Legal framework for taxation
Transitional constitution of the Republic of S. Sudan, 2011
The principle of legality is not expressly stated in the Constitution of South Sudan. However, it is inferred from the main provisions enabling the respective legislatures of the national and state governments to impose taxes.
Article 52 (1) of the Constitution reads thus:
The National Government shall exercise exclusive legislative and executive authority on all functional areas in Schedule A; it shall also exercise legislative and executive authority on all concurrent and residual matters as set forth in Schedules C and D read together with Schedule E herein.
In Schedule A to the Constitution, the legislative and executive powers extend to matters relating to national taxation and revenue.
According to Article 87, the process of introducing or amending legislation (including tax legislations) in South Sudan begins with the President causing to be presented to the National Legislative Assembly (NLA), before the beginning of the financial year, a bill for the allocation of resources and revenue. The financial year is a twelve months’ period beginning from July 1st, and ending on June 30th of the other year. The NLA is mandated to deliberate on the bill and approve it, by way of enactment, with or without modifications.
Under exceptional circumstances, the President, under Article 90 (1) of the Constitution may vide a presidential order impose taxes or fees pending the presentation to and approval of a bill by the NLA. If the NLA disapproves of such levies, the presidential order shall cease with immediate effect from the date of the rejection of the bill.
Thus, it can be concluded that the notion of legality (representation) in taxation is observed in the laws of South Sudan.
The Transitional Constitution, 2011 also establishes the National Revenue Authority and authorizes that a law be enacted to detail its structure, composition and functions. This body is yet to be made operational.
The Taxation Act, 2009
Establishment of the Directorate of Taxation
The Directorate of Taxation (DoT), which was created in 2009 when the South was still part of the Sudan, is the current tax authority. It is not autonomous from the Ministry of Finance (MoF).
Section 7 of the Taxation Act, 2009 lays down the functions of the DoT. They include:
- Making assessment of tax, penalties and other charges, and providing the taxpayer with such assessment;
- Investigating possible violations of the tax law;
- Collecting and enforcing payment of taxes; and
- Establishing the Appeals Board.
Setup of tax dispute settlement mechanism
In the preceding series of this write-up, it was observed that the DoT is mandated to establish an Appeals Board. The practice in the Directorate is that complaints of the Small and Medium Enterprises (SME) are handled in the Directorate and disposed of instantly.
Section 49 of the Taxation Act, 2009 empowers the Minister of Finance to convene an Appeals Board to review a tax assessment or a ruling made by the DoT. Membership of the Appeals board consists of the following:
- The Undersecretary (Chairperson);
- The President of the South Sudan Society of Accountants (Member);
- The Director General (DG) of Taxation (Secretary/Ex-officio); and
- An ad hoc member appointed by the Minister.
A taxpayer who disputes a tax assessment or other decision of the DG of Taxation has the right to appeal to the Board. Section 51 gives the right to appeal against the decision of the Appeals Board to the High Court on questions of: – (a) jurisdiction; (b) interpretation of law; or (c) evidence.
The writer is an Advocate and a Tax Consultant. He can be reached via: firstname.lastname@example.org.