Liberia: Amended Revenue Code Revising Excise Tax Law Of 2018 Will See Tariff Increases On Imported Water, Beer, Fruit Juices, Other Commodities
Washington – While everyone was asleep, members of Liberia’s national legislature made life-affecting measures to amend the revenue code of Liberia which in effect would see massive changes in prices of basic necessities ordinary Liberians rely on for their daily livelihood and relaxation.
In its most recent report published in March, an International Monetary Fund (IMF) team led by Mika Saito visited Monrovia from February 25-March 8 to conduct discussions for the 2019 Article IV Consultation with Liberia.
The team, among other things, recommended and made a strong case for tax reforms to improve the dwindling economy. “Revenue reforms have considerable potential to directly expand the resource envelope and facilitate a needed increase in social spending. The mission notes the recent finalization of the Domestic Revenue Mobilization Strategy. It recommends that the authorities pursue the envisaged reforms, including excise tax, tax exemptions, and compliance,” the team reported.
The changes according to the IMF team was key to improving the efficiency of government spending aimed at improving the monitoring, accountability, and transparency of spending. However, the Revenue Code of Liberia, Phase One of the Reform Tax code of Liberia, AD2000, as amended by the Consolidated Tax Amendments Act of 2011, to Reform Excise Tax Law (2018) has three components to the tariff points to a number of excise tax increases which poses serious challenges for consumers.
For example, the Excise Tax which was previously 35% and now raised to 45 % in the new approved tariff, authorities are trying to make the tax USD1 per litter instead of the 45% approximately which is double in terms of value extremely high.
The second involves the Duty. In the Custom Ecowas Tax (CET), it was previously 25%. But in mid-April 2018, the figure was changed to 0.90 cent per litter. Authorities are now in the process of proposing a new proposed tariff. Goods and services taxes (GST) remained unchanged at 10 percent.
Excise tax is a levy on goods with health, environmental and social effect. The Liberia Revenue Code of 2000 established a legal basis as amended 2011, chapter 11. Excise taxes are calculated on the cost, insurance and freight of imported goods except for alcoholic beverages and tobacco product and ex-factory price for local manufactured goods. For alcoholic and non-alcoholic imported and locally manufactured beverages and tobacco products.
The changes will see taxpayers and consumers paying high fees on several beverages and products including fruits, water, wine, and alcohol.
According the revised revenue code fruit juices (including grape must), and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter which were previously two percent.
Under the amended act, commodities such as waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening water or flavored; ice and snow will see a 0.45 percent increase.
Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored, and other non-alcoholic beverages, not including fruit or vegetable juices will see a US$1.00 per liter import increase while beer made from malt is also up US$1.00 per liter.
Items such as wine of fresh grapes, including fortified wines and grape must will see US$1.00 percent per liter increase while vermouth and other fresh grapes flavored with aromatic substances will see $1.00 per liter increase.
Other fermented beverages (for example, cider, perry, mead, sake); mixtures of fermented beverages and mixtures of fermented and non-alcoholic beverages will also see $1,00 per liter increase.
This means that consumers of the popular Savannah drink will soon be coughing up more from their pockets.
Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent volume; spirits, liquors and others will see a $3.00 per liter increase.
Section 1160(C) of the Liberia Revenue Code of 2000 as amended in 2011 states that, “the amount of excise tax levied under the provisions of this chapter shall be calculated on the duty-paid value of imported goods, or the manufacturer’s cost price value of goods manufactured in Liberia, multiply by the tax rate expressed as a percentage he quoted.”
Section (e) of the LRC of 2000 as amended in 2011 states that, “the term duty-paid value used in this section refers to the value defined in section 1004 (d) as the amount of a taxable import.
Whereas, section 1004 (d) defines taxable import as “the sum of the following amounts- The CIF Liberian Port or customs entry value, whenever applicable, if not included in the CIF Liberian Port or customs entry value, the value of incidental services as defined in section 1002 (c) and the customs duty, customs service fee, ECOWAS Trade Levy, and excise tax (if any) on import he spoke.”
Section 1000 (b) (3) of the LRC of 2000 as amended in 2011 states that, “the rate of goods tax is 7 percent of the section 1004 taxable amount except that- If the supply is of an alcoholic beverage, is 10 percent.”
Section 1121 of the Liberia Revenue Code of 2000 as amended in 2011 states that, excise tax at a rate of 35 percent shall be levied on tobacco and on any product containing tobacco, including cigarettes, cigars, snuff, chewing tobacco and similar products whether imported to or manufactured in Liberia.
The amended revenue code is sending shivers amongst many Liberians with many unsure how the new changes will impact the lives of ordinary Liberians. In recent weeks, foreign business owners in the country have been taking the government to task over new amendments and enforcements of Excise Taxes by the LRA which could pose to the struggling economy of Liberia.