Who is a Taxpayer?
A taxpayer is a person or organization (such as a company) subject to pay a tax. Modern taxpayers may have an identification number (TIN), a reference number issued by the LRA to citizens or firms.
A taxpayer is an individual or entity that is obligated to make payments to municipal or government taxation-agencies, in this case, Liberia Revenue Authority. Taxes can exist in the form of income taxes and/or property taxes imposed on owners of real property, along with many other forms. People may pay taxes when they pay for goods and services which are taxed.
The term “taxpayer” often refers to the workforce of a country which pays for government systems and projects through taxation. The taxpayers’ money becomes part of the public funds, which comprise all money spent or invested by government to satisfy individual or collective needs or to generate future benefits. For tax purposes, business entities are also taxpayers, making their revenues and expenditures subject to taxation.
What is a Tax Identification Number (TIN)?
A Taxpayer Identification Number is your primary source of Identification as a taxpayer. It is used to identify you with the Liberia Revenue Authority, and the Republic of Liberia as a whole.
It is a 9-digit number beginning with 5
Ex. 5********
According to Section 53 of the Liberia Revenue Code, every legal resident having a tax obligation within Liberia should have a TIN. It is given to every Taxpayer free of charge, and no taxpayer should have more than one TIN.
Tax Clearance Information
What is a Tax Clearance Certificate?
A tax clearance certificate is an instrument issued by the Liberia Revenue Authority (LRA) that certifies that a taxpayer has complied with all known tax requirements at the time of issuance.
How long does it take to get a Tax Clearance Certificate?
Normal processing time for a complete and accurate tax clearance certificate application is 1 to 4 working days. For incomplete applications (missing information, missing supporting documentation and/or outstanding tax liabilities) processing may take up to 5 working days. If all documentation and tax obligation issues are not settled within these 5 business days, a new application is required.
How much does it cost to get a Tax Clearance Certificate?
Tax Clearance Certificate is absolutely free.
Why do I need a Tax Clearance Certificate?
A Tax Clearance Certificate is required and useful when you want to:
- bid on or receive payment for a government contract
- clear goods in commercial quantities from a port of entry (as per Risk Profile)
- apply for a bank loan
- contest a public election
- obtain payment from government for the sale of goods and services
- traveling purposes
- apply for Duty Free (As per Risk Profile)
- confirm closure of a business entity
- effect export of goods from Liberia (As per Risk Profile)
- transfer Profit, Dividends, Interest and Royalties in excess of US$100,000.00 from Liberia to place or country outside of Liberia
- other activities that may necessitate the request for tax clearance
For how long is a Tax Clearance Certificate Valid?
There are six (6) kinds of Tax Clearances didvided into three (3) categories as follows:
- Conditional (Provisional) Tax Clearance: Provisional tax clearance certificates are issued to new business or businesses that are not fully tax compliant.
- 45 Days
- 60 Days
- 90 Days
- Regular Tax Clearance: Regular tax clearance certificates are issued to businesses that are fully tax compliant.
- 120 Days
- 180 Days
- Annual Tax Clearance: Annual tax clearances certificates are issued to businesses and individuals that have been audited and are fully complying with all the applicable tax laws and other relevant regulations.
- 360 Days
Taxpayer Bill of Rights
- Right to Pay Only The Correct Amount of Tax
All taxpayers are to receive the benefits, credits, and refunds to which they are entitled to under the law and to pay no more and no less than the correct amount required under the law. - Right to Privacy and Confidentiality
Taxpayers have the right to confidentiality of their information provided to the Liberia Revenue Authority (LRA). A taxpayer’s information will be used only for purposes allowed by law. Only those persons who are authorized by law, and who require the information to administer programs and legislation, have the right to access the personal and financial information of taxpayers. - Right to Professional, Courteous, Efficient, Transparent and Fair Service
Taxpayers are to be treated courteously and with consideration at all times, including when the LRA requests information or arranges interviews and audits. Integrity, professionalism, respect and cooperation are core values that reflect our commitment to giving taxpayers the best possible service. - Right to Complete, Clear and Timely Information
Taxpayers have the right to complete, accurate and timely information that will explain in plain language the laws, policies and procedures regarding obligations and entitlements. - Right to Consistent Application of the Law
The Revenue Code of Liberia Act of 2000 and all amendments including regulations pertaining thereto shall be applied consistently so that every taxpayer gets his/her/its entitlements and pays the legitimate amount. - Right to Appeal and Judicial Review
Taxpayers are entitled to a formal review if they believe that the Commissioner General or any officer has not applied the law correctly or that they have not received their full entitlements under the law. An Appeals Officer shall conduct a formal and impartial review. Filing an objection (an appeal in the case of assessments) will begin with an Appeals Officer. If the matter is not resolved to the taxpayer’s satisfaction, the taxpayer is entitled to appeal to the Board of Tax Appeals or Tax Court. - Right of Refusal to Pay the Full Income Tax Amounts in Disputes before you have had an Impartial Review
A taxpayer is required to make a partial payment of thirty percent (30%) of the tax amount in dispute excluding payment of interest and penalty pending the decision of the Board of Tax Appeals. After the review, if the Board of Tax Appeals finds the taxpayer’s protest to be contrary to the law or procedure, the taxpayer will be requested to make payment of the remaining seventy percent (70%) plus penalty and interest. If the Board of Tax Appeals finds the taxpayer objection or protest to be correct, the partial payment of thirty percent (30%) will be refunded and accrued interest will also be paid by the LRA. - Right to a Service Complaint and Redress
A taxpayer can expect that if he/she/it lodges a complaint about the service provided from the LRA, he/she/it will be listened to and given the opportunity to explain the situation.
The LRA will deal with all complaints promptly, impartially and in confidence, and it will provide a formal explanation of its findings. - Right to Notice on Audit
Any notice or document sent by tax authorities must be written, signed by an authorized tax official, noting the taxpayers’ last name, and must carry the official stamp of the Republic of Liberia. LRA will take into account the costs of compliance. when administering tax legislation. We recognize the need to minimize your cost including time. - Right to Expect the LRA to be Accountable
A taxpayer has the right to expect the LRA to be accountable for what it does. When a decision is made about a tax obligation, the LRA will explain that decision and inform the taxpayer about his/her/its rights and obligations in respect to that decision. - Right to Refunds and Claims
Taxpayers are entitled to receive the benefits, credits and refunds in accordance with the law. They may file a claim for refund if it is established that taxes have been overpaid. The claim must be filed within 3 years from the date you file your original return or 2 years from the date the tax is paid, whichever is later. The law generally provides for interest on the refund if it is not paid with in 45 days of the date the taxpayer’s return is filed or claim for refund is made. - Right to be Represented by the Person of your Choice
A taxpayer has the right to be represented by a person of his/her/its choice in the appeal process. However, decisions from such representation shall be legally binding.
Domestic Tax Education
Personal Income Tax (PIT)
What is a Personal Income Tax (PIT)?
A personal income tax is amount paid by an individual on a periodic basis from his/ her personal income.
What is the PIT table ?
The PIT table shows the different bands of income earners and their corresponding applicable marginal tax rate.
Personal Income Tax
| Band | From | To | Tax Rate | |
|---|---|---|---|---|
| 1 | - | 70,000 | 0% | of Gross Taxable Income |
| 2 | 70,001 | 200,000 | 5% | of Excess over 70,000 |
| 3 | 200,001 | 800,000 | 6,500 + 15% | of Excess over 200,000 |
| 4 | 800,001 | Above | 96,500 + 25% | of Excess over 800,000 |
How is PIT calculated? The PIT is calculated on the annual gross income which includes all of your cash and non cash benefits . Non cash benefits include vehicles, housing, gasoline coupons, etc. Pursuant to section 202-C, the Law allows for an annual exemption of L$100,000 on the aggregate market value of all non-cash benefits .
What is meant by an annual gross taxable income?
An annual gross taxable income is the summation of all monthly gross income for the year.
What is the difference between a marginal tax rate and an effective tax rate?
The difference between a marginal tax rate and an effective rate is that a marginal tax rate is the tax rate of the taxpayer’s band which is applied on the excess amount of his/her tax band and the effective tax rate is the actual tax rate levied on the taxpayer and is derived by dividing tax amount by earning before tax deduction.
What is the tax rate for a taxpayer who annual gross income is below the exemption threshold? For any taxpayer whose annual gross income is below the exemption threshold his /her tax rate is ZERO. Meaning no tax payment is required.
Is the New PIT table also applicable to contractors?
No. The New PIT table like the old table is only applicable to employees of both public and private sectors. Contractors of both public and private sector will continue to pay the 10% flat rate.
PIT Calculator
Business Income Tax (BIT)
For our quarterly payments in Liberia, the LRA uses the Presumptive Taxation Scheme for Businesses.
Presumptive taxation scheme (PTS) allows you to calculate your tax on an estimated income or profit.
The scheme can be used by all businesses in Liberia. The Quarterly Rate of 4% is applied to Small Tax Division, which are businesses having a total annual turnover of less than L$3,000,000 (three million Liberian Dollars) and the Quarterly Rate of 2% is applied to Medium & Large Tax Divisions, which are businesses having a total annual turnover of more than L$3,000,000 (three million Liberian Dollars) and more than L$30,000,000 (Thirty Million Liberian Dollars), respectively.
It is filed every Quarter, and the deadlines are as follows:
| Quarter | Duration | Deadline |
|---|---|---|
| Quarter 1 | January 1 - March 31 | April 15 |
| Quarter 2 | April 1 - June 30 | July 15 |
| Quarter 3 | July 1 - September 30 | October 15 |
| Quarter 4 | October 1 - December 31 | January 15 |
What Is Real Property Tax?
Real Property Tax is the tax paid ONCE a year on real property(ies) owned within the Republic of Liberia.
Real Property is immovable property. It is tangible fixed structure. Real Property include land and building and other fixed improvements to the land and/or building.
How Is Real Property Tax Determined?
Real Property Tax is the product of the Real Property tax rate and the current market value of your property in keeping with Section 2001(b) of the Revenue Code of Liberia Act of 2000. (herein referred to as the LRC)
Market value is the capital sum which land, building or improvements might be expected to realize as at the date of assessment if offered for sale on such reasonable terms and conditions as a bona fide seller would require.
Who Should Pay Real Property Tax?
- Owners of real properties are owners of land and/or buildings.
- Note that even if you own a vacant land, you are required by law to pay taxes for that land owned.
- Real Property Tax is paid by owners of real property(ies).
(In some lease agreements, owners of properties designate the lessee as responsible for the payment of the taxes, or the Lessee designates themselves as the responsible party, to ease negotiations or to facilitate bookkeeping.)
What are the Real Property Tax Rates?
Do I pay Real Property tax as a renter/tenant?
If you are renting a property, you don’t pay Real Property Tax. Instead, you pay a Withholding on Rental Income (10%).
When is Real Property Tax due?
- Real Property Tax is an annual tax and is paid once a year.
- Real Property Tax is due between January 1st to July 1st of the year in which the tax is levied.
- After July 1, the payment is considered late and starts to accrue penalty and interest in keeping with Section 2002 of the LRC.
What happens if my Real Property Payment is after the deadline?
After July 1, the payment is considered late and starts to accrue penalty and interest in keeping with Section 2002 of the LRC as follows:
“Penalty of 5% for each month elapsing after July 31st that the tax remains unpaid but not to exceed 25% Interest at the market rate as published by the Central Bank of Liberia”
How Do You Pay Real Property Tax?
- Obtain a Tax Identification Number (TIN);
- Obtain Valuation of your Property
- File a Schedule of your property(ies)
- Fill in Declaration/Registration Form. Based on the Valuation and Classification of your property, your tax bill is calculated
- Payment of your Real Property Tax in the GOL’s General Revenue Account.
Please note that with the Calculator you can estimate your yearly tax obligation using the fair market value of the property. However, the true value of your property may depend on other features of the property that you may not have factored in your estimation.
Monthly
Withholdings
Monthly Withholding Taxes
| Tax Type | Tax Rate | Due Dates |
|---|---|---|
| Personal Income Tax (PIT) | See PIT Table | Due by 10th day of suceeding month. |
| W/H on Wages/Salary | See PIT Table | Due by 10th day of suceeding month. |
| W/H on Rent | Resident 10% | Due by 10th day of suceeding month. |
| W/H on Rent | Non-Resident 15% | Due by 10th day of suceeding month. |
| W/H on Interests and Dividends | 15% | Due by 10th day of suceeding month. |
| Board & Management Fees | Resident 10% | Due by 10th day of suceeding month. |
| Board & Management Fees | Non-Resident 15% | Due by 10th day of suceeding month. |
| W/H on Payment for Services | 6% | Due by 10th day of suceeding month. |
| Contracts on Services Rendered | 10% | Due by 10th day of suceeding month. |
| Gambling | 20% | Due by 10th day of suceeding month. |
| Excise Tax | (See Excise Table) | Due by 21st day after month ends. |
| Goods & Services Tax | (see GST Table) | Due by 21st day after month ends. |
Royalties
| Tax Type | Tax Rate | Due Dates |
|---|---|---|
| Iron Ore | 4.5% | Due dates per Mineral Development Agreement or Contract. |
| Gold | 3% | Due dates per Mineral Development Agreement or Contract. |
| Commercial Diamonds | 5% | Due dates per Mineral Development Agreement or Contract. |
Quarterly
| Tax Type | Applies to | Tax Rate | Due Date |
|---|---|---|---|
| Presumptive Tax (Advance Payment) | (Small Tax Division) | 4% | Due within 15 calendar days following the end of each quarter. |
| Advance Tax (Minimum Tax) | (Medium and Large Tax Divisions) | 2% | Due within 15 calendar days following the end of each quarter. |
Annually
| Tax Type | Tax Rate | Due Dates |
|---|---|---|
| Real Property Tax | (See Real Property Table) | January 1 to June 30 |
| Personal Income Tax | Three months after end of calendar or fiscal year. | |
| Corporate Income Tax (Regular) | 25% | Three months after end of calendar or fiscal year. |
| Mining | 30% | Three months after end of calendar or fiscal year. |
| Petroleum Project | 30% | Three months after end of calendar or fiscal year. |
| Rice Production | 15% | Three months after end of calendar or fiscal year. |
What is Excise Tax?
Excise Tax is a commodity based tax that is levied on excisable goods and services. It is levied on the production, importation of excisable goods and the provision of excisable services.
All excise taxes are calculated on the Cost + Insurance + Freight (CIF) of imported goods except for alcoholic beverages and tobacco product, and ex-factory price for local manufactured goods.
How is the Excise on alcoholic and non-alcoholic imported and locally manufactured beverages and tobacco products calculated?
For alcoholic and non-alcoholic imported and locally manufactured beverages and tobacco product:
