JUBA , SOUTH SUDAN – South Sudan’s government says it has lost more than $4 billion in unpaid oil taxes since the country gained its independence a decade ago.
Vice President James Wani Igga, who chairs the country’s economic cluster, said the government is enacting measures to get hold of the money.
“In the area of oil, we are discovering painful malpractices, maladministration. For example, we have over 500 service companies. Most of them have never paid income tax,” Igga told reporters this week in Juba.
After poring over the activities of oil companies since the country’s independence in 2011, the government determined that hundreds of companies owed it a total of $1.5 billion dollars in income taxes and $3.3 billion dollars in arrears, according to Igga.
“We are taking this seriously. If you add $1.5 billion plus $3.3 billion, you have $4.8 billion. This would have done a lot for the country. You don’t even need to borrow from anyone, but we have been cheated,” Igga said Wednesday at an event officially launching the country’s first oil and gas licensing auction.
Igga did not explain how the government had failed to collect the taxes and arrears, but he vowed to take concrete measures to recover the money.
“Let me here in my capacity as the economic cluster chair warn all that we are going to be more stringent. For sure, we are not going to continue like that. We are going to be more stringent, and we will never stomach any defrauding or nonpayment of government rights by any concerned company,” Igga said.
Ahmed Morjan, a senior economics lecturer at the University of Juba, said he was not surprised to hear the government lost billions of dollars in oil-related tax revenue. The discovery may just be the tip of the iceberg, he said.
“There have been a lot of loopholes in the tax arrangements in South Sudan, especially those who are responsible for collection. Now you can imagine if taxes are not collected from companies for 10 years, then one may suspect foul play in it because under normal circumstances, every business is supposed to be paying its taxes on an annual basis,” Morjan told VOA’s South Sudan in Focus.
Morjan said the government should step up its investigations into companies that never pay taxes.
“They have to find out and strategize how these companies should be paying their taxes to the government, and the arrears, and they should make clear that every year, taxpayers pay their taxes,” he said.
The 2012 South Sudan Petroleum Act requires that all companies operating in the oil industry pay taxes and customs duties to the national government. Chapter 16 states that anyone conducting petroleum activities in the country shall pay taxes and customs duties in accordance with the applicable law, and that the Ministry of Petroleum shall develop “a model petroleum agreement in cooperation with the ministry of finance.”
The act also requires that all taxes, royalties, rental fees and any other fees payable to a licensee or contractor in the oil sector be paid to the National Revenue Fund.
