Wakilii

Ndugu Benson and Another v Uganda Revenue Authority [2025] UGTAT 18

Tribunal · 2025 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging tax assessment following Alternative Dispute Resolution
Decision
Assessment set aside and remitted to Respondent for recomputation with 75% of premium deductible and 25% non-deductible

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the Applicant's Group Life Accident policy covers both life insurance and short-term insurance aspects. Premiums attributable to life insurance (death benefits) are not deductible under section 22(3)(i) of the Income Tax Act. The Tribunal allocated 75% of the premium to short-term insurance (deductible) and 25% to life insurance (non-deductible), setting aside the Respondent's 50:50 split. The assessment of UGX 301,990,344 was set aside for recomputation in line with the Tribunal's guidance.

Outcome

Assessment set aside and remitted to Respondent for recomputation with 75% of premium deductible and 25% non-deductible

Facts

The Applicants, a firm of certified public accountants, paid insurance premiums for Group Personal Accident and Group Life Accident coverage for their employees. In 2018, the Uganda Revenue Authority audited the Applicants for the period 1 September 2013 to 31 August 2018 and disallowed UGX 603,980,688 in GPA/GLA payments. Following Alternative Dispute Resolution, the Respondent allowed GPA premiums but disallowed UGX 301,990,344 relating to Group Life Accident premiums, treating them as non-deductible life insurance under section 22(3)(i) of the Income Tax Act. The policy was annual, covered death (30 months' salary), permanent and temporary disablement, and medical expenses, and applied only to employees in service.

Issues

  1. Whether the Applicant is liable to pay the tax assessed.
  2. Whether premiums paid in respect of Group Life Assurance constitute an allowable deduction under the Income Tax Act.
  3. Whether the Applicant's Group Life Accident policy falls within the definition of 'life insurance business' under section 16(3) of the Income Tax Act.

Orders

  • Part of the Applicants' policy covers life insurance and the related premium is not an allowable deduction for income tax purposes.
  • The assessment of UGX 301,990,344 is hereby set aside and the Respondent should recompute the liability in line with the Tribunal's guidance.
  • The revised liability should be computed by 30 July 2025.
  • 75% of the costs are awarded to the Respondent.

Rules and key headnotes

Tax Law — Income Tax — Allowable Deductions — Life Insurance Premiums
Under section 22(3)(i) of the Income Tax Act, a premium or similar payment made to a person carrying on a life insurance business on the life of the person making the premium or on the life of some other person is not an allowable deduction for income tax purposes.
Statutory Interpretation — Tax Statutes — Strict Interpretation
In interpreting tax statutes, courts must apply strict interpretation and look at the plain language of the statute to determine taxability, without reading in exclusions or qualifications not provided for by the Legislature.
Tax Law — Income Tax — Definition of Life Insurance Business
Under section 16(3)(a) of the Income Tax Act, life insurance business includes effecting, carrying out and issuing policies on human life, and a policy that provides for payment upon the death of a member falls within this definition regardless of whether it is renewable annually, applies only to employees, or is issued to a group rather than individuals.
Tax Law — Income Tax — Mixed Insurance Policies — Allocation of Premiums
Where an insurance policy covers both life insurance and short-term insurance aspects, the premium must be allocated proportionally between deductible and non-deductible components based on the compensation attributable to each insured event, rather than applying an arbitrary 50:50 split.
Tax Law — Income Tax — Short-Term Insurance — Definition
Under section 16(3) of the Income Tax Act, short-term insurance business means any insurance business which is not a life insurance business, and premiums paid for short-term insurance are allowable deductions under section 22(1)(a) to the extent they were incurred in the production of income.

Legislation cited (5)

Cases cited (5)

  • Uganda Revenue Authority v Mukwano Enterprises Limited (High Court Civil Appeal No. 55 of 2019)
  • Sub Nigel Ltd vs Commissioner for Inland Revenue 15 SATC 381
  • Cape Brandy Syndicate V IRC (1921) K.B 64
  • Comm of Customs (Import), Vs. M/S. Dilip Kumar and Company on 30 July 2018, Supreme Court Civil Appeal No. 3327 of 2007
  • Uganda Revenue Authority v Siraje Hassan Kajura (Supreme Court Civil Appeal No. 9 of 2015)

Full judgment

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Ndugu Benson and Another v Uganda Revenue Authority 2025 UGTAT 18 (17 July 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.