Pres. Boakai Submits Bill Replacing Goods and Services Tax with Value-Based Taxation in Liberia - FrontPageAfrica
Source: Front Page Africa
Author: Gerald C. Koinyeneh
CAPITOL HILL, Monrovia - President Joseph Boakai has proposed amending Chapter 10 of the Liberia Revenue Code (LRC), advocating for the adoption of a value-added tax (VAT) to replace the current goods and services tax regime.
By Gerald C. Koinyeneh - [email protected]
In a letter addressed to House Speaker Fonati Koffa, President Boakai said implementing VAT would enhance tax compliance and boost revenue generation.
"... 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," the President said. "The VAT, as proposed, is a neutral tax; broad-based with minimum exemptions; transparent; and, more importantly, encourages voluntary compliance."
Value Added Tax is an indirect form of taxation levied on goods and services when they add value to the supply chain, while Goods and Service Tax it is a consumption tax that is imposed upon the cost of goods and services.
Liberia remains the only ECOWAS member state yet to adopt VAT as mandated by the regional integration program. The country committed to adopting VAT in 2009 through a memorandum of understanding with the ECOWAS Commission. President Boakai stressed that passing the proposed VAT law would fulfill this commitment and strengthen Liberia's overall tax system, addressing the shortcomings of the current GST regime and improving domestic revenue generation.
The President said to ensure comprehensive input into the VAT proposal, the government collaborated with stakeholders including local authorities, development partners, and civil society organizations. Three engagement dialogues were conducted in various counties, including Tubmanburg, Gbarnga, and Zwedru, involving officials from the fifteen counties.
USAID's support facilitated engagements with government agencies, civil society, businesses, and the National Legislature. Noteworthy activities included a legislative retreat on VAT implementation in Gbarnga and a study tour to Rwanda for select members of the House's Ways Means and Finance Committee in 2022.
President Boakai underscored the importance of VAT reform for Liberia, urging continued support for enacting the VAT law to boost government revenue and narrow the fiscal gap.
The President's communication was forwarded to the Committee on Ways, Means and Finance, Judiciary, Public Accounts and Expenditure to report on Tuesday.
