Income Tax - Employment Income

(i) Are terminal benefits & Lump-sum payments subject to tax?

Yes, compensation for termination of any contract of employment constitutes employment income.

How are terminal benefits & Lump-sum payments treated in taxation?

Where a Redundancy payment (terminal benefit) is paid by the employer to an employee who has served for ten years or more, the amount included in employment income is calculated according to the formula;
Ax75%,
Where A is the total amount of Redundancy payment derived by the employee. Otherwise for situations where one has worked for less than 10 years, the whole amount is included in employment income and subject to tax.
Any other lump sum payments are grossed up with other employment income and shall be chargeable to tax according to the Income Tax rates for individuals as spelt out in Part I Third schedule of the Income Tax Act..

Is transport allowance taxable?

Yes, transport allowance is subject to tax. You may wish to note that employment income includes among other things any wages, salary, leave pay, payment in lieu of leave, overtime pay, fees, commission, gratuity, bonus, or the amount of any traveling, entertainment, utilities, cost of living, housing, medical, or other allowance.
However, if where an employee is traveling on official duty and is given a sum of money specifically to cater for the transport expense on that occasion then such is not subject to tax.
.

How is sitting allowance treated for tax purposes?

Sitting allowance is subject to tax. Where the payer is the principal
employer the allowance shall grossed it up with all the other incomes and subject to tax at individual tax rates given in Part I of the
Third schedule of the Income Tax Act.

Where the payer is not the principal employer, any extra pay such as this shall be subject to tax at 30% and no thresholds are granted in cases where the
recipient earns income elsewhere and has been granted a threshold already.

What constitutes exempt income in relation to accommodation and meals?

Accommodation for an employee who has travelled away on official duty and the value of meals provided for all employees on equal terms, is exempt.

Can I be granted exemption of duty on sports equipment imported?

“There are no specific exemptions on sports material; any exemptions available are provided for in the tax code; please see the fifth schedule of the EAC CMA which spells out which institutions and or items that are exempt, in here you will find that the importation of a rally car is exempt from import duty.”

Tax Laws

How can I access the Customs law and the Income tax Act?

“You may Access the East African Community Customs Management Act, Income Tax & the VAT Acts by visiting the URA website at: www.ugrevenue.com and follow the link URA Regulations”

Is there any special treatment of persons with disabilities for tax purposes?

“Section 8 of the fifth schedule of the East African Community Customs Management Act 2004 exempts materials, articles & equipment, including one motor vehicle, which:
(a) are specifically designed for use by disabled or physically handicapped persons or;
(b) are intended for educational, scientific or cultural advancement of the disabled for the use of an organization approved by the Government for the purpose of this exemption

Licensing

What is the cost of acquiring a driving permit?

A driver's permit may be held for either one or three years and the cost is: