Withholding Tax in South Sudan: Rates, Rules and Compliance Guide

Withholding tax is an important part of the tax system in South Sudan and affects businesses, government entities, investors, landlords, contractors, consultants and other parties making certain types of payments.

Instead of requiring the recipient to pay the full tax liability directly, withholding tax requires the payer to deduct tax at source and remit it to the relevant tax authority.

For businesses operating in South Sudan, understanding when withholding tax applies, which rate should be used, and how the tax should be accounted for is important for maintaining tax compliance and avoiding unnecessary disputes or additional costs.

This guide explains the main withholding tax considerations for businesses in South Sudan.

Important: Withholding tax rules and rates can be amended through annual Financial Acts and other tax guidance. Businesses should therefore confirm the applicable rate and treatment for a specific transaction with the South Sudan Revenue Authority or qualified tax adviser before making the payment.

What Is Withholding Tax?

Withholding tax is a mechanism through which tax is collected at the point where certain income is paid.

For example, if a South Sudanese company is required to withhold 20% from a qualifying payment of USD 10,000, the company would generally deduct USD 2,000 and pay the remaining USD 8,000 to the recipient, while remitting the USD 2,000 to the tax authority.

The payer is therefore acting as the tax withholder.

South Sudan's Taxation Act provides for withholding on specified categories of income, while subsequent Financial Acts have modified the treatment and rates applicable to particular payments.

Which Payments Can Be Subject to Withholding Tax in South Sudan?

The withholding tax regime covers several categories of payments.

Depending on the nature of the transaction and the status of the recipient, withholding may apply to:

• Dividends

• Interest

• Royalties

• Rental payments

• Technical and consultancy fees

• Government contract payments

• Certain pension-related payments

• Lottery and gaming winnings

• Mobile money commissions paid to dealers

Current tax references for South Sudan identify different rates depending on the type of payment and, in some cases, whether the recipient is resident or non-resident.

South Sudan Withholding Tax Rates

The applicable rate depends on the nature of the payment.

The following table provides a practical overview based on current tax references:

Type of payment	Indicative withholding tax rate
Dividends	10%
Interest	10%
Royalties	10%
Rent	20%
Technical / consultancy fees to non-residents	20%
Government contract payments – residents	15%
Government contract payments – non-residents	20%
Pension income	10%
Lottery and gaming winnings	20%
Mobile money commission paid to dealers	10%

EY's 2026 South Sudan tax guide reports these rates and identifies the relevant categories of payments subject to withholding tax.

However, businesses should not treat a rate table as a substitute for reviewing the legislation applicable to the specific transaction. Annual Financial Acts can amend rates and the treatment of withholding tax.

Withholding Tax on Dividends

Dividends paid by a company can be subject to withholding tax.

The current rate identified for dividends is 10%, applicable to both resident and non-resident recipients.

For example, if a company declares a dividend of USD 100,000 and the applicable withholding rate is 10%, USD 10,000 would be withheld and USD 90,000 paid to the shareholder, subject to confirmation of the applicable rules.

Businesses should also consider whether the payment qualifies as a dividend and whether any other tax or corporate requirements apply.

Withholding Tax on Interest

Interest payments can also attract withholding tax.

The current rate for interest identified in South Sudan tax guidance is 10% for both residents and non-residents.

This can be particularly relevant where a South Sudanese company:

• borrows from a foreign shareholder;

• receives financing from an overseas lender;

• pays interest under a shareholder loan;

• makes other qualifying interest payments.

Where financing involves related parties or cross-border arrangements, businesses should assess the transaction as part of their broader tax and regulatory review.

Withholding Tax on Royalties

Payments for the use of certain intellectual property or other rights may fall within the royalty withholding tax provisions.

The current rate identified for royalties is 10% for both residents and non-residents.

Businesses should determine whether a payment is genuinely a royalty or instead represents a different type of service or commercial payment, as the tax treatment can differ.

Withholding Tax on Rent

Rental payments are an important area of withholding tax compliance for businesses operating in South Sudan.

Current tax guidance identifies a 20% withholding tax rate on rent for both residents and non-residents.

This can affect businesses paying for:

• office premises;

• warehouses;

• commercial buildings;

• staff accommodation;

• other qualifying rental arrangements.

Businesses should carefully review rental agreements to determine whether additional services or associated costs form part of the amount subject to withholding.

This is particularly important because the tax treatment of rent and associated services has been subject to clarification and amendment in South Sudan's tax framework.

Withholding Tax on Technical and Consultancy Fees

Technical and consultancy fees can create important tax considerations, particularly when services are provided by companies or consultants based outside South Sudan.

Current tax guidance identifies a 20% withholding tax rate for technical or consultancy fees paid to non-residents.

This can affect businesses engaging foreign providers for:

• management consulting;

• engineering services;

• technical advisory;

• professional consultancy;

• specialist technical support;

• project advisory;

• IT and technology-related services.

Before making a cross-border payment, the payer should establish whether the payment falls within the definition of a technical or consultancy fee and confirm the applicable withholding treatment.

Withholding Tax on Government Contracts

Government contract payments have specific withholding tax treatment.

Current guidance identifies:

• 15% for payments to resident contractors

• 20% for payments to non-resident contractors

This is particularly relevant to companies supplying goods, works, consultancy and other services to government institutions.

For companies participating in public procurement, withholding tax should therefore be considered when preparing bids and calculating expected cash flows.

A contract value should not automatically be treated as the amount the supplier will ultimately receive after tax deductions.

Resident vs Non-Resident Payments

One of the important considerations in South Sudan withholding tax is whether the recipient is resident or non-resident.

The distinction can affect the applicable rate, particularly for government contract payments and cross-border technical services.

For example:

Resident contractor

A South Sudanese resident contractor receiving a qualifying government contract payment may be subject to the resident withholding rate.

Non-resident contractor

A foreign contractor receiving a qualifying government contract payment may be subject to the non-resident rate.

Similarly, a South Sudanese business paying technical or consultancy fees to an overseas service provider needs to consider the specific non-resident withholding provisions.

This makes the tax residency and legal structure of the contracting party an important part of transaction planning.

Is Withholding Tax a Final Tax or an Advance Tax?

This is an important distinction for businesses.

South Sudan's tax framework has changed the treatment of withholding tax over time. The Financial Act for FY 2023/2024 amended the rules so that tax withheld under the relevant provisions is generally treated as an advance payment rather than automatically being a final tax and can therefore be available as a credit against the taxpayer's tax liability, subject to the applicable rules.

This distinction matters because withholding tax does not necessarily represent the recipient's final tax liability.

A business should therefore maintain proper documentation showing:

• the gross payment;

• tax withheld;

• net amount paid;

• date of payment;

• recipient;

• nature of the transaction; and

• evidence that the tax was remitted.

Who Is Responsible for Withholding the Tax?

Generally, the payer has the responsibility to deduct the applicable withholding tax when making a qualifying payment.

This means that a company cannot simply assume that the recipient is responsible for dealing with the tax.

For example:

A South Sudanese company engages an overseas consultant for USD 50,000. If the payment is subject to a 20% withholding tax, the company needs to consider the withholding obligation before releasing the payment.

At a 20% rate:

Gross payment: USD 50,000
Withholding tax: USD 10,000
Net payment to consultant: USD 40,000

The USD 10,000 withheld would then be accounted for and remitted in accordance with the applicable tax requirements.

Withholding Tax and Contracts

Businesses should address withholding tax during contract negotiation rather than after the contract has been signed.

A contract should make clear whether the agreed price is:

• gross of withholding tax, or

• net of withholding tax.

This distinction can have a significant financial impact.

Example

Suppose a foreign consultant requires USD 100,000 net of withholding tax and the applicable withholding rate is 20%.

The company cannot simply pay USD 100,000 and deduct 20%.

Instead, the contract may need to be grossed up:

Required net payment: USD 100,000
Withholding rate: 20%
Gross contractual amount: USD 125,000
Withholding tax: USD 25,000
Net received: USD 100,000

Therefore, the tax clause in a contract can materially affect the actual cost of an investment or project.

Withholding Tax and Foreign Companies

Foreign companies entering South Sudan should pay particular attention to withholding tax.

A foreign company may encounter withholding obligations when receiving:

• consulting fees;

• technical service fees;

• government contract payments;

• interest;

• royalties;

• rent or other qualifying income.

The tax implications should be assessed before signing the commercial agreement.

This is particularly important for international groups because the withholding tax treatment should be considered alongside:

• corporate income tax;

• permanent establishment considerations;

• transfer pricing;

• related-party financing;

• investment structure;

• repatriation of profits;

• contractual gross-up provisions; and

• any applicable tax relief or exemption.

Withholding Tax Compliance

A business making a payment subject to withholding tax should establish a clear internal process.

A practical compliance process can include:

1. Identify the payment

Determine exactly what is being paid.

Is it:

• rent?

• interest?

• royalty?

• consultancy?

• technical services?

• government contract?

• dividend?

2. Identify the recipient

Determine whether the recipient is:

• an individual;

• a company;

• a resident;

• a non-resident;

• a related party; or

• an unrelated third party.

3. Determine the applicable rate

Check the relevant Taxation Act, current Financial Act and applicable tax guidance.

4. Calculate the withholding

Calculate the tax on the appropriate taxable base.

5. Deduct the tax

Deduct the applicable amount before making the payment to the recipient.

6. Remit the tax

Submit the required withholding statement and remit the tax within the applicable statutory deadline.

The Taxation Act provides for withholding statements and remittance to the tax authority, with the original framework requiring payment within 15 days after the end of the calendar month in which the tax was withheld, subject to the specific statutory rules.

7. Maintain supporting documents

Maintain:

• invoices;

• contracts;

• payment records;

• withholding calculations;

• tax receipts;

• withholding certificates;

• supplier information; and

• relevant tax correspondence.

Good documentation is particularly important during tax reviews or audits.

Common Withholding Tax Mistakes

Businesses can encounter problems when withholding tax is treated as an administrative issue rather than a transaction-planning issue.

Common mistakes include:

Paying the full invoice without withholding

A company may pay the supplier the full invoice and only later discover that tax should have been withheld.

Using the wrong tax rate

Different categories of income can have different rates.

Ignoring non-resident payments

Cross-border payments require particular attention because different withholding provisions can apply.

Not including withholding tax in project pricing

A contractor may calculate project profitability using the gross contract value without considering the cash impact of withholding tax.

Poor contract drafting

If the agreement does not specify whether the price is gross or net of withholding tax, disputes can arise.

Failure to obtain evidence of remittance

The recipient may require evidence that tax deducted from its payment was actually remitted.

Treating withholding tax as automatically being the final tax

The current framework can treat withholding as an advance tax for specified categories, meaning businesses should understand how the withheld amount interacts with the recipient's overall tax liability.

Withholding Tax Checklist for Businesses

Before making a significant payment, businesses operating in South Sudan should consider the following:

• What is the nature of the payment?

• Is the payment subject to withholding tax?

• Who is receiving the payment?

• Is the recipient resident or non-resident?

• What withholding tax rate applies?

• Is the tax calculated on the gross amount?

• Does the contract contain a tax gross-up clause?

• Has the tax been deducted before payment?

• Has the withholding been remitted to the tax authority?

• Has the required documentation been retained?

• Can the recipient claim the withholding as a tax credit?

• Are there other tax implications associated with the transaction?

Why Withholding Tax Matters for Investors

For investors entering South Sudan, withholding tax should be considered as part of the initial transaction and market-entry assessment, rather than only after operations begin.

For example, an investor establishing a subsidiary may expect to pay:

• foreign technical consultants;

• overseas management companies;

• landlords;

• lenders;

• shareholders;

• contractors;

• technology providers.

Each payment may have different tax implications.

Understanding these obligations in advance helps investors develop more accurate financial models and avoid unexpected reductions in cash flow.

How Omnisage Can Support Withholding Tax and Tax Advisory

Omnisage supports businesses and investors navigating tax, financial and regulatory considerations in South Sudan.

Our advisory support can include:

• Withholding tax assessment

• Transaction tax analysis

• Tax compliance reviews

• Contract and tax-clause review

• Cross-border payment assessment

• Resident and non-resident tax considerations

• Tax registration and compliance support

• Financial and tax due diligence

• Investment structuring support

• Regulatory and government advisory

For investors and companies entering or expanding in South Sudan, withholding tax should be assessed alongside the broader legal, financial and regulatory requirements of the transaction.

Considering an investment, business transaction or market entry into South Sudan? Speak to an Omnisage advisor.

Conclusion

Withholding tax is an important component of doing business in South Sudan.

The obligation can arise across a range of transactions, including dividends, interest, royalties, rent, technical and consultancy fees, government contracts and other specified payments.

For businesses, the key is not simply knowing the headline rate. The correct treatment depends on the type of payment, recipient, residency status, applicable legislation and current Financial Act.

Businesses should therefore review withholding tax before entering into significant contracts or making cross-border payments. Proper planning can help reduce compliance risks, improve cash-flow forecasting and ensure that tax obligations are incorporated into the commercial structure of a transaction.

Note: This article provides general information for business and investment planning and should not be treated as a substitute for transaction-specific tax or legal advice. South Sudan's tax rules may change through annual Financial Acts, regulations and administrative guidance. The applicable rules should be confirmed for the relevant tax year and transaction.