House Amends Liberia Revenue Code

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Members of the House of Representatives have voted to amend Chapter 10 of the Liberia Revenue Code-LRC. Plenary’s decision followed a report from its joint committee on Ways, Means & Finance, Judiciary, Public Accounts and Expenditure Thursday, April 25, 2024 during its 8th Day sitting of the extraordinary session.  In statement from the House Press and Public Affairs, the joint committee reviewed a request from President Joseph Boakai, to amend Chapter 10 of the Liberia Revenue Code-LRC.  The amendment seeks the adoption of value-added tax- VAT in replacement of the existing goods and services tax- GST regime. President said in 2009, the Liberian Government committed, through a memorandum of understanding with the ECOWAS Commission, to adopt VAT. 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 the overall tax system. “In particular, the VAT adoption will fix the shortcomings of the GST regime thereby enhancing domestic revenue generation. The current GST is a single-staged sales tax with a narrow base with cascading and pyramiding effects”, he said. The Liberian Leader said they have contributed to the inefficiency of the tax as can be seen in its revenue generation when it is compared to regional counterparts. The President noted that in finalizing the draft law, the Government, through the VAT Technical Working Group, collaborated with and sought inputs from, various stakeholders, including local authorities and development partners.  “For instance, 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),” President Boakai alerted. He said 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 Gbarng in 2021; while select members House’s Ways Means and Finance Committee formed part of the VAT implementation study tour to Rwanda in 2022. “Honorable 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”, Pres. Boakai lamented. The Liberian Leader added that the VAT, as proposed, is a neutral tax; broad-based with minimum exemptions; transparent; and, more importantly, encourages voluntary compliance. He said considering the importance of VAT reform in Liberia, we look forward to the continued support to have the VAT law enacted, which will lead to the generation of additional revenue for the Government of Liberia and; hence, reduce the current fiscal gap. Meanwhile, plenary voted to pass the amendment value-added tax- VAT thus replacing the existing goods and services tax- GST regime.  The instrument has been forwarded to the Liberian Senate for concurrence.

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