Kampala, Uganda — The Tax Appeals Tribunal has ruled in favour of prominent businessman Dr. Amos Nzeyi, quashing a Uganda Revenue Authority (URA) tax assessment of over Shs 1.8 billion on proceeds from a 2019 land sale, concluding that the property was a private investment, not a business asset.
In its recent 30 ruling, the Tribunal dismissed URA’s claim that the Shs 6.5 billion sale of 42 acres of land in Kitende to Crown Beverages Limited was a taxable business transaction.
The Tribunal concluded that the land, held for nine years without development, did not meet the legal threshold of a business asset under Uganda’s Income Tax Act.
“The Respondent has provided no further evidence to prove to this Tribunal that the transaction amounted to the sale of a business asset,” the ruling stated.
The Tribunal held that the land was not used or held ready for use in a business, nor was there proof of Dr. Nzeyi engaging in repeated land transactions or modifying the land for trade.
The case, TAT Application No. 005 of 2024, stemmed from URA’s 2022 assessment of Shs 2.18 billion in additional income tax, later revised to Shs 1.82 billion.
URA argued that Dr. Nzeyi, through his tax profile which included real estate, had disposed of a business asset and thus owed income tax on the capital gains.
However, the Tribunal found this interpretation insufficient. “Ticking a box on a taxpayer registration form is not sufficient proof of an enterprise,” it ruled, affirming that a tax profile alone does not prove actual trading activity.
Dr. Nzeyi maintained that the land was a personal investment, never developed or used commercially, and held for nearly a decade before being sold.
He further submitted that he earns income only through dividends from companies such as Crown Beverages, Hot Loaf Bakery, and Monarch Capital, and rental income from Kololo apartments.
The Tribunal relied on precedents including Pickford v Quirke (UK, 1927) and Wisdom v Chamberlain (UK, 1968) to determine the indicators of trade. It found no evidence of repetitive transactions, speculative purchase, or land enhancement to suggest commercial intent.
In conclusion, the Tribunal ruled that the gains from the sale were exempt under Section 21(j) of the Income Tax Act, which excludes from taxation any capital gain not included in business income.
The application was allowed with costs awarded to Dr. Nzeyi. The decision is a notable clarification on how land sales by individuals are treated under Uganda’s tax law, particularly distinguishing private investment from business activity.
