Wakilii

International School of Uganda v Uganda Revenue Authority [2025] UGTAT 12

Tribunal · 2025 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging income tax assessment on interest from fixed deposits
Decision
Application allowed with costs to the Applicant; assessment set aside

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that withholding tax deducted by a financial institution on interest paid to an exempt organization is a final tax under Section 139(a) of the Income Tax Act. The provision envisages two alternate scenarios: tax withheld on treasury bills or government securities by the Bank of Uganda, or tax withheld by a financial institution on payments to a resident individual or exempt organization. The Applicant, holding a valid exemption certificate as an educational institution, qualified as an exempt organization. No further tax liability could be imposed on the interest income.

Outcome

Application allowed with costs to the Applicant; assessment set aside

Facts

The Applicant, an educational institution, held an income tax exemption from the Respondent for 2016-2020. During this period, the Applicant earned Shs. 1,053,010,485 as interest from fixed deposit accounts with Stanbic Bank. Stanbic Bank withheld tax at 15% on these interest payments and remitted it to the Respondent. The Applicant declared the interest as exempt income. The Respondent issued an assessment totalling Shs. 315,903,143, arguing that withholding tax on fixed deposit interest is not a final tax under the Income Tax Act and that the Applicant owed additional tax at 30%. The Applicant objected, contending that withholding tax on interest paid by a financial institution to an exempt organization is a final tax under Section 139(a) of the Income Tax Act. The Respondent upheld the assessment, stating that final tax treatment applies only to treasury bills and government securities. The Applicant brought this application before the Tribunal.

Issues

  1. Whether withholding tax deducted by a financial institution on interest paid to an exempt organization constitutes a final tax under Section 139(a) of the Income Tax Act.
  2. Whether the Applicant is liable to pay the assessed income tax of Shs. 315,903,143 on interest earned from fixed deposits.

Orders

  • Application allowed.
  • Declaration that the tax withheld at source by Stanbic Bank is a final tax.
  • Declaration that the assessment of Shs. 315,903,143 is unlawful.
  • Declaration that the Applicant is not liable to pay the assessed tax.
  • Costs awarded to the Applicant.

Rules and key headnotes

Tax Law — Withholding Tax — Final Tax Treatment — Interest Paid by Financial Institution to Exempt Organization
Under Section 139(a) of the Income Tax Act, withholding tax deducted by a financial institution on interest paid to an exempt organization is a final tax, and no further tax liability may be imposed on the taxpayer in respect of that income.
Statutory Interpretation — Plain Meaning Rule — Disjunctive Provisions
Section 139(a) of the Income Tax Act envisages two alternate scenarios separated by the disjunctive 'or': tax withheld on treasury bills or government securities by the Bank of Uganda to any person, or tax withheld by a financial institution on payments to a resident individual or exempt organization. The plain meaning of the statute must be applied without reading in restrictions not present in the text.
Tax Law — Exempt Organizations — Definition and Qualification
An educational institution that has been issued a written ruling by the Commissioner General stating that it is an exempt organization qualifies as an 'exempt organization' within the meaning of Section 2 of the Income Tax Act, provided none of its income or assets confers a private benefit on any person.
Tax Law — Property Income — Harmonious Construction with Withholding Tax Provisions
While Section 21(1)(f) of the Income Tax Act does not exempt property income such as interest from taxation, it must be read harmoniously with Section 127 (which imposes withholding tax on interest) and Section 139 (which treats certain withholding tax as final). Where withholding tax on interest paid to an exempt organization is a final tax under Section 139, no additional tax liability arises.

Legislation cited (9)

Cases cited (4)

  • Uganda Revenue Authority v Siraje Hassan Kajura (Court of Appeal Civil Appeal No. 26 of 2013)
  • Cape Brandy Syndicate v IRC (1992) KB1
  • Uganda Revenue Authority v Siraje Hassan Kajura (Supreme Court Civil Appeal No. 9 of 2015)
  • Farid Meghani v Uganda Revenue Authority (Civil Appeal No. 6 of 2021)

Full judgment

↓ Download PDF

The original judgment as reported. Read the original PDF before relying on any passage.

International School of Uganda v Uganda Revenue Authority 2025 UGTAT 12 (2 August 2025)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.