Public Finance and Taxation Notes

Download Public Finance and Taxation KASNEB Notes



This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to comply with and implement public financial management regulations and compute taxes for various entities.


A candidate who passes this paper should be able to:

  • Comply with the regulatory framework in public financial management (PFM)
  • Compute tax for various entities
  • Manage the budgetary process, public revenue and control public expenditure in national and county governments
  • Apply the written tax law in addressing various tax issues
  • Manage non-complex public financial management issues in public entities.


Introduction to public financial management

  • Nature and scope of public finance
  • General overview of public financial management as envisaged by the Constitution
  • Role of the national and county treasuries
  • Overview of the Public Financial Management Act
  • Financial regulations
  • Treasury circulars; meaning and application
  • Process of developing national and county government finance bills
  • Role of budget officers in budget preparation and execution
  • Responsibilities of the national and county treasuries in relation to budget preparation
  • Budget process for both national, county and public entities

Establishment of public funds in the public sector

  • Provision of establishing public funds
  • Rationale of creation of public funds
  • The Consolidated Fund
  • The establishment and administration of contingency funds
  • The establishment and administration of equalisation funds
  • County revenue sources

Supply chain management in public entities

  • Definitions and terminologies
  • General overview of Public Procurement and Disposal (PPD) Act
  • Procurement guidelines as envisaged by PPD Act
  • Committees responsible for procurement
  • Procurement process by National, County and other public entities
  • Tendering process and selection of suppliers in public sector
  • Concept of e-procurement

Oversight function in public finance management

  • The role of National Assembly
  • The role of Senate
  • The role of County Assembly
  • The role of Auditor General
  • The role of Internal Audit
  • Role of Controller of Budget in relation to disbursement of public funds as envisaged by the Constitution and PFM Act, 2012

Download Public Finance and Taxation KASNEB Notes

Introduction to taxation

  • History of taxation
  • Types of taxation
  • Principles of an optimal tax system
  • Single versus multiple tax systems
  • Classification of tax systems
  • Tax shifting
  • Factors that determine tax shifting
  • Tax evasion and tax avoidance
  • Taxable capacity
  • Fiscal policies
  • The Revenue Authority; history, structure and mandate

Taxation of income of persons

  • Taxable and non-taxable persons
  • Sources of taxable incomes
  • Employment income:
  • Taxable and non-taxable benefits
  • Allowable and non-allowable deductions
  • Tax credits (withholding tax, personal and insurance relief, others)
  •  Incomes from past employment
  • Business income:
  • Sole proprietorship
  • Partnerships (excluding conversions)
  • Incorporated entities (excluding specialised institutions)
  • Turnover tax
  • Income from use of property- rent and royalties
  • Farming income
  • Investment income
  • Miscellaneous taxes and other revenues
  • Stamp duty
  • Catering levy
  • Motor vehicle advance tax
  • Capital gains tax

Capital deductions

  • Rationale for capital deductions
  • Investment deductions: ordinary manufacturers
  • Industrial building deductions
  • Wear and tear allowances
  • Farm works deductions
  • Shipping investment deduction
  • Other deductions

 Administration of income tax

  • Registration and deregistration of tax payers
  • Assessments and returns
  • Operations of PAYE systems: Preparation of PAYE returns, categories of employees
  • Statutory deductions (NSSF and NHIF)
  • Notices, objections, appeals and relief for mistakes
  • Tax decisions; objections and appeals
  • Collection, recovery and refund of taxes
  • Administrative penalties and offences
  • Application of ICT in taxation: iTax

Customs taxes and excise taxes

  • Customs procedure
  • Import and export duties
  • Prohibitions and restriction measures
  • Transit goods and bond securities
  • Purposes of customs and excise duties
  • Goods subject to customs control
  • Import declaration form, pre-shipment inspection, clean report of findings
  • Excisable goods and services
  • Application for excise duty (licensing)
  • Use of excise stamps
  • Offences and penalties
  • Excisable goods management system

Emerging issues and trends

Download Public Finance and Taxation KASNEB Notes

One thought on “Public Finance and Taxation Notes”

Leave a Reply

Your email address will not be published. Required fields are marked *