James was a sole trader. He presented his income statement to KRA.

Revenues
Cost of sales		6,000,000
Gross profit		2,600,000
Operating expenses		3,400,000
Administrative expenses	1,200,000
Donations	300,000
Amortization expense	200,000
Preliminary expenses	100,000
Purchase of furniture	2,000,000
Depricication	500,000
Provision for bad debts	150,000
Allocation costs	70,000
Bad debts	120,000
Total expenses		4,640,000
Net Loss		1,240,000

Required

I) Ascertain the taxable income of James for the year 2022.

II) Compute the tax liability of James for the year of income 2022.

III) Explain the tax terminology Pay As You Earn (PAYE).