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Liberia Fiscal Guide (2014/2015)

Business income

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.

Rates

Liberia Tax Rate

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

Liberian Rate TaxCapital gains tax

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

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.

Download the full Liberian 2014/2015 Fiscal Guide here. Same versions for other African countries can be downloaded here

 

About Femi Oke

Relentless passion for creativity and digital acumen to help a professional services firm thrive in the digital space. Femi is an individual with a rich experience on regional African knowledge, its diverse business culture and he understands the continent’s economic drive. He thrives on selfless service and lasting mutually beneficial relationships with colleagues and especially clients encountered in the course of his duties. He is creative, practical and self-motivated with business judgement in corporate, brand and strategic communications, social, digital & traditional media and executive profiling. Roles in the firm include New Media, Digital Communication, Corporate Communication, executive profiling and Brand Management execution. Working on the multi-million dollar Africa high growth market project stands out for femi; besides this, managing all KPMG’s digital communication for the World Economic Forum on Africa is another project that gives him great delight. Femi holds a Masters Degree in Global Marketing from the University of Liverpool.

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