Executive summary

South Sudan Revenue Authority (SSRA) has issued a circular concerning the administration of Personal Income Tax (PIT), effective from 1 September 2024.

The circular is intended to enhance the coordination, transparency, consistency and effectiveness in the administration of PIT in line with the Transitional Constitution of the Republic of South Sudan and the Taxation Act.

A significant outcome of the circular is SSRA's suspension of the inclusion in the PIT calculation of certain income sources from the States and Administrative Areas. This measure seeks to align the PIT administration with the broader tax policy framework and address specific administrative recommendations agreed upon during the National Tax Policy Dialogue.

Detailed discussion

The SSRA has directed that SSRA determinations should not include the following sources of income in the calculation of Personal Income Tax:

• Wages of employees of institutions of States and Administrative Areas
• Wages of employees of community-based organizations registered in the States and Administrative Areas
• Wages of local employees of national and international nongovernmental organizations
• Wages of local employees of private companies, partnerships and other legal entities

The circular defines local employees and institutions as follows:

• Local employees refer to "auxiliary employees of non-governmental organizations and private entities who are recruited in the locality of the States and Administrative Areas."
• Institutions refer to "the Ministries, Departments and Agencies of the Government of the Republic of South Sudan."

This shift away from including certain income in the PIT calculation is aimed at ensuring coordination, transparency, consistency and effectiveness in the administration of PIT. Additionally, it aims to integrate the recommendations from the National Tax Policy Dialogue conducted by the Revenue Authorities of the States and Administrative Areas.

By suspending the inclusion of these income sources, the SSRA seeks to address administrative complexities and potential disparities in tax collection.

The circular also reiterates that the SSRA is mandated to administer PIT in accordance with Section 57(1) of the Taxation Act, 2009 (as amended). The SSRA is authorized to assess, audit, collect, remit and account for PIT on the following sources:

1. Wages of employees of national institutions, including members of the National Transitional Legislative Assembly and the Judiciary
2. Wages of employees of national and international nongovernmental organizations
3. Wages of employees of private companies, partnerships and other business entities
4. Earnings by sole proprietors and partners from entrepreneurial activities
5. Rents, including associated costs, from land, buildings, machinery, equipment and vehicles
6. Royalties from the use of patents, copyright, licenses and franchises
7. Technical fees exceeding 12,000 South Sudan Pounds (SSP12k) paid to nonresident persons
8. Payments made to contractors of the Government of the Republic of South Sudan
9. Dividends
10. Capital gains
11. Lottery and other gaming winnings
12. Interest

Further, the circular emphasizes that PIT exemptions are applicable to exempt incomes that are explicitly prescribed in the Taxation Act 2009 (as amended).

Conclusion

The suspension of these income sources from the PIT calculation implies that the Revenue Authorities of the States and Administrative Areas will now have the mandate to assess, collect, remit and account for PIT from the aforementioned sources of income.

However, it also raises questions about the administration of the surtax on PIT,¹ which is currently administered by the National government. The circular is silent on this aspect, which poses a risk that taxpayers could be subject to double taxation if both National and State governments levy taxes on the same income sources.

Further, the circular does not define the term auxiliary employee. Based on the ordinary dictionary definition, the term refers to support or supplementary staff members who are not part of the main staff but provide essential support services or functions that aid in the organization's or company's operations. Taxpayers may need to seek the SSRA's guidance on the criteria for determining who is an auxiliary employee.