Liberia looks to implement VAT

Preparations to replace GST with VAT

The Department of Domestic Tax at the Liberia Revenue Authority (LRA) is stepping-up its preparations for the implementation of a full Value Added Tax regime. Implementing legislation has been completed as part of Liberia’s commitment to the Economic Community of West African States (ECOWAS) to introduce a VAT regime.

Liberia is set to join over 175 countries that have a VAT or GST regime. This would replace its existing sales tax, known as Goods Services Tax (GST). The aim is to extend and stabilise the tax base, and boost exports by eliminating cascading taxes. The possible implementation date with

GST is currently levied as a charge on most supplies of goods and services at 10%. There is no right to deduct GST incurred by businesses. VAT would allow for deductions of input tax suffered – GST can give rise to tax cascading, or compounding, with distorts and slows economic development and manufacturing. There is a surcharge on telecoms services of a further 5%. Travel services are levied at a reduced rate of 7%.

Liberia is being supported by ECOWAS. VAT is prevalent in most West Africa countries. ECOWAS is committed to encouraging the adoption and harmonisation amongst its members to boost cross-border trade.

The VAT rates in some of the member states include:

• Nigeria – 7.5%
• Niger – 19%
• Ghana – 12.5%
• Guinea – 18%
• Mali – 18%

Countries with VAT or GST regime