Corporate tax in South Sudan

Summary

Corporate Income Tax Rate (%) 10 / 15 / 20 (a)
Capital Gains Tax Rate (%) 10 / 15 / 20 (a) (b)
Branch Tax Rate (%) 10 / 15 / 20 (a) (c)
Withholding Tax (%)
Dividends 10 (e)
Interest 10 (d) (e)
Royalties 10 (d)
Rent 10 (d)
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 5

a) For details regarding these rates, see Section B.

b) Capital gains are recognized as business income, while capital losses are recognized as business losses.

c) The taxation of a branch is similar to that of a company or subsidiary.

d) This withholding tax applies to payments to both residents and nonresidents.

e) This is considered to be a final tax.

Taxes on corporate income and gains

Corporate income tax. Business organizations pay South Sudan corporate income (business profits) tax. Business organizations are organizations that are required to be registered under the provisions of the Taxation Act except for insurance companies and individuals.

A resident taxpayer is a company, partnership or other entity that is established in South Sudan or that has its place of effective management in South Sudan. Taxable profit for a resident tax­payer is the taxable profit from South Sudan and foreign sources.

Corporate tax rates. The corporate income tax rates range from 10% to 20%, depending on the level of turnover. The following are the rates for resident and nonresident companies.

Type of business Annual turnover (USD)* Tax rate (%)
Small business enterprises Up to 316,456 10
Medium business enterprises From 316,456 to 23,734,177 15
Large business enterprises Above 23,734,177 20

* The exchange rate for the South Sudanese pound (SSP) against the US dollar (USD) is SSP3.16 = USD1.

To encourage industrial growth and attract foreign investment, certain incentives are available to certified investors under the Investment Promotion Act of 2009.

Capital gains. Capital gains are recognized as business income, while capital losses are recognized as business losses.

Administration. The tax period is the calendar year. The law does not allow for a change of the tax period from the calendar year.

A company must make payments for each quarter by 15 April, 15 July, 15 October and 15 January. The payments are estimated on a current year basis. The tax balance, if any, must be paid by 1 April of the following year. A company must file the tax return on or before 1 April of the year following the tax year.

Late filing of a return results in a penalty of 5% of the tax report­able on the return per month, up to a maximum of 25% of the tax reportable. Late payment of tax results in a penalty of 5% per month until the tax is paid. The interest rate payable on late pay­ment of tax is published annually by the Directorate of Taxation and is 120% of the prime commercial rate (this is the average rate that commercial banks in South Sudan charge other banks and financial institutions).

Dividends and interest. A 10% withholding tax is imposed on payments of dividends and interest. This tax is deemed to be a final payment of tax.

Foreign tax relief. Tax paid by resident taxpayers that derive prof­its from business activities outside South Sudan through perma­nent establishments is allowed as a foreign tax credit if the juris­diction (country) in which the permanent establishment is located allows similar treatment for tax paid in South Sudan.

Relief for foreign taxes paid will also be granted in accordance with tax treaties with other countries. However, South Sudan has not yet signed any tax treaties.

Determination of business profits

General. Business profit is accounting income adjusted for certain non-taxable income and nondeductible expenses, such as depre­ciation. Expenses are deductible if incurred wholly and exclu­sively in the production of income.

Representation costs are all costs related to the promotion of the business or its products. These are allowed as deductible expenses, up to a maximum of 2% of gross income.

Inventories. The normal accounting basis of the lower of cost or net realizable value is generally accepted for tax purposes.

Bad debts. Bad debts are allowable deductions if they meet the stipulated conditions contained in the Taxation Act.

Tax depreciation. Depreciation charged in the financial statements is not deductible for tax purposes. It is replaced by the following tax depreciation allowances.

Asset class Description Rate (%) Method
Category 1 Buildings and other structures 10 Straight-line (a)
Category 2 Vehicles, office equipment and computers 33 Reducing balance (b)
Category 3 All other property 25 Reducing balance (b)

 

a) The initial cost for buildings and other structures includes taxes, duties and interest attributable to the property before they are placed in service.

b) Expenditure on property in Categories 2 and 3 of less than SSP1,000 is allowed as a current expense.

Amounts expended on repair, maintenance or improvement of a category of capital assets are allowed as deductions, up to a maximum of 5% of the written-down value of that category of capital assets.

Relief for losses. Business losses can be carried forward for up to five successive tax periods and may be claimed as a deduction against any income in those years.

Groups of companies. The income tax law does not permit con­solidated returns combining the profits and losses of affiliated companies or the transfer of losses from loss companies to prof­itable members of the same group of companies.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)
Sales tax; on the production and importation
of goods into South Sudan and on the supply
of specified services
General rate 5
Austerity rate (applicable to periods in which
no oil is produced)
15
Social security scheme 8 / 17
(The country has not yet set up a national
social security scheme. However, deductions
of 8% from wages and employer contributions
of 17% of wages are required.)

Miscellaneous matters

Foreign-exchange controls. The Bank of South Sudan imposes certain foreign-exchange controls.

Transfer pricing. The arm’s-length price should be determined under the comparable uncontrollable price method. If this is not possible, the resale-price method or the cost-plus method can be used.

Debt-to-equity rules. No debt-to-equity ratio restrictions are imposed.

Tax treaties

South Sudan has not yet signed double tax treaties with other countries.