Employment Income

Uganda Revenue Authority Vs Kajura (CIVIL APPEAL N0.09 OF 2015) [2017] UGSC 63 (20 December 2017);


Search Summary: 

This was a second appeal by the appellant
against the decision of the Court of Appeal
which ruled that terminal benefits paid to the
respondents were not taxable under Section 19
of the Income Tax Act. The background is that
the respondents were retrenched and awarded
terminal benefits for which they sought from
the appellant the tax due. The appellant
reviewed and presented a sum that was
contested by the respondents and the high court
ruled that the amount given to the former
employees was akin to gratuity which was tax
exempt. The court of appeal agreed with the
trial court hence this appeal.

Headnote and Holding: 

The court considered whether the appellants
unlawfully taxed the respondents.
The court held that it is untenable to assert that
the package is taxable merely because of the
manner in which it has been described and
itemized. Further the retrenchment packages as
were given to the respondents are not expressly
or by necessary implication provided for under
Section 19 (1) (a) of the ITA. That that
provision is clear and unambiguous and only
provides for employment income inclusive of
the heads expressly provided for. That the Act
doesn’t expressly provide that the taxable
benefits are only those attained while in active
employment. That if it were the intention of the
parliament, the parliament would have

specifically stated so. That the duty to pay
taxes is sanctioned by the Constitution. Unless
exempted, the obligation to pay income tax is
The fact that the compensation is not defined in
the ITA and the fact that PERD Act provided
for compensation under S. 21 thereof does not
mean in the least that the benefits were subject
to tax.


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