URA WINS LEGAL BATTLE TO TAX TERMINAL BENEFITS.
#TaxJudgementsUg*1
In 2009, Siraje Hassan Kajura filed a suit that turned out to be a game changer in tax administration, as the Ugandan public had for long held divided views on whether or not retrenchment packages or...
#TaxJudgementsUg*2
...terminal benefits are taxable. The subject drew URA and Mr. Kajura and 160 other former employees of the defunct Dairy Corporation Ltd in a legal duel, after their retrenchment in August 2006....
#TaxJudgementsUg*3
...The Privatization Unit of @mofpedU (Ministry of Finance Planning and Economic Development) had subjected the retrenchment packages of these senior citizens to Pay As You Earn, and remitted to URA tax of Ugx. 1,130,778314.
#TaxJudgementsUg*4
...Mr. Kajura challenged the taxation of their benefits in the High Court, lodging civil suit no. 117 of 2009, arguing that, the packages paid to them were not employment income but rather a ‘thank you’, following the privatization of the Diary Corporation...
#TaxJudgementsUg*5
...In his judgment, Justice V.F Musoke Kibuuka ruled in favour of Mr. Kajura declaring that, URA unlawfully charged PAYE on the terminal benefits, thereby ordering refund of the taxed amount, with interests, general damages and costs...
#TaxJudgementsUg*6
...Being dissatisfied with the High Court decision, URA appealed to the Court of Appeal, under civil appeal no. 26 of 2013, arguing that, retrenchment packages and terminal benefits generally, are taxable under the Income Tax Act...
#TaxJudgementsUg*7
...The Court of Appeal, in a Judgment of 7th July 2013, agreed with the High Court, that terminal benefits were not meant to be taxed...
#TaxJudgementsUg*8
...Not satisfied, URA further appealed in the Supreme Court in 2015, contending that the items in the package paid to Mr. Kajura and his colleagues were indeed taxable and qualified as compensation under the Income Tax Act...
#TaxJudgementsUg*9
...The Supreme Court agreed with URA, in its decision handed down on 20th December 2017, that terminal benefits or retrenchment packages are indeed taxable and URA was right in taxing them...
#TaxJudgementsUg*10
...Feeling aggrieved by the Supreme Court ruling, Mr. Kajura filed an application for review in 2018, under civil application no. 26 of 2018, asking the very Court to revisit and ‘correct’ its judgment, alleging the Supreme Court was in error...
#TaxJudgementsUg*11
...in deciding as it did in 2017. On 10th September 2020, the Supreme Court dismissed Mr. Kajura’s case, with costs, terming it a disguised appeal to the very Court that had ruled on the same matter already, in 2017...
#TaxJudgementsUg*12
...This land mark decision has cleared all doubts in the minds of the taxpayers that indeed terminal benefits are taxable...
#TaxJudgementsUg*13
...“The value of this decision is unquantifiable, in monetary terms. This decision means the @GovUganda would've been exposed to the risk of revenue loss, had the case gone against URA...
#TaxJudgementsUg*14
...The Government would have to refund all terminal benefits that have ever been taxed by URA from retirees/ retrenchees,” said URA’s Assistant Commissioner Litigation, Mr. George Okello.
#TaxJudgementsUg*15
Between April to June, 2020, URA registered 17 Court wins, out of 26 cases concluded. Out of these, 5 were settled, while 4 were lost, some of which have been appealed to higher courts.
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.