Opinion Of Taxes In The Republic Of Liberia And Its Effect On The Liberian Economy

By Samora P.Z. Wolokolie, MBA, CFE, CA, CPA, CFIP, CTP.

The Perspective
Atlanta, Georgia
Published, March 27, 2017 and Republished Friday, January 11, 2019

Referenced resolution of February 1, 2017 under the banner of the Patriotic Entrepreneurs of Liberia (PATEL), in which some burning issues affecting Liberian businesses and the well-being of the Liberian people in general were highlighted and presented to the National legislature and the Executive branch for their intervention to curtail the situation, I hereby again provide some detailed explanations with recommendations that will pacify the situation to wit:
Count 1.0 (b) of the Resolution “Halt to multiple assessments on imported goods by LRA” by definition means the Liberia Revenue Authority must secure uniform assessment of customs duties in keeping with Section 1207 of the Revenue Code of  Liberia and must be done at one-stop-shop instead of multiplicity of assessments.
BIVAC Clean Report of Findings (CRFs) once obtained by the importers as required under the Pre-shipment Regime should serve as final arbiter for customs duties collection by Government instead of re-assessing CRFs and uplifting duties already calculated by BIVAC to avoid uncertainty. It should be noted that the issuance of Clean Report of Finding on any imported or exported consignment entails that BIVAC has done the relevant due diligence on price/valuation, quantity, origin and duty and related charges assessment/calculation as required by the Government for which BIVAC is being contracted and inspection fees paid by importers to conduct pre-shipment inspection. Discrepancies that may arise after inspection and shipment with container sealed resulting from BIVAC’s error or failure to do due diligence should be attributed to BIVAC and not to chase after the importers.
Referring also to Destination Inspection (DI) regime, it is further recommended that declaration into the ASYCUDA database should be made after physical inspection at Customs-BIVAC DI site and the valuation process must take into account importers’ invoices and the transaction processes in the countries of export instead of only relying on BIVAC’s obsolete database.

Count 1.0 (g) “Address issues of CET and Protective Tariff Tax” by this we refer to the concomitant use of two (2) tax instruments, namely, “the Harmonized System and Customs Tariff Schedules 2012” and the ECOWAS Common External Tariff (CET) without adequate public tax awareness and/or migration plan circulated or published in newspapers for certain commodities that are being selectively assessed by LRA under the 2012 tariff regime. It is recommended that the CET be applied holistically with reference to Section 3 (e) of the Revenue Code of Liberia quoted as follows: “Where an international agreement ratified by the Legislature has entered into force and establishes rules inconsistent with those provided by this code, the international agreement takes priority over and supersedes this code to the extent of the inconsistency.”
We further refer to LRA’s arbitrary increase in excise tax rate of tobacco from 35% to 80% and GST from 7% to 10% on November 1, 2016 when there was no law to the effect at the time. A tax refund for excess tax payment on imports from November 1 to December 22, 2016 is hereby recommended to be made to the importers concerned.
Most Administrative Regulations that are being enforced by the Liberia Revenue Authority (LRA) are arbitrary, meaning that they have not been promulgated and published through the Ministry of Foreign Affairs in keeping with the requirements enshrined in the Revenue Code of Liberia. Additionally, Section 10.5 (1) of the Executive Law requires that the President of the Republic of Liberia is to approve all regulations but this has not been the case.  More besides, some of the aforementioned regulations are excessive in application with specific reference to the Destination Inspection Penalty regulation that has been in use for over ten (10) years, states 10% on CIF value for first & second DI offense, 20% for third & fourth DI offense and 30% for fifth DI offense and above.
Another excessive tax instrument designed by LRA and referred to as “PRACTICE NOTE NO. 1-2016” has also not met presidential approval nor been promulgated and published through the Ministry of Foreign Affairs but is being enforced. The document instructs that the calculation of excise tax for selective products, alcoholic beverages and tobacco products MUST be on “tax-on-tax”, meaning that the ad valorem excise tax rate now 80% must be multiplied by the (CIF plus Import Duty plus ETL plus CUF) to derive total excise tax payable only on these two products which violates the principles of uniform assessment as mentioned supra under Section 1207 of the Revenue Code of Liberia.

The undue delay of refund to tax payers by LRA when an over payment of tax due is established must be addressed, thus disallowing the tax payers to always be at the disadvantage end in the Government-tax payers partnership.
Also, the deliberate delay to adjudicate protest cases by LRA to the level of a year or more is unfair and frustrating to the tax payers. Redress must be given by LRA to tax queries in the soonest possible time interval to restore confidence and trust in the Government-Tax payer’s partnership. It is hereby recommended that the Board of Tax appeal be reconstituted to fill the vacuum in dealing with this issue.
That considering the current economic conditions of the country where inflation has seriously undermined the purchasing power of the ordinary consumers who suffer the trickle-down effect of tax increment in any given situation, it is hereby recommended that the Tax Amendment Act which was approved on December 20, 2016 and published on the 22nd December 2017 instant in which taxes were increased but was not accompanied by adequate public tax awareness, be further reviewed and revert to status quo ante pending economic normalcy divorce of inflation, uncertainty and inconvenience in the competitive market environment, the dual currency exchange rate and other economic factors in the country. Being cognizant of the fact that Government needs to collect revenue, it should be paralleled, noted that the certainty and convenience of the tax paying public is paramount in the endeavor as outlined in Adam Smith’s book, “The Wealth of Nations” under the principle of taxation.

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