The Liberia Revenue Authority (LRA) and Sierra Leone’s National Revenue Authority (NRA), have signed a vital tax cooperation Agreement.
The Agreement aimed to strengthen “cross-border tax compliance, enhance information exchange, and combat tax evasion between the two countries.”
The Memorandum of Understanding (MoU) on Simultaneous Tax Examinations (STE) was signed in Freetown by LRA Commissioner General James Dorbor Jallah, and NRA Commissioner General Jeneba Bangura, on the sidelines of the 13th IMF AFRITAC West 2 Steering Committee Meeting.
The initiative is expected to improve tax compliance among multinational businesses, and strengthen the ability of both countries to identify and address revenue leakages.
The Agreement, according to a release, is in line with the ECOWAS Supplementary Act on Mutual Administrative Assistance in Tax Matters, and establishes a framework for coordinated tax examinations involving taxpayers and business entities operating in Liberia and Sierra Leone.
Under the Agreement, the two tax administrations will conduct simultaneous examinations of taxpayers with cross-border operations, transactions, or interests that may have tax implications in both jurisdictions.
The initiative intends to strengthen information sharing, enhance audit effectiveness, improve tax compliance, and support efforts to detect and prevent tax avoidance and tax evasion.
It will focus on high-risk cross-border transactions, multinational business arrangements, transfer pricing issues, illicit financial flows, unreported income, and other activities that may result in tax avoidance or revenue leakage.
The MoU also provides a framework for identifying and addressing complex international tax risks, including undeclared business activities, non-compliant tax arrangements, and transactions involving jurisdictions that may pose heightened compliance concerns.
Through the Agreement, both the authorities will exchange relevant information, conduct joint risk assessments, coordinate audit activities, and strengthen collaboration on matters involving taxpayers operating in both countries.
The arrangement seeks to improve the determination of taxpayers’ correct tax liabilities, facilitate the exchange of information on multinational business practices, strengthen administrative cooperation, enhance the effectiveness of cross-border audits, and reduce compliance costs for both taxpayers and tax administrations.
Other Objective
Another key objective is to prevent double taxation and promote the early resolution of cross-border tax disputes, thereby creating a more predictable, transparent, and business-friendly tax environment for investors and companies operating in Liberia and Sierra Leone.
The MoU establishes procedures for selecting cases for simultaneous examination, conducting joint planning exercises, coordinating audit activities, and protecting taxpayer rights in accordance with the laws and administrative practices of both countries.
Information exchanged under the agreement will be protected in accordance with applicable ECOWAS legal instruments and national laws governing taxpayer confidentiality and the use of tax information.
Mr. Jallah described the Agreement as an important milestone in regional tax cooperation and a practical mechanism for strengthening domestic revenue mobilization efforts.
He said, increasing economic integration within the region requires stronger collaboration among tax administrations to effectively address cross-border tax risks, improve compliance, and safeguard government revenues.
Madam Bangura also described the Agreement as a demonstration of the shared commitment of the two sisterly countries to strengthen tax compliance, improve information exchange, and enhance cooperation in addressing cross-border tax challenges.
She said, closer collaboration between the two revenue administrations would help protect their respective tax bases, improve domestic revenue mobilization, and contribute to regional economic growth and integration.
The Agreement further reinforces the commitment of both countries to implementing international best practices in tax administration while advancing ECOWAS efforts to strengthen cooperation among member states in combating tax evasion, illicit financial flows, and aggressive tax avoidance schemes.
The Agreement further positions Liberia among a growing number of African countries adopting coordinated approaches to address cross-border tax risks and enhance international tax cooperation.
The initiative is supported by ECOWAS as part of efforts to strengthen regional tax cooperation and combat cross-border tax evasion.
The MoU forms part of the LRA’s international cooperation strategy. Earlier this month, the Authority signed three landmark agreements with the National Tax Service (NTS) of the South Korea to strengthen tax administration, enhance information exchange, expand technical cooperation, and support the modernization of Liberia’s tax administration.
Under the leadership of Mr. Jallah, the LRA continues to expand strategic partnerships, and implement reform initiatives designed to strengthen compliance, enhance domestic revenue mobilization, improve institutional efficiency, and build a modern, intelligence-driven, and taxpayer-focused revenue administration capable of supporting the national development agenda.