For telecommunications services, the tax rate was reduced from 15% to 20%. Under this law, the exchange rate for converting the value of goods from the U.S. dollar to SSP was increased to SSP 90 to US$1. Previously, the exchange rate was 45 SSP to 1 US dollar. We note that this is a departure from how the calculation of PIT was previously calculated and how graduated scale rates work in practice. The Act amends the rates of excise duty on certain excise services as follows: In addition, as of 18 July, the applicable tax rate was reduced to 10% (previously 15%). When you set up a business in South Sudan, you must obtain a Tax Identification Number (TIN). The TIN is provided at the time of registration/inclusion of the company name. The significant milestone in the Republic of South Sudan`s tax policy was the adoption of the 2009 Tax Act, which provided a sound tax policy framework. A solid foundation for tax administration and modern and easy-to-administer tax legislation. The law also increased the income tax rate on the import of non-food products from 4% to 5%. The Act amends various tax laws relating to Income Tax (IRP), Corporate Income Tax (BPT), Excise Tax, Customs Duties and Other Fees and Charges Levied by the various institutions of the Government of the Republic of South Sudan (GRSS). In general, all sectors, with the exception of the oil sector, which had lower tax rates, will now value the BPT at 30% of taxable corporate profits.
In addition, operators in the insurance sector are subject to the TPB at the rate of 10% in addition to the excise duty of 10%. Taxation in South Sudan takes place at the Republic of South Sudan level, at the national level and at the county/payam/boma level. Taxes are payable to the Tax Directorate. The amendment is intended to reflect the rates set out in the Public Service Pension Act, 2013. In addition, the law aims to include the insurance sector and insurance companies in the scope of the TPB. The law provides for a BPT rate of 10% for the insurance sector/company. The law repealed the differentiated tax rates provided for in Schedule II to the 2009 Tax Act, as well as the sectoral tax rates set out in the NRA Circular to the 2019/2020 Finance Act. Therefore, all companies subject to the BPT are subject to a flat BPT rate of 30% under the law, regardless of the size or type of activity. Rates of pay for non-residents related to the provision of technical/consultancy/part-time work have been increased from 15% to 20%.
However, on the basis of the NRA Circular, the scale should not be considered as a progressive rate for the purposes of calculating the PIT, but as an indication of the applicable tax rate for a given income level. For example, an income of 6,000 SSP is entirely subject to the 10% IORP and not just the 5,000 SSP that fall into the third category. Insurance companies were previously exempt from the BPT under Section 64 of the 2009 Tax Act, which does not identify an insurance company as a commercial organisation subject to the BPT. The 10% excise duty continues to apply to the insurance sector/companies. The South Sudanese Finance Act 2021/2022 was promulgated on 9 June 2022. The provision of incentives to investors in South Sudan is subject to the South Sudanese tax system (under the 2009 tax act) and to the benefits and incentives for investors (under the Investment Promotion Act 2009). Finance Law 2021/22 introduced/amended various fees and charges levied by the various GRSS institutions. The fees and charges established are defined in Chapters 10 to 34 of Part 3 of the Finance Act 2021/2022. According to the NRA circular, fees and charges are collected from NRA officials who are deployed in the various GRSS institutions.
Excise duties are levied on goods produced in South Sudan; the importation of excise goods into South Sudan; and the provision of excise services in South Sudan. The following table provides a detailed list of excise goods and corresponding excise duties. It is important to note that the definition of a business organization has not been changed by law to include insurance companies. The NRA circular also did not reflect this change. The NRA should provide further guidance and clarification to affected taxpayers on the implementation of this new provision, including the tax base of the BPT. The law reintroduced an additional 30% tax on PIT, which had been suspended in 2014. This is an additional tax burden for employers, as the additional tax is borne by the employer. The tax margins modified by the Finance Act 2019/2020 were maintained as follows: no BPT exemptions would be allowed, except for those provided for by the 2009 tax law or a DTA between South Sudan and other countries. Customs duties on certain items have also been amended by law as follows: This is likely to affect expatriates who were previously exempt from IRP due to instruments other than DTAs. Tax incentives and duty exemptions are sought through an application to the Ministry of Finance and Planning, which is requested and administered by the South Sudan Investment Authority, the government-designated agency to regulate and promote investment opportunities in South Sudan, the region and the world. The Act amends various tax statutes relating to income tax, corporate income tax, excise duties and customs duties.
This alert examines the main determinations. For a complete list of contacts and email addresses, please click on Tax News: Global Edition (UNWG) of this alert. The law is designed as a package and is one of the few comprehensive tax laws in Africa that includes: The Government of the Republic of South Sudan has identified the following sectors as priorities for investment, and investors in these sectors are entitled to benefits and incentives: An employee`s contribution to a funded pension plan approved by GRSS up to a maximum of 5% of gross salary is deductible of gross income, taxable income. Previously, up to 8% of gross salary was deductible for the calculation of taxable income. Based on a circular from the National Tax Authority, there is a position that the effective date is 18 July 2022. With these amendments, the IRP/withholding tax (WHT) declaration for the month of July 2022 and the BPT declaration for the financial year 2022 (FY) will be prepared and filed on the basis of the provisions of the Finance Act 2021/2022. Dividends, interest and royalties are subject to a withholding tax of 10%. The law is very investor-friendly, including: Investors in the above-mentioned sectors benefit from the following incentives: In particular, the new e-taxation system still needs to be updated with the additional tax liability. We understand that the NRA is working on this. However, since this additional tax is now in effect, taxpayers may consider providing for the additional tax accrued on PIT when updating the system. The effective date of the IRP provisions is July 18, 2022.
The law limits the exemptions from the IRP to those provided for by a double taxation agreement (CDI) signed with the GRSS. This disclaimer summarizes the key changes to the law, indicating that the changes will come into effect on June 9, 2022 (the date of presidential approval). 15. However, in July 2022, the National Tax Authority (NRA) issued a circular making the law operational, stating that the date of entry into force of the amendments is 18 July 2022. Therefore, taxpayers should consider using the July 18, 2022 implementation date. These changes to the TPB indicate that GRSS is working to increase its revenues outside the petroleum sector. The effective date of the amendments to the BPT is July 18, 2022. The NRA has already published a public notice on the implementation of the new rules, which will apply to all tax changes from 18 July 2022.
Therefore, it is important that taxpayers understand the impact of the new laws on their businesses and strive to comply with them. Taxpayers should also seek advice and clarification in areas that require advice from the NRA.
