This question was very popular with the candidates.   Majority of the candidates that attempted it knew the requirements and gave good answers.  The overall candidates’ performance in the question was very good.

Some of the points candidates identified in their answers to score high marks included:

(a)   -    A direct tax is a tax on incomes and properties.  Examples include persona income tax, company tax, death duties, inheritance tax, capital gains taxes, etc.

            Whereas

        -   An indirect tax is tax on goods and services.  Examples include sales tax, import
            and export duties, excise tax, purchase tax, value added tax, etc.

(b)    (i)   absence of reliable records of business activities and revenues collected.

         (ii) the prevalence of subsistence production.

         (iii) corruption on the part of tax officials.

          (iv) high level of tax evasion and tax avoidance  etc.