Republic of South Sudan. Ministry of Finance & Economic Planning. Withholding Taxes. Directorate of Taxation

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1 Republic of South Sudan Ministry of Finance & Economic Planning Withholding Taxes Directorate of Taxation Ministry of Finance and Economic Planning Republic of South Sudan Juba, Southern Sudan June 30,

2 Withholding Taxes What is tax withholding? Tax withholding is a deduction for taxable amounts by third parties. Tax withholders are required to remit tax withheld to the Republic of South Sudan Treasury. Which sources of income are subject to withholding tax? Wages, interest, dividends, rents and royalties are subject to withholding tax. Withholding on interest and dividends are final for residents and non-residents. Withholding on rents and royalties is final for nonresidents. What is the difference between the final and non-final withholding taxes? Income other than interest and dividends tax withholding is an estimate of tax liability. In some cases it will be necessary to file an annual income tax return at the end of a calendar year. When a withholding tax is final, it means that the taxpayer does not have to do anything further in terms of reporting the income or paying additional tax. Who is required to withhold? Anyone who pays wages, interest, dividends, rents or royalties is required to withhold tax. What are the rates of withholding taxes? For wages, withholding is levied at 10% and 15%, depending on the amount of wage income of payees as follows: Amount of Taxable Income (monthly average) Tax Rate SSP 300 and below Exempt SSP 301 to % SSP 5,001 and above SSP % However, for interest, dividends, rents and royalties the withholding rate is 10%. How do I calculate withholding tax on wages/salaries? For example, an employee s monthly gross salary is SSP 2,000. His withholding tax liability will be calculated as follows: Amount of Taxable Income (monthly average) Calculation of withholding SSP 300 Exempt SSP 10% 170 2

3 When do I have to remit withheld tax? Personal Income Tax Withholding must be remitted within 15 days after the last day of each month in which the tax was withheld. If the withheld amount is above SSP 300,000 for the month your payment is due within 5 business days after month end. Where do I have to remit withheld tax? Remit withheld tax to the Bank of South Sudan Account number: What if I fail to withhold tax? If you fail to withhold tax you are liable for the tax not withheld, as well as penalties and interest. In addition, no deduction will be allowed for the payment of the tax, penalties or interest when calculating business profit tax liability. This is not quite clear to me. Could you please explain it further with an example? For example, in July 2010 your company paid wages of SSP 180,000 to 120 employees at the rate of 1,500 per employee. Thirty six thousand (36,000) should be treated as a withholding exemption (120*300). Thus, the taxable amount should be 144,000 at the rate of 10%. As a result, your company is liable for 14,400 and should remit this amount to the treasury by August 15, In this case, your company is allowed a deduction of 14,400 as an expense from your business profit. If your company failed to withhold and remit the 14,400, your company must pay this amount as well as penalties and interest. In addition, your company cannot deduct the wages paid for July of 180,000 as a deduction from your business revenues as an expense for tax purposes until withholding tax is paid. Would you please explain the method for calculating wage withholding tax liability? Our example is XYZ Company with TIN and located at Plot 120, Nyakuron Juba Town which has 13 employees. Salaries for the month of December 2012 are as follows: SN Employee Monthly gross salary 1 Abraham 1,600 2 Andrew 1,900 3 Bosco 1,800 4 Chaplin 1,600 5 Deng 1,700 6 Emmanuel 2,000 7 Francis 2,200 8 Insaf 1,800 9 John 1, Thomas 2, Tom 4, Henry 3,500 3

4 13 Neena 4,200 Total 30,900 Wage withholding tax liability should be calculated as follows: (Amount in SSP) SN Employee Monthly gross salary Basic exemption Taxable amount Wage withholding tax 1 Abraham 1, , Andrew 1, , Bosco 1, , Chaplin 1, , Deng 1, , Emmanuel 2, , Francis 2, , Insaf 1, , John 1, , Thomas 2, , Tom 4, , Henry 3, , Neena 4, , Total 30,900 3,900 27,000 2,700 Finally, could you please explain how to complete the Monthly Tax Withholding Statement using the above example? Monthly wage withholding statement should be completed in the following manner. For your convenience, wage withholding table is given at the end of this brochure. 4

5 Monthly Tax Withholding Statement under the Taxation Act, 2009 Instructions: This form must be completed by a registered taxpayer if the taxpayer makes a payment of wages, dividends, interest (other than interest on a consumer loan) rents, or royalties. The form must be submitted to the Directorate of Taxation, together with proof payment of the withheld amount, by the 15th day of the month immediately after the month in which the payment was made. Failure to submit the form, or to make full payment of the amount required to be withheld, will result in penalties being imposed on the taxpayer. Tax Withholder: 1. Tax Identification Number (TIN) Employer Name XYZ Company 3. Employer Address Plot 120, Nyakuron, Juba Central Equatoria I certify that I have made the following payments during the month of December 2012 and have withheld the corresponding amounts Type of Gross Taxable Amount Number of Rate Total amount Net amount Payment (a) (b) Payees % (d) withheld (e) paid (f) 4. Wages SSP 27, ,15 SSP 2,700 SSP 2, Dividend Interest Rents Royalty Total SSP 27, SSP 2,700 SSP 2,700 Payment was made to the Republic of South Sudan Domestic Tax Account #: Signed: Date: January 10, The Monthly Tax Withholding Statement has a column (b) with the heading of Gross Taxable Amount How is the Gross Taxable Amount calculated? The Gross Taxable Amount is gross salary less the 300/month exemption. If you have a qualified pension plan and you withhold pension contributions from the salary of your employees, the monthly pension contribution (up to a maximum of 8% of the gross salary) is deducted first and then the SSP 300/month is deducted from gross salary and the result is Gross Taxable Amount. For other payments subject to withholding, the Gross Taxable Amount is the total amount of the payment that is subject to withholding. 5

6 What is an Annual Tax Withholding Statement? It is a document supplied by an employer at the request of an employee regarding their personal tax withholding for the previous year. When is it necessary to submit an Annual Tax Withholding Statement? The Annual Tax Withholding Statement should be provided by the employer to the employee by the 31 January of the following year. What is an Annual Tax Withholding Reconciliation Statement? When and where do I have to submit it? This is a form to be completed by all employers that indicates wages paid and tax withheld for each employee from the previous year. You are required to submit it to the tax office within 60 days of the end of a year. Gross Income Tax due without deducting contributions to the approved pension Tax Withholding Table Income after deducting 8% of approved pension Tax due on income after deducting 8% of approved pension

7 Gross Income Tax due without deducting contributions to the approved pension Income after deducting 8% of approved pension 7 Tax due on income after deducting 8% of approved pension

8 Gross Income Tax due without deducting contributions to the approved pension Income after deducting 8% of approved pension 8 Tax due on income after deducting 8% of approved pension , , , , , , , , , , , , , , , , ,058.60

9 Gross Income Tax due without deducting contributions to the approved pension Income after deducting 8% of approved pension Tax due on income after deducting 8% of approved pension , , , , , , Further Inquiry Please contact the Taxpayer Service Section of the Nyakuron Tax Office behind the Nyakuron Cultural Centre in Juba. Tel: +211 (0) Website: Other Tax Brochures/Guides 1. Taxpayer Identification Number Registration 2. Employee Withholding Employer s Responsibilities 3. Tax Registration and Taxpayer Identification Number 4. Personal Income Tax 5. Business Profit Tax 6. Excise Duties 7. Sales Tax 9