Course Catalogue

Module Code and Title:      BLT202 Financial and Business Tax Management

Programme:                                      Bachelor of Business Administration

Credit Value:                                     12

Module Tutors:                                 Tika Ram Sharma, Arindam Ghosh,

Module Coordinator                         Tika Ram Sharma

General Objective: The module aims to introduce students to the basic taxation and financial management tools used for efficient operations of business. With introduction to basic financial tools students will be able to understand how business decision-making are made based on such tools. Introduction to basic taxation concepts will develop the students ’basic competence in tax computation, tax filing, and institutional tax planning for both national and international level.

Learning Outcomes - On completion of the module, students should be able to: 

  1. Calculate the tax liability of individuals, business organizations and corporations
  2. Discuss the process for filing of business and corporate income tax returns in Bhutan
  3. Compute present value and future value of single and multiple cash flows
  4. Explain different financing sources of firms under money and capital markets
  5. Analyse the importance of cash management, inventory management, and receivables and payables management
  6. Evaluate the feasibility of business opportunities using the time value of money by using sample businesses
  7. Select appropriate and effective tax strategies for domestic and international tax planning
  8. Choose effective management decisions using tax planning concepts and calculations
  9. Evaluate capital projects using payback period, internal rate of return, net present value and profitability index techniques

Teaching and Learning Approach:

Approach

Hours per week

Total credit hours

Lectures

2

30

Class discussions, tax problem solving, planning exercises, quizzes

1

15

Group discussion, case discussion, project and presentation

1

15

Independent study, written assignments, case studies

2

60

Total

120


Assessment Approach:

A. Quizzes: Portion of Final Marks-20%

The four quizzes (5% each, covering approximately 3 weeks of material, of 30 min duration) will have questions based on the basic fundamentals of taxation. Each student will answer 10 objective type questions on (each quiz) on basic concepts of taxation, problem identification, understanding and definitions.

B. Case Study: Portion of Final Marks-15%

Each student will complete one case on corporate tax planning, based on calculation and analysis of taxability under corporate income tax.

5%       accurate assessment of the relevant corporate income tax, its computation and analysis

5%       how effectively the factors of tax planning are used to analyse the problem

5%       deriving suitable conclusion for the problem given

C. Project and Presentation: Portion of Final Marks-20%

(10% for the project & 5% for presentation of the project)

The project shall be a small group project (groups of 4). The paper of 2000 words includes rationale, data, economic analysis, conclusions and references. The group presentation will be approximately 20 minutes using power point presentations and explanation, including Q&A.

3%       description of the problem and related tax issues and rationale

5%       using appropriate analysis techniques

2%       quality of the writing (language, organization, referencing)

5%       presenting the project to the class (English fluency, understanding of the subject, body language, class Q&A) – individually assessed

5%       individually assessed process score based on contribution to group output

D. Midterm Examination: Portion of Final Marks-15%

Students will take a written exam of 2-hour duration covering topics up to the mid-point of the semester.

E. Semester-end Examination: Portion of Final Marks-30%

The module will have a semester-end exam for 2 hours covering the entire syllabus. The question will be divided into two parts – Part A (carrying 40% of the exam weightage) will be mostly of short answer including objective questions. Part-B (carrying almost 60% of the exam weightage) will be mostly of essay type or an extended response to the given question. This part of the question requires students to apply, analyse, and evaluate or construct knowledge and skills. Cases will also be used to test the levels of knowledge.

Areas of Assignments

Quantity

Weighting

A.    Quizzes

4

20%

B.    Case study on tax planning

1

15%

C.   Project and presentation

1

20%

D.   Midterm Examination

 

15%

Total Continuous Assessment (CA)    

 

70%

E.   Semester-end Examination (SE)          

 

30%

TOTAL

 

100%


Pre-requisites:BLT101 Legal Considerations in Business

Subject Matter:

  1. The Nature and Purpose of Financial Management
    • Difference between accounting and finance
    • Concept of financial management and financial planning
    • Financial management decisions –investment, financing and dividend
    • Financial objectives and the relationship with corporate strategy
    • Profit vs shareholders’ wealth maximization
    • Non-financial objectives
      • Employee welfare
      • Service provision
      • Corporate Social Responsibility
    • The relationship between business entity and the government
      • Taxation
      • Encouraging new investments
      • Encouraging employment, wider share ownership and entrepreneurship
      • Legislations
      • Economic policy
    • Remuneration schemes and performance
      • Performance related remuneration
      • Rewarding managers with shares
      • Executive share option plans
    • Objectives of not-for-profit organizations
      • Value for money
      • Service effectiveness
  1. The Financial Environment
    • Financial intermediaries
      • Concept
      • Roles
    • Financial Markets
      • Money markets
        • Discount and Treasury bills
        • Commercial paper
        • Negotiable certificate of deposits
      • Capital markets
        • Debt
        • Stocks
        • Commodities
      • Securitisation
      • International money and capital markets
        • Dollar market
        • Euro market
        • International bond markets
  1. Time Value of Money
    • Future value
      • One period case
      • Multiple period case
      • Future value and compounding
    • Present value and discounting
      • Perpetuity
      • Annuity
      • Mortgages
    • Computation of interest rate and effective rate of interest
  1. Investment Management
    • Managing working capital
      • Cash management
      • Inventory management
      • Receivables and payables management
    • Capital budgeting decisions
      • Types of investment decisions
      • Techniques of evaluating investment proposals
        • Discounted cash flow methods
          • NPV
          • PI
          • IRR
        • Non-discounted cash flow methods
          • Payback period
          • ARR
  1. Introduction to Taxation
    • Introduction to the concept of tax
    • Types of taxes
    • Tax rules for individuals, business and corporate houses
    • Concepts and applications of Income Tax Act, income tax rules, amendments and alterations in tax laws in Bhutan time to time
    • Different cannons of taxation and their application for better tax planning
    • Different elements of tax for computing tax liabilities for individuals and business
      • Tax rates
      • Tax base
      • Entities and person
    • Residential Status and taxability of individual
      • Residential Status of individual
        • Residents
        • Non-residents
        • Citizens and persons
  1. Introduction to Corporate Income Tax (CIT) and Business Income Tax (BIT) in the Context of Bhutan
    • Tax liabilities under business and corporate tax
    • Corporate and business tax liabilities
      • Full tax liability
      • Limited tax liability
    • Preparation of accounts as per income tax rules and computation of corporate and business income tax
    • Tax administration of BIT and CIT including recovery measures
    • Fines and penalties
  1. Tax Planning and Business Decision
    • Business tax environment and incentives – its influences on business decisions.
    • Different tax incentives available to tax payers in Bhutan
      • Selection, location, and formation of the business organization
      • Divestment and tax advantage
  1. International Tax Planning
    • Factors influencing International tax planning through tax reliefs, tax holidays and incentives for business establishments
    • Taxation problems and incentives with FDI Companies
    • Methods of Tax planning, tax minimization, incidence of double taxation and relief
    • Differences between tax planning, management and minimization vs. avoidance and evasion

Reading Lists:

  1. Essential Readings
    • Ross, S., Westerfield, R., Jaffe, J., & Jordan, B. (2015). Corporate finance (11th ed.). New Delhi: McGraw Hill.
    • Karlson, L.C. (2015). Corporate value creation: An operations framework for nonfinancial managers (1st ed.). Wiley Corporate F&A.
    • Siciliano, G. (2014). Finance for nonfinancial managers (2nd ed.). McGraw-Hill Education.
  2. Additional Readings
    • Dinkar, P. (n.d.). Direct tax planning and management. New Delhi; Sultan Chand and Son.
    • Girish, A., & Gupta, R. (2016). Simplified approach to corporate tax planning and management (17th ed.). Delhi: Bharat Law House.
    • Ministry of Finance. (2001). Income Tax Act of the Kingdom of Bhutan (2001). http://www.mof.gov.bt/wp-content/uploads/2014/07/RulesOnIncomeTax3rdEd.pdf
    • Ministry of Finance. (2005). Income Tax Rules of the Kingdom of Bhutan (2005). http://www.mof.gov.bt/wp-content/uploads/2014/07/RulesOnIncomeTax3rdEd.pdf

Date: July, 2017
Royal Thimphu College