By Grace Q. Bryant
The Executive has written the Legislature for the amendment of Chapter 10 of the Liberia Revenue Code of 2009.
The proposed amendment seeks the adoption of the Value Added Tax VAT in replacement of existing goods and services tax regime.
It says, ‘Liberia is the only ECOWAS Member State yet to adopt the VAT as required by the body’s regional integration program.’
In the Communication, President Boakai said the amendment will fulfill Liberia’s commitment to regional fiscal integration program and improve the tax system.
“The approval of the proposed VAT law will not only fulfill Liberia’s commitment to the regional fiscal integration program but also help to strengthen our overall tax system,”
According to the communication, in 2009, the Government of Liberia committed, through a memorandum of understanding with the ECOWAS Commission, to adopt VAT and in particular, the VAT adoption will fix the shortcomings of the GST regime thereby enhancing domestic revenue generation.
President Boakai added that the adoption will serve as a catalyst for improving tax compliance and maximizing revenue generation.
The President’s communication further explained that the current GST is a single-staged sales tax with a narrow base and pyramiding effects.
“All of these have contributed to the inefficiency of the tax as can be seen in its revenue generation when it is compared to regional counterparts, in finalizing this draft law, the government, through the VAT Technical Working Group, collaborated with and sought inputs from, various stakeholders, including local authorities and development partners,” the communication noted.
The communication disclosed there was three engagement dialogues were held with local officials from the counties to solicit their inputs into the draft documents one in Tubmanburg (for officials from Cape Mount, Gbarpolu, and Bomi), one in Gbarnga (for officials from Nimba, Grand Bassa, Rivercess and Bong) and one in Zwedru (for officials from Maryland, Sinoe, Grand Kru, River Gee, and Grand Gedeh).
With support from USAID, the team held several engagements with government agencies, civil society organizations, members of the business community, and the Legislature.
A special legislative retreat on the VAT implementation was held in Gbarnga in 2021 while selected members on the House’s Ways Means and Finance Committee formed part of the VAT implementation study tour to Rwanda in 2022.
“Speaker, as already intimated, by the adoption of VAT, the Government of Liberia intends to use it as a catalyst for improving Liberia’s tax system in response to the increasing need to improve tax compliance and hence maximize revenue generation for national development,” the communication noted.
The VAT, as proposed, is a neutral tax, broad-based with minimum exemptions, transparent, and more importantly, encourages voluntary compliance.
Meanwhile the communication has been sent to the committees on Ways, Means, Finance, Judiciary, Public Accounts and expenditure to report Thursday.
