Scope of Taxable Employment Income: a case comment on FDRE Ministry of Justice V. Tekle Garidew et al

Abstract

Despite the legal frameworks as to taxable and exempted employment income, there are dispute relating to such issues. One such instance relates to resettlement fund or payment for loss of employment. A dispute appeared between the Federal Democratic Republic of Ethiopia Ministry of Justice (the applicant), on the one hand, and Tekele Garidew et al (respondents), on the other. The case was first entertained by the Administrative Tribunal of the Federal Civil Service Agency and later on it reached to the Federal Supreme Court on appeal. Both the Tribunal and the Appellate Court decided that resettlement fund or payment for loss of employment is not taxable income. As a result, the case was finally taken to the Cassation Division of the Federal Supreme Court of Ethiopia which affirmed the decisions of the Tribunal and the Appellate Court. As we will be shown below, the decision of thisCassation Division is contrary to the income tax laws and its own analysis appearing in its judgment.