Court of Appeal Upholds Sh240.5 Million Tax Assessment Against Bank of Africa Tanzania

Arusha. The Court of Appeal has upheld decisions of the Tax Revenue Appeals Board (TRAB) and the Tax Revenue Appeals Tribunal (TRAT) dismissing an appeal by Bank of Africa Tanzania Limited, thereby allowing the Tanzania Revenue Authority (TRA) to collect more than Sh240.5 million in additional tax.

The disputed amount comprises Sh225.6 million in principal tax and over Sh14.9 million in interest.

In its ruling, the Court agreed with the lower tax bodies that Pay As You Earn (PAYE) tax was properly imposed on taxable benefits paid to two expatriate employees of the bank, including group life insurance contributions and school fees for the 2019 tax year.

The judgment was delivered by a panel of three judges while hearing Civil Appeal No. 166 of 2025.

The dispute arose from a tax audit conducted by the TRA in 2020 for the 2019 year of income. On December 11, 2020, the Authority issued a PAYE assessment demanding the additional tax and interest.

The bank objected to the assessment in January 2021, arguing that the TRA had wrongly calculated PAYE on benefits provided to its two expatriate staff and had improperly included group life insurance premiums and school fees in their taxable income.

However, the objection was dismissed, prompting the bank to appeal to TRAB and later to TRAT, both of which upheld the TRA’s position.

In the present appeal, the bank challenged the Tribunal’s decision on four grounds, including alleged misinterpretation of provisions of the Income Tax Act and errors in the assessment of documentary evidence. It also disputed the legality of charging interest on late tax payments.

The respondent maintained that most of the grounds raised involved issues of fact rather than law and were therefore outside the Court’s jurisdiction. It further argued that the benefits in question arose directly from employment and were taxable under the law.

In its decision, the Court held that benefits such as group life insurance premiums and school fees paid by an employer on behalf of employees constitute gains from employment and must be included in taxable income under the Income Tax Act of 2004.

The judges noted that group life insurance relieved employees of a personal financial obligation and was distinct from medical insurance, which enjoys tax exemption.

They also dismissed claims that the benefits could not be apportioned to individual employees, stating that the amounts paid and the number of beneficiaries were known, making allocation administratively feasible.

On the issue of interest, the Court emphasised that under Section 76(1) of the Tax Administration Act of 2015, charging interest for late payment of tax is mandatory.

The Court stated that charging interest where a taxpayer fails to pay assessed tax is an inevitable consequence for which the taxpayer is liable, as it dismissed the appeal with costs.