Tax Regime Strangulating Businesses – Need For Extension of Tax Clearance Period


THE ECONOMY OF LIBERIA is struggling as the economic outlook is not impressive due to slow business and other factors including high taxes and bottlenecks in importing goods into the country.

THE GOVERNMENT OF Liberia which is the largest vendor to a small private sector has over the last two years failed to pay vendors on time to help with the circulation of money within the economy.

MANY BUSINESSES THAT transact with government have to bear the pinch of going sometimes the entire year before getting payments, thereby putting many small entities completely out of business.

SINCE THE GOVERNMENT STRENGTHENED its tax collection mechanism with the establishment of the Liberia Revenue Authority and giving it an autonomous agency status tasked with the responsibility to collect taxes, tax collection has been very effective as LRA tax collectors are seen moving one place to another on a daily basis checking the records of entities to ensure they are in compliance with the payment of taxes.

BUSINESSES ARE REQUIRED TO HAVE valid tax clearance before they are declared a tax compliance entity by tax collectors qualifying them to receive payments from Government entities for business transactions and the timeframe for a tax clearance to be renewed is three months or 90 days.

WHILE THE GOVERNMENT HAS strengthened its tax collection mechanisms and businesses are striving to comply, the government has not been able to pay its arrears to businesses on time but continues to enforce the regulation on the timeframe for renewal of tax clearance.

THESE HAS CREATED NUMEROUS constraints for businesses with some contending that they are finding it difficult to renew their tax clearances every three months when the Government, which is the largest vendor cannot pay its arrears.

PRESIDENT ELLEN JOHNSON SIRLEAF during a recent interview with FrontPageAfrica conceded that the complaints from businesses about high taxes and the short timeframe for the renewal of tax clearance are all valid and government is working to address the situation.

“THAT IS A VALID POSITION AND WE have looked at it and we are even thinking about extending the period for the tax clearance but the LRA says: ‘look it is a system that is just working so that people get accustomed to paying taxes, and getting their tax clearance and now that they are beginning to get accustomed to it; than we begin to relax it.’ If you wait until sensitivity is there, people will slip into the whole thing and they will stop paying but the time to pay, I agree; we need to try to match the two but we need to try and speed up our own expenditure system, it should not take that long”, said President Sirleaf.

THE EXPRESSION BY THE PRESIDENT is welcoming and should be addressed in a timely manner to help rescue businesses from further collapse.

WHEN IMPORTERS ARE COMPLAINING about bottlenecks in getting their containers and other goods cleared from the various ports of entry due to high levies, the government needs to do something so as not to discourage people from importing into an economy that is import reliant.

THOSE INVOLVED IN THE IMPORTATION of motor vehicles are even complaining that they are made to pay more money at the ports of entry in Liberia than the actual amount paid to these vehicles from the places of purchase.

A COUNTRY CANNOT PROVIDE JOBS and keep the economy booming when taxes are so high and processes that strangulate businesses such as renewal of tax clearance are not favorable to businesses.

THE GOVERNMENT ALONE CANNOT make the economy strong and it must therefore take actions that will empower businesses and make them able to help the economy grow.

The private sector is the engine of growth and when businesses continue to complain about high taxes and burdensome processes, it is a bad sign that the country economy is heading into crisis.

MANY BUSINESSES ARE EVEN closing down and importers abandoning business due to these high taxes and strenuous processes involved with business activities in the country.

AS PRESIDENT SIRLEAF HAS SAID, these issues need to be addressed urgently to help the businesses are strong, the economy will definitely grow.

MADAM PRESIDENT THE TAXES are high and the timeframe for renewal of tax clearance is too short, all need to be reviewed and addressed as quickly as possible.