Liberia’s government has started the procedures necessary to join the Value Added Tax regime. If the process is completed, VAT will replace the GST (Goods and Services Tax), which raises hopes of boosting exports, creating a more transparent taxation system, and increasing tax collection.
The current GST is a compounding tax charged on most services and goods at 10 % and does not allow for business deductions. VAT, prevalent in Western Africa, would stop this tax cascading, which could speed up the country’s economy.
Moreover, the planned change of the taxation regime is also a part of the region’s harmonization, aimed at promoting cross-border trade. Liberian experts and government officials are supported by the representatives of the Economic Community of West African States (ECOWAS) in drawing provisions and building policies for the implementation of VAT.
Liberia’s government expects fewer instances of tax evasion once VAT is adopted because it would allow the VAT statutory rates to be much lower at the same time, making it so that all parties of the supply chain have to account for the tax, even though it falls on the final customer.
The expected dates of VAT implementation are still not defined.