Pres. Boakai wants GST amended to VAT

President Joseph Nyuma Boakai, Sr., wants Liberia to transition from Goods and Services Tax regime to Value Added Tax system to put the country on par with countries in the ECOWAS region.

By Bridgett Milton

 Monrovia, Liberia, April 24, 2024 – President Joseph Nyuma Boakai, Sr. has written the House of Representatives, seeking a proposal to amend Chapter 10 of the Liberia Revenue Code (LRC).

He said the proposed amendment seeks to adopt a value-added tax (VAT) to replace the existing goods and services tax (GST) regime.

“Honorable Speaker, as you may be aware, Liberia is the only ECOWAS member state that has yet to adopt the VAT as required under the ECOWAS regional integration program.

In 2009, the Government of Liberia committed, through a memorandum of understanding with the ECOWAS Commission, to adopt VAT’’.

President Boakai added that the approval of the proposed VAT law will fulfill Liberia’s commitment to the regional fiscal integration program and help strengthen the country’s overall tax system.

The President said that 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 and cascading and pyramiding effects. These have contributed to the tax’s inefficiency, as seen in its revenue generation compared to counterparts in the region.

Pres. Boakai said that for this draft law, the government, through the VAT Technical Working Group, collaborated with and sought input 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),” the President explained.

He said with support from USAID, the Team held several engagements with government agencies, civil society organizations, members of the business community, and the National Legislature, and a special legislative retreat on the VAT implementation was held in Gbarnga in 2021 while select members of the House’s Ways, Means, and Finance Committee formed part of the VAT implementation study tour to Rwanda in 2022.

He added that, as already intimated, the Government of Liberia intends to use the adoption of VAT as a catalyst for improving Liberia’s tax system in response to the increasing need to improve tax compliance and maximize revenue generation for national development.

He said the VAT, as proposed, is a neutral tax, broad-based with minimum exemptions, transparent, and, more importantly, encourages voluntary compliance.

Meanwhile, the Plenary has forwarded the communication to the committees on Ways, Means and Finance, Judiciary, Public Accounts and Expenditure to report next Thursday. Editing by Jonathan Browne