Income Tax
Income tax is a financial charge imposed on individuals' and companies' income as per the Income Tax Act 1986 and its amendments . It's a key source of government revenue, funding public services like healthcare, education, and infrastructure.
Tax is imposed for the tax year on income from the base period arising from : 1. Sudan (for residents and non-residents). 2. Any place outside Sudan (for residents). Despite any law granting tax exemption, tax is imposed on profits from business activities, which include: - Trading goods or services for profit, relating to: - Business profits - Rental income from real estate - Personal income - Total income This applies even if the person no longer owns the income source in the tax year. The Minister may grant exemptions to Sudanese or foreigners residing in Sudan with income taxed abroad . These provisions don't apply to businesses under the Zakat Act 2001 or Islamic Endowments Act 1996.
Tax Returns and Audited Accounts
1/ For the purposes of applying the provisions of Article 38(1) of the law, the Secretary General may request companies: A. That are audited by the General Auditor to submit a return for the same period mentioned in the aforementioned article. B. That close their accounts on a date other than 12/31 to submit the return and audited accounts within a period not exceeding the period mentioned in the above article.
2/ Every person subject to the self-assessment system must submit their self-assessment return regarding their income and pay the tax due at the time of submitting the return, accompanied by supporting data and documents. The Secretary General must accept it as it is. If it is found that the return is incorrect after review, an additional tax will be imposed, not exceeding twice the amount of tax determined from the audit and review.
3/ If any person submits a return and audited accounts for the same period, prepared or examined by a certified accountant in their professional capacity, the following must be stated: a. The nature of the accounting books and supporting documents. b. That they represent a true, clear, and fair view of the profits and earnings during that period, along with any reservations, if applicable.
The documents required to be submitted with the tax declaration include:
Lease agreements.
Return certificates.
Zakat payment certificate.
Private residence lease agreement.
Certificate from financial institutions to determine the cost of borrowing.
Certificate of search in case of transactions transferring property ownership.
Final legal notice.
Birth certificates and marriage certificates.
Supporting documents for expenses (maintenance, repairs, administration) in the case of submitting audited accounts.
Declarations &Announcements
For the purposes of applying the provisions of Articles 40, 39, and 38 of the law, individuals and companies subject to the tax must comply with submitting the declarations and audited accounts on time, indicating the following:
1/ The name of the tenant and their address.
2/ The property number.
3/ The start date of the lease and its amount in both local and foreign currency, signed by the owner or their legal representative.
The income upon which the tax is levied
(1) Subject to the provisions of this Act, the tax shall be levied, for the assessment year, upon such income from the basis period, as may result out of: (a) Sudan, in case of a resident, or non-resident person; (b) any place outside Sudan, in case of a resident person;
(2) Notwithstanding any special provisions in any other law granting an exemption from tax, to any person, tax shall be levied upon the profits resulting from any commercial activity. In this Sub-section, "commercial activity" means any business of dealing into a commodity or rendering a service for the purpose of profit; provided that the said income shall relate to the following: (a) business profits; (b) estates leases income; (c) personal income; (d) gross income, regardless of the fact that such person no longer owns, in the assessment year referred to, the source of such income; provided that the Minister may grant exemptions to any Sudanese, or resident alien, or domiciled in Sudan, who has an income which falls under paragraph (b) and is subjected to tax, at the place from which he has derived the income outside Sudan.
(3) The provisions of Sub-section (2) shall not apply to any commercial activity under the Zakat Act, 2001 and the Islamic Endowments Act, 1996.
(4) The Minister may, after consultation with the Minister of Welfare and Social Insurance, reimburse the amounts collected from the tax of the income of the profits of the commercial activity of any legally registered charitable body.
Exemption of a particular income from tax
Notwithstanding any contravening provision in the Act, there shall be exempted from tax the income set forth in Schedule 1 hereto to such extent specified therein:
The Council of Ministers may, upon recommendation of the Minister, by an order to be made thereby exempt any income from tax;
(i) to such extent, as may be set forth in Schedule I hereto, and such extent specified therein;
(ii) any income or any type of income from tax to such extent as may be set forth in such order.
The Council of Ministers may, upon recommendation of the Minister, revoke the exemption granted under the provisions of Sub-section (1) with respect to any income generally or to such extent, as may be set forth in the order.
Document Required for Granting the Exemption
1. The period of service or reaching the age of fifty years for the government and fifty years for the private and public sectors shall be verified in accordance with the decision issued by the Minister of Finance (on the maximum exemption), and the exemption shall end upon termination of service with the entity for which the exemption was granted. In case of transfer to another entity, the specific rules of the other entity shall apply.
2. Procedures and documents required for exemption:
a. Submission of the application.
b. Service certificate or employment contract.
c. Birth certificate or age assessment, provided the age assessment certificate is issued within three years of the exemption application date.
For the purposes of applying the provisions of Article 39(3)(4)(5) of the law, every person subject to tax must keep accounting books, either manual or electronic, recording the volume of activity, with at least journals, ledgers, and inventory, in addition to necessary documents to explain any entry in those books, for a period of not less than six years after the base period to which those books and documents relate, in either Arabic or English. If there are documents or invoices in a currency other than the Sudanese pound, they must be converted to its equivalent at the exchange rate at the time of the transaction, stating the exchange rate used.
Expenses allowed to be deducted from income subject to Business Profits Tax for the purposes of applying the provisions of Article 18(1)(A) of the law:
1. Expenses related to the activity and necessary for its operation.
2. Communication expenses (telephone, telex, fax, internet): work-related expenses are fully deductible, others as deemed appropriate by the Secretary-General according to the nature of the work.
3. Subscriptions to trade chambers, scientific journals, and bulletins related to the work.
4. Advertising expenses as determined by the Secretary-General.
5. Hospitality and entertainment expenses related to the work as determined by the Secretary-General.
6. Rent paid for the workplace.
7. Depreciation of fixed assets at the rates specified in the First Schedule attached to these regulations.
8. Legal expenses related to the work.
9. Professional allowance subject to the provisions of Article 18 of the law, provided the taxpayer has submitted an acceptable declaration to the Secretary-General under Article 38 of the law.
10. Salaries, wages, and similar payments, subject to payment of Personal Income Tax.
11. Zakat paid during the accounting period, subject to proof of payment.
12. Bonuses, grants, and rewards given to employees, not exceeding three months' salary in a year, subject to payment of Personal Income Tax and proof thereof.
13. Amounts payable for repair of buildings, machinery, and equipment: a. Not considered capital expenditure. b. No depreciation is allowed under the Second Schedule attached to this law. c. Must be used in the production of business profits.
14. For the purposes of applying Article 20(E)(1) of the law, for debts to be considered bad: a. The person must have correct audited accounts or a correct declaration. b. The debt must be related to the person's activity. c. The debt must be of a specific value and included in the person's accounts. d. The person must have taken legal action to recover it and a decision must have been issued.
15. Allowance is made for deduction of any post-service benefits or savings or pension fund established specifically for paying pensions or similar benefits to employees upon retirement or to their dependents after death, subject to approval by the Secretary-General under the following conditions: a. There must be a regulation establishing the rights of members, approved by the Labor Office. b. The employer must separate the post-service benefits or savings or pension fund from the business funds by opening separate accounts with banks and preparing separate audited accounts. c. Social security contributions payable by the employer on behalf of the employee must be deducted if paid to social security or a pension fund.
For the purposes of applying the provisions of Article 18(2) of the law, the expenses not allowed to be deducted from taxable income are:
1. Provision for bad debts.
2. Business Profits Tax.
3. Interest paid to the owner of the business on his capital.
4. The owner's or partner's salary, except for the management remuneration specified in Article 20(F).
5. Expenses corresponding to the exempt part of the activity.
Verification of Estates Leases Income
Upon verifying the estates leases income of any person, which is obtained from any land, or premises, in any basis period, there shall be deducted, from the rent of the estates obtained by such person, with respect to such period:
(a) Where such person himself hires such land or premises, the value of the rent of the estates which he has paid therefor, with respect to such period;
(b) Where such income is derived by any individual from a lodging, the value of the rent paid by such individual to occupy a lodging, which is the only place of his abode;
(c) With respect to repairs, maintenance, management, or insurance of such land or premises, the person may choose one of the two following ways, and he may not forsake the same, save upon the approval of the Secretary General, and after ascertainment that the object of forsaking is not tax evasion:
(i) In case of the person presenting validated audited accounts, the actual expenditure set out in this paragraph, in whole, as may be entered on the accounts, after ascertainment of the accuracy thereof, including: - The current annual repairs, maintenance, insurance, and borrowing cost (if any) - Management expenditure, as the Secretary General may prescribe - Depreciation of the premises, the furniture, and the devices belonging thereto
(ii) In case of presenting an accurate return, in accordance with the provisions of Section 38 and 47 (3), thirty-five percent of the total income for the expenditure set out in this paragraph; provided that where such person is required, in pursuance of the terms of any agreement, to only incur part of the total expenditure of such repairs, maintenance, insurance, or management, or not required to do anything thereof, the allowed deduction, under this paragraph, shall be such part of the percentage, or nothing thereof, as the case may be;
(d) The value which he pays, in such period, for the Localities rates levied upon such land or premises, and in case of land or premises situated in a country outside the Sudan, for any taxes of similar nature collected thereon, in such country;
(e) The borrowing cost paid for any mortgage (if any) as a security for payment of any loan, or part thereof, as he may have borrowed for the purchase of such land or premises, which shall be treated as follows:
(i) Deducting the value of borrowing cost paid thereby in such period; (ii) The value of the borrowing cost paid during the years of building, in such way as may be deemed as if paid in the year of completing building, and deducting the same within ten years, commencing from the year of completing the building;
(f) Any such other deduction, as the regulations may prescribe.
For the purposes of applying the provisions of Articles (9, 12, 26) of the law, personal income can be defined as the income derived from salaries, wages, and similar benefits, whether in cash or in kind, representing the revenue or income resulting from the work element performed by the employee for the account of another, the employer, whether it is the government, a private entity, or an individual.
The tax is imposed for the assessment year on the income from the base period resulting from:
1. Sudan, for the purposes of applying the provisions of Articles 12 and 26 of the law, every employer must deduct from the taxable income subject to Personal Income Tax the amount of tax and remit it monthly to the Taxation Office.
2. Any place outside Sudan in the case of a resident person. In case any amounts are deducted on account from any entitlement, the employer must pay those amounts to the Office, to be reviewed and settled to the account of the person from whom it was deducted for the relevant assessment year.
For the purposes of applying the provisions of Article 41 of the law, the employer must:
1. Deduct Personal Income Tax from all employees according to the laws and regulations governing salaries, wages, allowances, bonuses, and other cash and in-kind benefits, and remit the deducted amounts to the Personal Income Tax account on or before the 15th of the following month.
2. Send detailed payroll statements to the relevant office showing the names of employees and salaries for each month separately.
3. Make adjustments for salaries, wages, benefits, and other payments to all employees at the end of the year and remit any difference to the Taxation Office if applicable.
4. Deduct tax from Board of Directors' remuneration as per relevant regulations.
5. Keep payroll records for five years and allow the Secretary-General or his delegate to inspect them.
6. Notify the Taxation Office in case of cessation or freezing of activities or change of location (address).
7. Every employer paying personal income subject to tax, due to be paid to a deceased employee before his death or to an employee who has left employment, must deduct the tax payable from the employee's entitlement.
8. The employer must deduct tax from local and foreign employees and remit it to the Taxation Office. If tax is not deducted from the employee and is borne by the employer on his behalf, the tax will be treated on a "tax on tax" basis.
Books Presented and Kept, Appearance and Otherwise
(1) The Secretary General, or any person he may delegate for the purpose of obtaining full information regarding the income of any person or class of persons, and notwithstanding any provision in any other law, may require any person, by a written notice, to:
(a) Present, to the Secretary General for examination, or to any person he may delegate, at such time and place as may be set forth in such notice, any accounts, account books, lists of assets and debts, and any other documents that the Secretary General may deem necessary for such purpose;
(b) Present immediately any accounts, account books, or other documents, as the Secretary General or his delegate may specify in such notice, and retain the same for such reasonable period as may be sufficient to examine them;
(c) Appear at the time and place set forth in such notice, with the intention to interrogate him regarding his income, or the income of any other person, or any transactions or matters that may appear to be connected with such income.
(2) A person who keeps electronic accounts shall enable the Secretary General to enter his electronic system, peruse his accounts, books, and documents, and take a copy thereof for the purposes of examination and auditing to ascertain the income.
(3) Where the person fails to comply with the provisions of Sub-sections (1) and (2), the Secretary General, without prior notification, may enter the places of business of such person during working hours, to examine the accounts, books, documents, and data he deems necessary, and take the same for purposes of examination and auditing to verify his income, without prejudice to the provisions of Section 44(1)(b).
(4) Any national or state governmental bodies, localities, public corporations, public and private sector companies, and factories shall prepare a suitable office for tax employees whenever required by the Secretary General or his delegate.
Sanctions Consequential to Omission of Presenting Returns
(1) There shall be inflicted upon every person who: (a) is required to present an income return under the provisions of Section 38 and 47 (3) but omits to present the same within the time specified, a sanction of one hundred Sudanese pounds for each day on which such omission continues, or such amount as the Secretary General may deem fit; provided that the sanction shall not exceed 5% of the total due tax; (b) omits to comply with the provisions of Section 41, or any written notice under any of Sub-sections (2) or (3) of Section 39, or under Section 40, a sanction of fifty Sudanese pounds for each day on which such omission continues.
(2) The Secretary General shall assess the sanctions imposed upon any person under the provisions of Sub-section (1) at such periods as he may specify and serve the person in default with a written notice. All the provisions of this Act relating to appeals against assessments shall apply to such notice, as if it were a notice of assessment under the provisions of this Act, in such a way that the grounds of appeal against the sanction included in such notice shall be restricted to:
(a) the fact of default in presenting the return, or presenting a copy of the audited accounts, or omission of keeping the required records and books;
(b) the period in which such default continues; provided that where the person in default is unable to present the returns and audited accounts due to his absence from Sudan, illness, or another reasonable cause, the Secretary General may, at his discretion, waive the sanction wholly or partially, either before or after sending the written notice.
(3) Subject to the provisions of Sub-section (1), where the person continues to omit presenting the income return under the provisions of Sections 38 and 47 (3)(a) for a period exceeding six months from the prescribed date for presenting the same, he shall be deemed to have committed the offence of tax evasion and shall be punished with the penalties provided for herein.
Appeals - Income Tax Committee
For applying Article 55 of the law, the Secretary-General's appeal stage is divided into three levels for centers, general administrations, and states as follows :
1. Level One: An appeals committee reviews appeals according to regulations and submits a report to the Secretary-General.
2. Level Two: Appeals against Level One decisions are reviewed by another committee according to regulations, which submits a report to the Secretary-General.
3. Level Three: Handled by the Secretary-General through: a. Submitting an appeal to the relevant office, center, or general administration. b. The relevant director submits a memo to the Technical Operations Department for study, which makes recommendations to the Secretary-General .
- For the purposes of applying the provisions of Article 11 of the law, a tax on rental income from real estate is imposed on persons resident in Sudan and non-residents in case of income generated in Sudan as follows:
- The tax is determined on income derived from renting or holding land or buildings, whether actual or deemed, including furnished rented buildings, and the entire rent due.
- Tax is imposed on income received for subleasing land or a building previously rented, on the difference between the two rents without any expenses (sublease).
- For the purposes of applying the provisions of Article (10) of the law, taxable profits include the following:
- Profits resulting from any work for any period during which that work is performed.
- Profits from commercial, industrial, and service activities, extraction of minerals, petroleum, or any natural resource from the earth or water, agriculture, or similar activities.
- Profits from dividing land and selling it, or building or buying real estate with the intention of selling it professionally.
- Brokerage, commission agency, and intermediation activities for buying, selling, or renting real estate or any type of goods and services.
- Profits from any right or document or license granted to a person to use or hold any asset, whether tangible or intangible, excluding income from land and buildings.
- Income from royalties for the use of trademarks, patents, copyrights, designs, and industrial or scientific expertise, or similar rights.
- Profits from deposits, sukuk, savings accounts with banks, and investment fund returns for corporate entities.
- If the Second Schedule attached to this law includes a balance reserve as trading income for any accounting period, its value is considered business income for that period ( Withholding tax ).
- Seizable and Disposable Assets For applying Article 69 of the law, seizable and disposable assets include: - Lands, houses, goods, money, cash, bank balances, checks, bills, government securities, financial securities, debts, company shares, and other seizable assets held personally or by another person as a trustee.
- Disposal of seizable Assets - Movable assets are sold by public auction 10 days after seizure. - Perishable goods may be sold immediately, with proceeds deposited with the Taxation Office.
- Administrative Seizure Conditions 1. Seizure requires : a. Tax payment deadline passed. b. No lawsuit filed under Article 68. c. Secretary-General's order or delegation. d. Seizure during business hours, preferably with taxpayer or representative present. Seizure Procedures
- - Seizure report signed by tax officer and taxpayer or representative. - Police officer presence can be requested. - Report includes : a. Seizure location, procedures, obstacles. b. Detailed list of seized items, estimated value. c. Signatures of tax officer and taxpayer or representative.
- - Valuables estimated by expert appointed by Taxation Office. Special Procedures : - Doors/breaking locks only with police presence. - Cash seized detailed and deposited within 24 hours .
- For the purposes of applying the provisions of Article 18 of the law, the following conditions must be met for costs and expenses to be deductible: 1. They must be related to the activity and necessary for its operation.
- 2. They must be actual expenses supported by documents, except for costs and expenses that are not customarily supported by documents, such as (internal travel expenses, internal customer hospitality, cleaning, routine maintenance, daily and weekly newspapers and magazines if required by the nature of the activity).
- 3. The expenses must relate to the relevant base period and not to previous or subsequent years.
- 4. The expenses must relate to an activity subject to tax for the relevant base period.
- "Assessment" includes the additional assessment.
- - "Loss" in relation to business profits means a loss computed in a similar manner to profits.
- - "Income" includes any revenue derived from carrying on any business or employment, and any revenue accruing to the owner from the sale of any goods or assets belonging to the business, excluding individuals' capital gains.
- - "Tax" means income tax imposed under this law.
- - "Business" includes any trade, profession, vocation, agriculture, industry, extraction of minerals, or any natural resource from the earth or water, but excludes employment.
- - "Accounting period" means the period for which a person's business accounts are made up.
- - "Chartered accountant" means a person authorized in writing by the Minister to act as a chartered accountant for this law.
- - "Competent court" means the court competent to hear administrative appeals under the Civil Procedure Act 1983 or any other law replacing it.
- - "Full-time service director" means a company director required to devote most of their time to the company's service in an administrative or technical capacity.
- - "Resident" means a person who has taken Sudan as their place of residence and shown intention to settle there.
- - "Resident in Sudan" when applied to a period: (a) For an individual, means the individual is resident in Sudan, excluding temporary absences deemed reasonable by the Secretary-General. An individual is considered resident if: (i) Present in Sudan for 183 days or more in the period. (ii) Present in Sudan in the period and both preceding periods for 12 months or more. (b) For a non-individual, means control and management are exercised directly in Sudan in the period. References to "resident" or "non-resident" in Sudan refer to the person's status in the base period.
