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
- The Right to Be Informed
Taxpayers must have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanation of the laws and LRA procedures in all forms, instructions, publications, notices, and correspondences. They have the right to be informed of the LRA decisions about their tax accounts and to receive clear explanations of the results or outcomes. - The Right to Quality Service
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the LRA, to be spoken in a way they can easily understand, to receive clear and easily understandable communications from the LRA, and to speak to an appropriate staff about inadequate service. - The Right to Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay the amount of tax legally due, including interest and penalties, and to have the LRA apply all tax payments properly. - The Right to Challenge the LRA’s Position and Be Heard
Taxpayers have the right to raise objections and provide additional documentation in response to formal LRA actions or proposed actions, to expect that the LRA will consider their timely objections and documentation promptly and fairly, and to receive a response if the LRA does not agree with their position. - The Right to Appeal an LRA Decision in an Independent Forum
Taxpayers have the right to be accorded a fair and impartial administrative appeal of LRA decisions, including any penalties, and have the right to receive a written response regarding appeal decision by the Board of Tax Appeal or any appeal body. Taxpayers generally have the right to take their cases to court. - The Right to Finality
Taxpayers have the right to know the maximum amount of time they have to challenge the LRA’s position as well as the maximum amount of the time the LRA has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the LRA has finished an audit. - The Right to Privacy
Taxpayers have the right to expect that any LRA inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing - The Right to Confidentiality
Taxpayers have the right to expect that any information they provide to the LRA will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, tax practitioners, and others who wrongfully use or disclose taxpayer return information. - The Right to Retain Representation
Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the LRA. Taxpayers have the right to seek assistance from a Low Taxpayer Clinic if they cannot afford representation. - The Right to Retain a Fair and Just Tax System
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or liability to provide information timely. Taxpayers have the right to receive assistance from an independent office situated within the LRA or Taxpayer Advocate Office if they are experiencing financial difficulty or if the LRA has not resolved their tax issues properly and timely through its normal channels.
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 (USD)
PIT Calculator (LRD)
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:
