TAX INTRODUCTION EXERCISE

Question

You have been appointed as a Tax Officer in a newly established company. The Managing Director asks you to explain taxation to employees.

Required:

1. Define Tax.
2. Mention five objectives of taxation.
3. Explain the difference between Direct Tax and Indirect Tax.
4. Give three examples of taxes collected in Rwanda.

Question

Digital Encyclopedic Tech Ltd collected the following taxes during a training session:

• VAT collected: 180,000 Frw
• PAYE deducted: 250,000 Frw
• Withholding Tax deducted: 150,000 Frw

Required:

1. Identify the type of each tax.
2. State who bears the burden of each tax.
3. Explain why governments collect taxes.
4. Describe how taxation contributes to national development.