The High Court has ruled that insurance agents are not employees of the companies, adding that they are freelance and self-employed people, who survive on commissions and ordered Uganda Revenue Authority (URA) to stop taxing them.
Justice Richard Wejuli Wabwire of the Commercial Division of the High Court ruled on Friday that the Insurance Act of 2017 excludes employees of insurers and reinsurers from acting as agents.
“There is no doubt that by excluding employees from being insurance agents, the legislature intended for them to be considered independent contractors. I find that the tribunal’s examination of the agreements between the appellants and their agents is an imputation of their own intention in the Insurance Act of 2017 for purposes of ensuring business convenience,” Justice Wabwire ruled.
In August 2018, the tax tribunal ruled that the agreements entered between the insurance firms and their agents render the insurance agents employees by virtue of exclusivity.
Justice Wabwire ruled that the Tax Appeals Tribunal (TAT) erred in holding that insurance agents are employees for purposes of the Income Tax Act.
The court decision resulted from an appeal in which 23 insurance firms challenged the TAT dismissal of their application against URA’s move to treat insurance agents as employees of insurance companies for purposes of taxation under Income Tax Act.