OBOY & CO. Advocates

06/03/2021

Constitutionality of Presidential Decrees appointing state government officials

Recently, the President of the republic of south Sudan issued a number of decrees ‘appointing’ state government officials (Ministers, Deputy Ministers, Advisors, County Commissioners and Chairpersons and Deputies of independent Commissions) in all the ten states of the country. The ‘appointments’ was welcomed by many across the nation who felt that it represents progress in the implementation of the Revitalized Agreement on the Resolution of the Conflict of South Sudan (R-ARCISS). On the other hand, there were others who questioned the legitimacy of decrees.

The Decrees for the appointment of the state government officials, as read on the national broadcaster, were issued pursuant to Article 106(A)(2)(a) of the Transitional Constitution of the republic of South Sudan 2011 as amended; Articles 1.9.2.1 1.16.2, 1.16.3 and Item 20 and 21 of Annexure D of (R-ARCISS). Article 106(A)(2)(a) of TCRSS states that “the president shall, in consultation with the First Vice President and the four Vice Presidents in order to reach at mutual understanding and agreement in accordance with the Agreement and the law, exercise the powers of appointment of constitutional office holders and judicial officers including State governors.” This provision was introduced into TCRSS by Constitutional Amendment Act no.6/2020 which incorporated the provisions of R-ARCISS into TCRSS including Article 1.9.2.1 of R-ARCISS which is in pari materia with Article 106(A)(2)(a). Article 1.16.2 of R-ARCISS provides for reconstitution of state and local governments.

In addressing the constitutionality of the Decrees, one has to look firstly into the question whether those appointed state government officials are constitutional office holders (as stated in the decree) and secondly the question of who has authority to appoint those officials. According to Black’s Law Dictionary a ‘constitutional officer’ is a government official whose office is created by the Constitution; rather than by statute; one whose term of office is fixed and defined by the constitution. From that definition, state Ministers (and indeed national Ministers) and their deputies, county commissioners, Advisors are clearly not constitutional office holders since their offices are not a creation of the constitution and their functions and terms of office are not fixed by the constitution. Members of independent Commissions, on the other hand, are constitutional office holders as their functions, powers and terms and conditions of services are regulated. In that regard, the Decree is defective.

The more difficult issue to address (perhaps) is whether the Chairpersons, Deputies and members of state independent Commissions are constitutional office holders. Part IX of Transitional Constitution provides for the establishment of independent institutions and Commissions (Employee Justice Chamber, the Anti-corruption Act, the Human Rights commission Act, Public Grievances Chamber, Relief and Rehabilitation Commission, Demobilization, Disarmament and Re-integration Commission and HIV/ AIDS Commission). The president has powers to establish other Commissions through legislation (e.g. Peace and Reconciliation Commission).

The functions and composition of the Commissions are provided under TCRSS and written laws. The Chairpersons, deputy Chairpersons and members of the above mentioned institutions are appointed by the President (before 2020 Amendment) with the approval of National Legislative Assembly and their functions are stipulated in the enabling laws, for example the South Sudan Human Rights Commission Act 2009. Such Commissions have their Head Offices in Juba and may establish branch offices in the ten states (e.g. under section 6(4) South Sudan Human Rights Commission Act, 2009).

The question is: if national Commissions like the Human Rights Commission may, by law, establish branches in the ten states, then what would be the function of a State Human Rights Commission? Are the ‘state independent Commissions’ branches of the national Independent commissions established under the Constitution? If not is that not duplication of work? And if the national body is answerable to the President and National Legislative Assembly, to whom is the state independent commission answerable to? If answerable to the state Governor, why would the power to appoint be vested in the President?

As mentioned earlier, the question of state independent Commissions is a difficult one. Perhaps they are established under the State Constitutions, which I have not had access to any. Be that as it may, Schedule B of Transitional Constitution on the powers of states is silent on the question of independent Commissions, though Item 6 of Schedule B provides for the state Civil service.
Indeed R-ARCISS has not addressed this issue clearly stipulating that existing Commissions and Institutions shall be restructured and reconstituted at the national level only. (Article 1.19.1)

Since R-ARCISS states that existing Commissions shall be restructured and reconstituted at the national level only, then the Decree appointing Chairpersons, Deputies and members of state independent Commissions is null and void. Perhaps governors would be better placed to appoint state independent Commissions if the national and State Constitutions allow.

Regarding the mandate to appoint the other state government officials (Ministers and their Deputies, Advisors and County Commissioners, Article 1.16.2 of R-ARCISS provides for the reconstitution of state and local governments at the beginning of the Transitional period, in accordance with responsibility sharing formula dictated by R-ARCISS. The positions to be shared by the parties to the agreement includes the Governors, Speakers of state Legislatures, State Councils of Ministers, State legislatures, county commissioners and County Councils. (Article 1.16.3)

Annexure D of R-ARCISS which was also cited in the decrees as granting the President power to appoint state government officials basically provides how the Agreement shall be implemented clearly stipulating activities or tasks to be performed, the persons or bodies responsible for performing those tasks and timeframes to complete those activities. Specifically, Item 20 of Annexure D provides that Presidency and the Parties are responsible for reconstituting state and local government. Item 21 of Annexure D, on its part, provides that the Presidency, the Parties and RJMEC are responsible for “...appointment of Transitional Governors, Speakers of State Legislatures, State Councils of Ministers, State Legislatures, county Commissioners, County Councils(if any)”

From the text of Item 20 and 21 there is no explicit mention of “President”. The word closest to “President” there is “Presidency”. However the two are not synonymous. The term “Presidency” has been defined in Article 1.5.1 of R-ARCISS as comprising the President, the First President and four Vice Presidents. Having said that, it is perplexing how the word President was ‘imported’ in the Decrees. Seemingly, Item 21 was not intended to give appointing authority to any of those persons mentioned but rather to ensure that the parties to the Agreement adhere to the formula of sharing power at the state and local government level. Indeed there had initially been disagreements on how to share power in the state government level between the Parties to the Agreement and through some guidance from RJMEC, those disagreement were resolved.

Having stated that Item 21 of Annexure D was not intended to give the President appointing authority, the question is who has the power to appoint those state government officials?

The answer to that question can be found in Article 165(2) of TCRSS as amended states “The Governor of each State shall be the head of executive organ in the State and shall appoint and relieve the Deputy Governor, Advisors, and State Ministers in consultation and agreement with the President, First Vice President and the four Vice Presidents and the nominating party and in accordance with the State Constitution and the Agreement”

According to general principles of interpretation of Constitutions, where words in a constitution are clear, they should be given their plain, ordinary meaning. This literal rule is equally applicable here. The provision clearly states that the governor (not the President) has power to appoint State Councils of Ministers and Advisors. It is therefore the governors of the ten states who ought to have appointed those officials and not the president, as decreed. Consequently, those decrees are null and void.

The second principle of interpretation of Constitutions is that a Constitution has to be read as an integrated whole and no particular provision destroying the other(s) but each sustaining the other. This is called the rule of harmony; rule of completeness, and exhaustiveness and the rule of paramountcy of the written constitution. This rule has clearly been ignored here. The Advisors of the President, in their wisdom (or lack of it thereof) chose to read some parts of the constitution in isolation of others thereby arriving at an erroneous legal position.

In conclusion, no single provision of R-ARCISS or TCRSS empowers the President, explicitly or by necessary implication, to appoint State government officials (except Governors). In fact, the letter and spirit of R-ARCISS is the devolution of powers to the State and Local Government levels (Article 1.2.15). Although the list of persons appointed was agreed upon by the Presidency and the Parties, and had the blessings of the President, the proper appointing authorities ought to be the governors and the subsequent “delegation of power to governors to swear in the “appointed” state government officials is of no consequence to cure that illegality.

By Bryan Oboy
Advocate & Legal Consultant

07/01/2020

On 12th December 2019 the Ministry of Finance and Economic Planning finally published the Financial Act 2019-20 which H.E the President had signed on 17th September 2019. (www.mofep-grss.org)

The Act revises a number of taxes and fees payable to different government agencies.
Of particular importance is Personal Income Tax (PAYE). The rates are as follows:
0-2,000SSP Zero rated
2,001-5,000SSP 5%
5,001-10,000SSP 10%
10,001-15,000SSP 15%
15,001 and above 20%

Evidently, those who will be hit hard are those working in the private sector and Non-Governmental Organizations where salaries are significantly higher than in government where the basic salary of a senior civil servant or Constitutional Post holder is roughly less than 10,000SSP( about 30USD)

21/10/2019

SOUTH SUDAN, Juba

AN OVERVIEW OF THE FINANCE BILL FOR 2019-20

In June 2019, the Ministry of Finance and Economic Planning submitted to the National Legislature the Finance Bill 2019-20. The Finance Bill 2019-20 introduced a number of changes to the Taxation Act 2009 as amended and the Financial Act of 2018-19. These changes are outlined below:

PERSONAL INCOME TAX

The exemption level of personal income tax from wages has been raised from South Sudanese Pounds Six Hundred (SSP 600) to Two Thousand (SSP 2,000). The number of income brackets scaled up and rates of taxes altered.

a) Taxable income of SSP 2,000 per month and under are now not subject to tax (i.e. zero Per Cent)
b) Taxable incomes ranging from SSP 2,001-SSP 5,000 are charged at the rate of five Per Cent (5%)
c) Taxable incomes ranging from SSP 5,001-SSP 10,000 are charged at the rate of ten Per Cent (10%)
d) Taxable income ranging from SSP 10,001-SSP 15,000 are charged at the rate of fifteen Per Cent (15%)
e) Taxable incomes ranging from SSP 15,001 and above are charged at the rate of twenty Per Cent (20%)

RENTAL INCOME OR INVESTMENT INCOME

The Finance Bill 2019-20 introduces what is termed Investment income in addition to rental income. Although the Bill does not define Investment income it maintains the rate of tax for both investment income and rental income at twenty Per Cent (20%). However, the Bill introduces allowable deductions on gross rental income at Standard allowance of twenty Per Cent (20%) and any other allowable expenses, such as local council, city rate levies, or interest expense on mortgage.

EXEMPTIONS

Apart from the exemptions in the Taxation Act 2009, the Finance Bill 2019 introduces a new element of exemption as it allows exemption from personal income tax for persons from countries that have signed double taxation agreement with South Sudan.

CONTRACTS FOR SUPPLY OF GOODS AND SERVICES TO GOVERNMENT
The Finance Bill 2019-20 reduces the rate from 20% to 15%

BUSINESS PROFIT TAX

The Financial Bill 2019-20 introduces significant changes to rates of Business Profit tax. In the Finance Act 2018-19, businesses were categorized into three:

a) Small business enterprise with the tax rate at Ten Per Cent (10%);
b) Medium business enterprise with the tax rate at Twenty Per Cent (20%); and
c) Large business enterprise at the rate of Twenty-Five Per Cent (25%).
The Financial Bill 2019-20 introduces new rates which are based on the sectors of operation of the business enterprises. These are:

S/N NATURE OF COMPANY BUSINESS PROFIT TAX RATES
1. Trading companies 28%
2. Manufacturing Companies 28%
3. Financial Institutions/ Banks 20%
4. Construction Companies 25%
5. Hospitality/ Hotels 25%
6. Mining Companies 15%
7. Petroleum Companies 30%
8. Telecommunication Companies 20%

ADVANCE PAYMENT OF INCOME TAX ON IMPORTED GOODS
Under the Financial Act 2018-19, advance payment of income tax on imported goods was imposed at the rates of Two Per Cent (2%) and Four Per Cent (4%) for imported food items and all other imported goods respectively. The Financial Bill 2019-20 repeals this.

SALES TAX
The Financial Bill 2019-20 maintains the rate of sales tax on hotels, restaurants and bar services, business enterprises and imported goods at eighteen Per cent (18%). The Bill introduces sales tax on telecommunication service or call tax at the same rate of eighteen Per cent (18%).

EXCISE DUTIES
In the Financial year 2019-20, Excise duties imposed on several locally produced and imported goods remain unchanged with the exception of Excise tax on insurance companies which has been increased from seven Per Cent (7%) to Ten Per Cent (10%).

CUSTOMS DUTIES
The Financial Bill 2019-20 made some changes to the rates of Customs duties on several goods Raw material imports (or intermediate goods) that can be used to produce finished goods are zero-rated to encourage local production. Other goods that are zero rated include pharmaceutical products, preparations of the kind used in animal feeding, certain organic chemicals, rubber and articles of rubber, plastics and articles thereof in primary form, iron and steel in raw form etc.
Customs duties on some goods have been increased. These include on sugar and sugar confectionary, fertilizers (from 5% to 10%), sacks and bags of polymers (plastics) for protection of environment.

BRYAN OBOY ITORONG
Managing Partner
Oboy & Co. Advocates and Legal Consultants
[email protected]

14/10/2019

14/10/2019

PAYMENT OF TAXES IN FOREIGN CURRENCIES IN SOUTH SUDAN IS ILLEGAL

29th March 2017 the then Minister of Finance issued a Circular instructing all N.G.Os and businesses whose transactions are denominated or quoted in foreign currencies to pay their taxes in foreign currency. This Circular is a follow up of an earlier Directive by the Director General of Taxation dated 11th February 2016. (copies of the Circulars herein attached).

(i) The first issue is whether the Finance Minister and DG taxation have powers to make such directives.

Section 119(1) of the Taxation Act empowers the Minister of Finance to "...make rules and regulations as may be necessary for the effective and efficient implementation of the provisions of the [Taxation] Act." However, the law does not empower the Director General Taxation to make such rules or regulations. The power of the Director General is limited to” … prescribing forms, notices, returns and other documents necessary for the efficient and effective implementation of the Taxation Act”. (Section 119(2). Therefore, the Directive of the DG Taxation is null and void.

Although the Minister of Finance has power to make rules and regulations under the Taxation Act, such power must be exercised in accordance with the law. According to basic Principles of Administrative Law, if there is a conflict between subsidiary legislation and the terms of statutory law under which the subsidiary legislation was made, the statutory legislation shall prevail and the Courts can declare the subsidiary legislation invalid (Refer to H.R.W Wade, Administrative Law (Oxford University Press, 11th ed 2014; Also refer to Article 92 of the Transitional Constitution; Also refer Section 21(b) Interpretation of Laws and General P).

The question as to whether the directives of the Minister contravenes statutory law is addressed in issue No.2 below.

(ii) The second issue is in whether taxes may be paid in foreign currency.

Section 25 of the Taxation Act 2009 states that "any transaction which is recorded or effected in foreign currency shall be converted into [South] Sudanese Pounds(SSP) at the prevailing market rate”.

39 of the Bank of South Sudan Act 2011 states that " the currency of South Sudan and its monetary unit is the South Sudanese Pounds, the symbol of which shall be SSP."

Section 46 of the BSS Act recognizes SSP as Legal tender which shall be accepted in payment of all public and private debts in South Sudan. In other words, there is an obligation on every person (private or public) including the National Revenue Authority to accept SSP for any debt. The fact that our currency keeps depreciating cannot justify the tax authority to insist on payment in USD or any other foreign currency.

Section 47(2) of BSS Act which reiterates Section 25 of the Taxation Act states that “compulsory payments” shall be assessed and required to be paid in South Sudanese Pounds. The section defines "Compulsory payments" as any payment made to a public body other than under a contract or other voluntary transactions and includes the payment of taxes (either direct or indirect), custom dues, excise, levies, fees, charges, penalties etc.

According to general rules of legislative drafting, the word “shall” denotes mandatory duty imposed on a person or entity (Asprey 2003; Black’s Law Dictionary 8th Edition). The use of the word shall in the Taxation Act and Bank of South Sudan Act imposes an obligation on the tax authorities to assess taxes and accept payment in SSP.

(iii) The final issue is what is the applicable rate of exchange. Section 25 of the Taxation Act 2009 states that "any transaction which is recorded or effected in foreign currency shall be converted into [South] Sudanese Pounds(SSP) at the prevailing market rate.

The question of what is "the prevailing market rate" may not be an easy question, considering how volatile our economy has been Since the devaluation of our currency. It is paramount to note here that the Bank of South Sudan releases on a Daily basis "Daily Exchange Rates" of the major Foreign currencies. This information can easily be obtained from Its website: www.bankofsouthsudan.org.

The Daily Exchange Rates contains three columns: (1) Buying; (2) Selling and (3) indicative. The Selling Price is always higher than the buying Price and the Indicative is the median of the two. For purposes of tax, conversion of foreign currency to SSP, the prevailing market would be the Indicative rate since there is no buying or Selling involved. Ideally, every time a taxpayer or any person under obligation to withhold taxes (e.g. an employer or Tenant) and the income is quoted in USD or any other foreign currency desires to pay his or her tax for a specified period on a particular date, he or she must confirm the Indicative rate for that date of payment, calculate the tax payable, make payment in SSP and submit the returns to National Revenue Authority.

Conclusion:
The Directive of the DG Taxation dated 11th February 2016 is null and void as the powers of the DG is limited to prescribing forms, notices, returns and other documents. Although the Minister has powers to make rules and regulations under the Taxation Act, such rules and regulations must conform to the law. The Taxation Act as well as the Bank of South Sudan Act provides that all taxes must be paid in SSP. Therefore, the Circular dated 29th March 2017 is also null and void as it contravenes the provisions of these Act.

Bryan Oboy Itorong
Managing Partner
Oboy & Co. Advocates and Legal Consultants

04/01/2019

Happy New Year