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 this
Cassation Division is contrary to the income tax laws and its own analysis
appearing in its judgment.