GODFREY CHEGE, THE ACCOUNTANT

I had difficulties understanding the concept of BALANCING DEDUCTION and BALANCING CHARGE. These were my class notes below. I hope they will help in your case. The rates used refers to Kenya case only. In case of queries, you know how to get me.

The simplest notion of tax incidence (formal incidence) concerns the question of who is assessed to pay a tax. Thus, the formal incidence of an income tax falls on the income earner; the formal incidence of a petrol tax falls on the petrol company. On the other hand, the tax burden is the person or institution that eventually bears the responsibility of paying the tax (who carries the burden created by tax imposition).

Globalization and liberalization has substantially influenced the nature of industrial relations (IR) policies being followed by employers. This has reduced the power of trade unions. Some social scientists caution that severe social tensions will result from acute economic inequality that will result from these policies in the next few decades (Towers, 1997; Szell, 2001). They see a severe weakening of countervailing power in society as well. The frameworks of IR of different organisations in the new environment are being oriented to new business exigencies. Strategic shifts in management's approach to manage IR are noticeable at covert as well as overt levels (Venkata Ratnam, 2001; Saini, 2003). These are resulting in new types of negotiated settlements, which reflect a greater degree of employee cooperation (Venkata Ratnam, 2003).

How taxes, government expenditure have helped Kenya in achieving the three functions of fiscal policy namely resources allocation function, distribution function and stability of the economy.

A private foreign investment is an investment made by a private individual or a private entity in a foreign country.

  According to Bruton (1998), Import Substitution is substituting the imported goods with the locally produced goods in order to meet the internal demand.

A multinational firm mostly regarded as Multinational Corporations (MNCs) is a firm that views the world as consisting of unique parts and markets to each pat differently.

Export Processing Zones (EPZ) program came into existence in 1990 following the enactment of CAP 517 Laws of Kenya, which also created the Export Processing Zones Authority (EPZA), as the regulatory body. However, while the program was officially adopted in 1990, production activities did not take off effectively until 1993. The introduction of the program follows several studies indicated their viability, thus making Kenya one of the early African countries to adopt EPZ in the 1990s. The factors which favoured establishment of EPZs in Kenya included among others, relatively large and dynamic private sector, a low cost but well trained labour force and relatively good infrastructure.