Liberia to Move from GST to VAT Tax System￼
MONROVIA – The government of Liberia is going through its preparatory process to transition from Goods Service Tax (GST) to the Value Added Tax (VAT) system, an official of the Finance Ministry has said at a validation workshop outside Monrovia.
A VAT is similar to a sales tax, except that it is paid incrementally at all levels of production, on only the value added at each level, to prevent pyramiding and eliminating the need to separate business inputs from retail sales.
The Director of Indirect Tax Unit, at the Ministry of Finance, Robert Quaye Dwuye told FrontPageAfrica that VAT reduces evasion because it’s harder for three entities to avoid paying a tax than it is for one.
“This in turn allows VAT statutory rates to be much lower than those of ordinary sales taxes, raising the same amount of revenue more efficiently,” he stressed.
Dwuye said currently technicians from Liberia and ECOWAS are working and brainstorming as liberia gears to transition from the GST tax payment system to VAT which is now being used in almost all countries in Africa and the Weatern world.
The validation workshop that attracted the participation of technicians from Liberia and ECOWAS is part of ECOWAS’ commitment to ensure the government of liberia implement a smooth and successful transition to the VAT from GST regime, Dwuye availed.
He said the government under ECOWAS regional fiscal integration program has found a solution to the current cascading tax regime by committing to the adoption of VAT as a replacement to the GST regime.
As a demonstration of it commitment to the process, the government of Liberia in collaboration its development partners has undertaken several initiatives toward the transition and implementation of the VAT.
Dwuye disclosed that during the workshop the technical will be looking at the process leading to the transition process.
“We will look at the VAT policy paper, the draft VAT law, and the draft implementation or migration plan, this workshop serves as the first step toward the VAT roll out plan and where the technicians will have an interactive working session to update he documents and develop a comprehensive roll out plan for submission to policy decision maker approval,” he stated.
He, however, disclosed that in the next years to come, mainly after the election period, the government of Liberia will completely transition from GST to VAT respectively.
For his part, ECOWAS Representative at the training, and a consultant at the Ministry of Finance Munyentwali Gam expressed gratitude for the transformation process Liberia is taking gradually.
He said it’s a good thing for Liberia as member of ECOWAS to transition to the VAT process.
“ECOWAS is happy to welcome Liberia onboard the process is great and I know liberia can do better,” Gam availed.
Speaking earlier at the opening of the validation workshop in Buchana City outside Monrovia, Assistant Minister for Revenue Tax policy at the Ministry of Finance described the transition process as tough one.
Minister T. Ojuku Nyenpan said the process might meet up with state resistance in the same manner the GST suffered to be accepted by the people.
“But we can make it and we will make it, the resistance will be for a while but the VAT is very important for liberia and it has it own benefit for tax payers,” he disclosed.
Also in attendance was Commissioner of the Liberia Revenue Authority (LRA), Darlingston Talery who praised the technician for their hard during the period of transition.
“You guys are the real backbone that everyone can relax on, you are the ones that are doing the dirty work we must acknowledge this and we happy that you all have the passion for this process,” he noted.