking business

7.1.3. Taxation of Trusts Learners will be able to:

(a) Explain the meaning of trust and unit trusts.

(c) Compute tax liability in the hands of beneficiaries

7.1.4. Taxation of partnership Learners will be able to:

(a) Explain the meaning of Partnership

(b) Explain taxation principles of partnershipbusiness

(c) Calculate the taxable profits of a partners

(d) Explain the similarities and differences between the calculation of taxable income for
corporations and partnerships.

7.1.5. Corporate Investment Income Learners will be able to:

(a) Explain the meaning Investment and itsdifferences from business

(b) Describe inclusions/component of investment income

(c) Describe exclusions/income not Included inInvestment income

(d) Explain allowable and non-allowable deductions of investment income

(e) Establish evaluate chargeable Investment Income

7.1.6. Tax Accounting for Long Term Contracts Learners will be able to:

(a) Describes the accounting for revenue and expenses under long-term contracts

(b) Explain the rules for accounting long term contracts transactions for income tax purposes

(c) Explain the treatment of unrelieved loss underlong- term contract

7.2. TAXATION OF SPECIALIZED INDUSTRIES

7.2.1. Taxation of Insurance Business Learners will be able to:

(a) Describe special rules related with computation of taxable of a person running General
InsuranceBusiness

(b) Describes special rules related with computation of taxable of a person running Life
Insurance Business

7.2.2. Taxation of Retirement Funds

Learners will be able to:

(a) Explain the meaning and types of retirement funds

(c) Describe taxation rules of approved retirement funds in the year they cease to be approved

(d) Explain taxation rules relating to transfer of funds among retirement benefits

7.2.3. Taxation of Charitable Businesses Learners will be able to:

(a) Explain the meaning of charitable or religious organization

(b) Describe taxation principles of charitable or religious organization

(c) Explain taxation rules when charitable Organisation or Religious Organization Ceases tobe
Charitable

7.2.4. Taxation of Clubs and Trade Associations Learners will be able to:

(a) Explain the meaning of a club and tradeassociation.

(b) Describes taxation principles of clubsand trade associations.

7.2.5. Taxation of mining and petroleum operations Learners will be able to:

(a) Describe fiscal regimes and instruments for mining and petroleum in Tanzania

(b) Describe special topics in mining and petroleum taxation (Ring-fencing, decommissioning,
rehabilitation, bonus payment and stabilisation)

(c) Describe taxation rules of petroleum operations in Tanzania.

(d) Describe taxation rules for midstream and downstream activities:

(e) Describe taxation rules of mining operations

(f) Describe taxation rules for processing, smelting and refining business

7.3. International Taxation

7.3.1 General principles of international taxation Learners will be able to:

(a) Explain the meaning and nature of international taxation and objectives of international tax
rules including the principle of capital import neutrality and capital export neutrality

(b) Discuss major issues in international taxation

(c) Describe the right of a jurisdiction to impose tax

(d) Explain residence-based taxation and describe alternative methods for determining
residence status of individuals and corporations

(e) Explain source-based taxation and describe typical rules for determining source of income
7.3.2 International double taxation Learners will be able to:

(a) Explain the meaning and effects of international double taxation of income and forms of
double taxation of income (juridical vs economic)

(b) Explain causes of juridical double taxation of income, (Conflicts of residence and source,
Conflicting definitions of connecting factors and other causes of international double taxation

(c) Analyse methods of eliminating Double Taxation (deduction method, exemption method,
credit method etc) including simple computations under the different methods of double taxation
relief

(d) Explain the difference between unilateral and bilateral double taxation relief and the
interaction between the two methods

7.3.3 Double Taxation Agreements Learners will be able to:

(a) Explain the meaning and nature of Double Taxation Treaties.

(b) Describe the functions of Double Taxation Treaties.

(c) Analyse the general approach to interpretation of a DTA

(d) Explain the Stages in the life of a double tax treaty and procedures for incorporation of the
treaty into domestic law

(e) Explain the relationship between tax treaties to domestic law and discuss the concept of
treaty overrides

(f) Explain a limitations on the use of double tax treaties by tax authorities

(g) Explain the concept of “treaty shopping” and methods

by which it may be countered by a taxing jurisdiction.

(h) Explain main Model Tax Conventions on Double Tax Agreement and the main differences
between the OECD and UN model DTA

(i) Explain Standard Chapters And Articles Of A Model DTA

(j) Describe the specific contents of the DTAs entered into by the United Republic of Tanzania.

7.3.4 Taxation of Permanent Establishments (PEs)

Learners will be able to:

(a) Discuss the meaning and types of Permanent Establishments

(b) Discuss the rationale for permanent establishment rules in income taxation

(c) Discuss the proposed changes contained within Action 7 of the OECD/G20 BEPS 2015 Final
Reports (Preventing the Artificial Avoidance of Permanent Establishment Status).
(d) Describe criteria for permanent establishments under digital economy

(e) Discuss the methods of attribution of profits to PEs

(f) Describe Taxation of Permanent Establishment’ under

the Tanzanian Income Tax Cap 332

7.3.5 Taxation of Controlled Foreign Corporations and Trusts

Learners will be able to:

(a) Discuss the meaning and rationale for controlled foreign trusts and corporations

(b) Describe the principles of taxation of controlled foreign trusts and corporations and its
members under the Income Tax Act, Cap 332

(c) Describe building blocks identified in the OECD final report on Action Point 3 of BEPS as the
design principles for CFC rules.

7.3.6 International Tax Planning and Avoidance Learners will be able to:

(a) Explain international tax planning and the need for international tax planning

(b) Describe tax planning and avoidance techniques employed by multinational firms

(c) Describe and apply general anti-avoidance provisions and specific anti-avoidance provisions
(anti-thin capitalization, anti- treaty shopping, CFCs rules, transfer pricing etc.)

(d) Describe judicial anti-avoidance doctrines (Business purpose rule, substance over form
principle, sham transaction, step transaction doctrine etc)

(e) Describe the scope and details of the OECD BEPS Project

7.3.7 Transfer Pricing Learners will be able to:

(a) Discuss the meaning of, and apply transfer pricing

(b) Discuss the rationale for, and evaluate introduction of transfer pricing regulations in Tanzania

(c) Describe the provisions of the Tanzania Transfer Pricing Regulations

(d) Describe recommended transfer pricing methods (comparable uncontrolled price; resale
price; cost plus; profit split; transactional net margin; other methods of transfer pricing.)

(e) Assess the basic comparability factors in the process of TP benchmarking

(f) illustrate Functional analysis

(g) Explain the provisions relating to Advance Pricing Agreement

(h) Explain the basic documentation requirements for transfer pricing benchmarking
(i) Describe a specific transactions ( Intra-group services, financing, Intangible property,
commodity transactions etc)

7.3.8 Thin Capitalization Learners will be able to:

(a) Explain the meaning of the term

‘’thin capitalisation’’

(b) Describes the reasons why entities may choose to be thinly capitalised.

(c) Explain various approaches to prevent thin capitalisation

(d) Describes thin capitalisation rules in Tanzania

(e) Describe the final report on Action Point 4 of the BEPS Project

7.3.9 Tax havens

Learners will be able to:

(a) Explain the meaning and features and uses of taxhavens

(b) Explain main types of tax havens

(c) Describe forms of tax avoidance in tax havens

(d) Describe incentives for a country to become atax haven

(e) Explain and evaluate the cost of tax havens to LDCs

(f) Describe and assess the OECD Committee on Fiscal Affairs(CFA) harmful tax competition
report

7.4 Value Added Tax

7.4.1 Partial Input Tax Credit Learners will be able to:

(a) Describe partial input tax credit

(b) Explain annual input tax adjustments

(c) Describeother VAT adjustments

7.4.2 VAT on Specialized Transactions and Entities Learners will be able to:

(a) Describe VAT implication on sale of an economicactivity as a going concern

(b) Describe Value Added Tax on Insurance businesses

Learners will be able to:

(a) Describe the circumstances for, apply and evaluate VAT refunds

(b) Explain the requirements for effecting VAT refunds

(c) Explain procedures for VAT refunds

(d) Describe VAT refunds procedures to diplomats and international bodies

7.4.4 Administrative Provisions for VAT Learners will be able to:

(a) Describe returns and notices under VAT

(b) Describe documents, Records and accounts to be kept for VAT purposes

(c) Describe the consequences of not meeting the filing and payment

(d) State the VAT offences from non-compliance.

(e) Describe the electronic fiscal devices system, its benefits and the possible revenue risks
involved

7.5 Tax Administration

7.5.1 Self-Assessment for Entities Learners will be able to:

(a) Explain the Self-Assessment System and theprocess for making self-assessment

(b) Explain Tax payable on the assessment and duedate for payment

(c) Explain the procedures for payment of Incometax by quarterly instalments

(d) Calculate Interest for underestimating Tax payable and failure to pay tax and penalties for
failure to file tax returns.

7.5.2 Settlement of Tax Disputes Learners will be able to:

(a) Explain causes of tax disputes and measures toavoid tax disputes

(b) Explain Handling of Tax objections in Tanzania

(c) Explain use Tax Revenue Appeals system in Tanzania

7.5.3 Tax audit and investigation Learners will be able to:

(a) Explain the nature and meaning of tax audit, Rules of tax audit, purpose of tax audit and tax
audit techniques.
(b) Describe the nature and meaning of tax investigation, rules of tax investigation, reasons for
tax investigation, types of tax investigation and approaches for tax investigation.

(c) Explain the roles of the taxpayers in tax audit and investigation.

(d) Describe application of tax audit in multinational companies

7.6 Taxation of the digital economy Learners will be able to:

(a) Explain the concept of digital economy.

(b) Discuss the existing legal/administrative framework for taxing digital transactions in Tanzania

(c) Explain the key challenges of taxing digital goods and services in Tanzania.

(d) Discuss the Action 1, of the OECD BEPS 2015 Final Reports (Addressing the Tax Challenges of
the Digital Economy).

7.7 Tax incentives and competition for investment Learners will be able to:

(a) Explain the meaning, nature and types of tax incentives

(b) Identify tax incentives available under various laws in Tanzania

(c) Explain how tax incentives influence investment location decision

(d) Describe argument for and against tax incentives

(e) Evaluate the effectiveness of various tax policies and incentives in attracting investment

(f) Explain the role and influence of non-tax factors in attracting investment

(g) Explain the meaning, rationale and practice of tax competition

(h) Explain the difference between ‘tax competition’ and ‘harmful tax competition’

(i) Discuss the positive and negative effects of tax competition on the
economy

7.3 Tax reforms and emerging issues

Learners will be able to:

(a) Discuss tax reforms made within the last 12 months

(b) Describe tax implications of emerging issues both locally and internationally.