Income Tax
Income Tax is a tax imposed on the income or profits earned by individuals, businesses, or other entities. The tax is levied by the government based on a person's or entity's total income, including wages, salaries, capital gains, and other earnings. The amount of tax paid is generally determined by a percentage of the income earned, which varies depending on the tax laws of the country or jurisdiction. Income tax is typically used to fund public services, infrastructure, and other government expenditures.
The tax is imposed for the assessment year on income from the basis period, which is derived from: Sudan in the case of a resident or non-resident person. Any place outside Sudan in the case of a resident person.
Despite any specific provisions in any other law that grants exemption from tax to any person, tax is imposed on the profits resulting from any business activity. In this clause, "business activity" refers to any work involving the trade of goods or provision of services with the aim of making a profit, and the income mentioned is related to the following: Business profits Rental income from properties Personal income Total income This applies regardless of whether the person no longer owns the source of that income in the year of assessment. However, the minister may grant exemptions to any Sudanese or foreign resident or settler in Sudan who has income under this paragraph and has paid tax in the place from where the income was derived outside Sudan. The provisions of this clause do not apply to any business activity under the Zakat Act of 2001 and the Islamic Endowments Act of 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.
Types of Deductibles and Non-Deductibles
(1) Subject to the provisions of this Act, and in order to verify the income of any person subject to tax for any basis period, with respect to incomes set forth in Section 9: (a) There shall be deducted all the expenditure incurred, in the aforesaid basis period, which are such expenditure as such person may have incurred totally in obtaining such income, not otherwise, and may not be of such expenditure as deduction is not allowed to be made thereout, under the provisions of Sub-section (1). Where any income has, under the provisions of Section 15, been deemed in an accountancy period terminating on a day other than the last day of the basis period referred to, as income for such period, the expenditure incurred within the said accountancy period shall be deemed as expenditure incurred within the said basis period; with the exception of personal income, Zakat paid for the accountancy period referred to shall be deemed from the expenditure which has to be deducted, after proof of payment thereof, to the Zakat Chamber.
(2) With respect to incomes referred to in Sub-section (1), deduction shall not be allowed, with respect to:
(a) Expenditure which such person has not spent fully in obtaining the income not otherwise;
(c) Any expenditure or losses, as may be covered under any insurance, contract, or compensation;
(d) Any expenditure spent on the living of his family, abode, or any other personal or household purpose;
(e) Any income tax similar, in nature, to income tax paid for the income, other than the post-income tax, or employment of foreign experts; on condition that the same shall be subject to tax, under the provisions of this Act, as income for the person, on whose behalf the same has been paid;
(f) Any expenditure other than that which the Secretary General has given thereon;
(g) The costs of directors, including the income which is subject to tax under the provisions of Section 12(1)(a) in whole, up to the limit by which such costs exceed 1000 Sudanese pounds, or 5% of the assessed business profits, whichever is the greater, before deducting such costs, in case where the company has achieved profit. Where there is loss, the costs allowed to be deducted shall be specified, as to such amount, as the Secretary General may prescribe; provided that: - There shall be allowed the deduction of such similar costs as the Secretary General may prescribe for any full-time director, provided that the number of full-time directors shall not exceed two; - The total amount of the costs to be deducted to directors other than the full-time directors shall not in any case exceed 30% of the business profits assessed prior to the deduction of these profits;
(h) All the allocations and reserves, with the exception of the allocations allowed by this Act, or the regulations made thereunder;
(i) Any borrowing cost (if any) which is paid, unless the same is: - Subject to tax, under the provisions of this Act, being income of the person to whom it has been paid; - Subject to tax, had such person not been exempted from the tax thereon; - Paid to a bank for a loan used by such person to achieve the income, subject to tax, under the provisions of this Act; - Paid to a body outside the Sudan, for a loan used with intent to obtain an income subject to tax, under the provisions of this Act;
(j) Incentives, grants, and rewards granted to employees, save within the limits of salary of three months annually.
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.
The tax on personal income shall be paid at the rates set forth in Sector (B) of Schedule III annexed hereto; provided that where any person is subject to tax under the provisions of this Act, with respect to:
(a) Personal income and estates lease income; (b) Personal income and business profits; or (c) Personal income and estates leases income and business profits, in this case: (i) Where the amount of income, other than personal income, does not exceed one-quarter of the amount of personal income, the tax shall be calculated on the total income from all the sources at the rates set forth in Sector (B) of Schedule III annexed hereto;
(ii) Where the amount of income, other than personal income, exceeds one-quarter of the amount of personal income, the tax due shall be calculated at the rates set forth in Sector (B) of Schedule III annexed hereto, on the personal income, and at the rates set forth in Sector (A) of such Schedule, on the income other than the personal income, in addition to the threshold exempted from tax, as the case may be.
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
(1) The Minister, by an order, may form an income tax committee, to be composed of a chairman, a deputy chairman, and a maximum of three other members, and have the authority to consider and determine disputes under the provisions of Section 58. The members of such committee shall be appointed for a term not exceeding three years, as specified in the appointment decision.
(2) The Chairman of the committee and the deputy chairman shall be persons experienced in taxation laws.
(3) The Minister may relieve any member of the committee from membership and appoint new members whenever he deems it necessary.
(4) The quorum for a meeting of the committee shall be three members, excluding the Chairman.
(5) In the absence of the Chairman from any meeting, his deputy shall assume the role of chairman of the committee.
(6) Without prejudice to the provisions of any other law, no personal responsibility shall result for the members of the income tax committee for any act or error that may occur from the committee, provided it is done in good faith in the course of performing the tasks assigned to it under the provisions of this Act.
(7) The Minister may appoint a clerk to perform the tasks assigned to them by the Chairman of the committee.
(8) The Council of Ministers shall specify the emoluments and privileges of the Chairman and members of the income tax committee, upon the recommendation of the Minister.
- "Assessment" includes the additional assessment.
- "Loss" with respect to business profits refers to the loss calculated in a manner similar to the way profits are calculated.
- "Income" includes any revenue derived from engaging in any business or occupation, as well as any revenue that the owner actually or legally derives from the sale of any goods or property related to the business, excluding capital revenues of individuals.
- "Income" includes any revenue derived from engaging in any business or profession, as well as any revenue that the owner actually or legally derives from the sale of any goods or property related to the business, excluding capital income specific to individuals.
- "Tax" refers to the income tax imposed under the provisions of this law.
- "Business" includes any trade, profession, craft, agriculture, industry, mining, or any wealth derived from the land or water, but does not include employment.
- "Accounting period" refers to the period for which a person prepares the accounts of their business.
- "Certified Accountant" refers to any person who is authorized by the minister in writing to work as a certified accountant in relation to this law.
- "Competent Court" refers to the court responsible for administrative appeals according to the Civil Procedures Act of 1983 or any law that may replace it.
- "Full-time Service Manager" refers to the company manager who is required to dedicate the majority of their time to serving the company in an administrative and technical capacity.
- "Resident" refers to a person who has made Sudan their place of residence and has shown intent to settle there.
- "Settler" refers to a person who has made Sudan their place of residence and has shown an intention to settle there.
- "Resident in Sudan" When applied to the basis period: (A) For any individual, it means that the individual is a resident in Sudan, except for temporary absences that the Secretary-General deems reasonable. An individual is considered a resident in Sudan if: (1) They have been in Sudan for a total of 183 days or more during the basis period. (2) They have remained in Sudan for the aforementioned basis period and in the two previous basis periods for a total of more than twelve months. (B) For any person who is not an individual, it refers to the supervision and direct management of the business of that person within Sudan during the aforementioned basis period. In reference to this law, a "resident" or "non-resident" of Sudan means that the person is considered a resident or non-resident of Sudan based on the situation in the basis period.
