Liberia Fiscal Guide (2014/2015)
Generally residents are taxable on all income regardless of source. Therefore, foreign source income by a resident is taxable in Liberia subject to available foreign tax credit relief. Non-residents are subject to tax on income having a source in Liberia. The Corporation tax rate is 25% and 30% for general companies and mining/petroleum companies respectively. Some mining/petroleum companies have concessionary tax rates with the government. Withholding taxes also apply to certain types of income for both residents and nonresidents. Withholding tax on interest, dividends, and royalties paid to a non-resident is the final tax.
Tax on employment income of resident natural persons
Tax is applied on payments or benefits received in the form of non-cash property including the following:
- Wages and salaries
- Gifts received by an employee in the course of employment
- Allowances provided by the employer for benefit of the employee
Employment income is deemed to arise in Liberia if the employment giving rise to the income is carried on in Liberia irrespective of where the contract of employment is signed or payments are made. Non-cash benefits provided by an employer to an employee are valued at 100% of fair market value and are only included as part of an employee’s income if the aggregate value of the benefit is in excess of L$ 100 000 per year. In addition a natural person is entitled to a credit against income tax due for approved medical expenses (medical insurance premium and the amount of medical care costs) paid by the person during the tax year.
Resident natural person’s income tax table
There is no separate Capital Gains Tax regime although capital gains arising from the disposal of property (whether real or personal, tangible or intangible) used in a business or held as investment are included in taxable income and subject to income tax except for gains from the sale of property held for personal use below L$ 1 600 000.
Capital losses from disposal of property other than property used in a business are deductible against taxable income. If the property is held for investment, the loss is deductible to the extent the loss is offset by gain on the disposition of the investment during the tax year. Unused investment loss may be carried forward to future tax years not exceeding five years.
Transfer pricing and thin capitalisation
Liberia does have limited transfer pricing rules. The Minister of Finance may distribute, apportion or allocate amounts to be included or deducted in calculating income and credits granted, or disregard a transaction that was entered into as part of a tax avoidance scheme which would result or has resulted in less tax being paid. There are no thin capitalisation rules applicable in Liberia. However, the amount of interest payable which exceeds the total of interest income receivable and 50% of taxable income is not deductible. In relation to the mining, petroleum, agricultural and renewable resources operations the interest which was disallowed may be carried forward indefinitely. Interest may be re-characterised as dividends.
Inheritances and donations
No estate duty is levied in Liberia nor is a donation or gift tax applied. However distributions from a trust or an estate are chargeable to income tax.