Sierra Leone Tax Rates
Personal income tax rates in Sierra Leone are progressive to 30%.
Income in Leones per annum Tax rate
0 - 1,500,000 Nil
1,500,000 - 4,500,000 20%
4,500,000 - 7,500,000 25%
Above 7,500,000 30%
Proposed 'possible' following year tax brackets are:
Income in Leones per annum Tax rate
0 - 1,800,000 Nil
1,800,000 - 5,400,000 20%
5,400,000 - 9,000,000 25%
Above 9,000,000 30%
Individual residents of Sierra Leone are subject to tax on their worldwide income.
Non-residents are subject to tax on all payments from which withholding tax is
deducted and all other assessable income from a source in Sierra Leone.
Non-resident tax rate is a flat 25%.
Sierra Leone Tax Year - The ordinary tax year begins on January 1 and ends on December 31 each year. To use a substitute year, a request must be made in writing to the Commissioner-General setting forth the reasons for the request. The request may be approved or denied.
Filing of Tax Returns - The tax form is to be filed with the Income Tax Department not later than 90 days after the end of the tax year. For taxpayers using the ordinary tax year, this means by March 31 of every non-leap year and by March 30 of each leap year.
Tax Penalties - There is a penalty of Le 2,000,000 and 10% of the total tax to be paid for failure to file an Income Tax Return.
Sierra Leone Corporate Tax
In Sierra Leone, resident companies pay tax at 30% on their worldwide income. Non-resident companies pay tax at 30% on income sourced in Sierra Leone. Company tax is based on computed chargeable income.
For mining companies, the tax rate is 37.5% subject to additional tax on profits agreed between the Minister of Mines and Mineral Resources and the company.
CAPITAL GAINS TAX
Gains derived from the disposal of a business or investment asset are included in taxable income. Gains from the disposal of any other asset are not taxed. The loss incurred on the disposal of a business or investment asset is also taken into account in determining a person's taxable income.
A business asset is an asset held for the production of assessable income and which is used in a business or is held for sale in a business.
FRINGE BENEFITS TAX
Non-cash benefits given by employers to employees are included in employment income on the basis of the higher of the cost to the employer or the market value. Infrequent fringe benefits of very small value are excludable.
LOCAL TAXES
Taxes are withheld from local employment income in accordance with the PAYE schedule.
OTHER TAXES
Acquisition of freehold land by sale to foreigners in Sierra Leone is prohibited by law. However, the law makes provision for the acquisition of leasehold land for leases less than 21 years subject to the provisions of the Non-Citizens (Interest in Land) Act 1966. For leases longer than 21 years, provision is made for acquisition with a prior approval by the Board of the Ministry of Lands.
All land acquisitions are subject to the payment of the following:
- registration fees
- land tax
- stamp duty
NATIONAL SOCIAL SECURITY AND INSURANCE TRUST (NASSIT)
Employers and employees contribute 10% and 5% respectively of the employees' employment income.
BUSINESS LICENCE
This is renewable annually. Business licence fees depend on the annual turnover of the business. For individuals the fees are as follows:
Turnover up to Le200,000 pa Le20,000
From Le200,001 - Le500,000 pa Le40,000
Above Le500,000 pa Le60,000
Companies pay Le120,000 annually to renew their licences.
DEPRECIATION
This expense is disallowed in the tax computation in Sierra Leone. Capital allowances are given instead.
STOCK/INVENTORY
The cost of sales is deductible in determining chargeable income of the business.
DIVIDENDS
Dividends are taxable under the Withholding Tax Regime. The tax is final and is not aggregated with other income(s). Dividends paid by a resident company to another resident company are not subject to withholding tax.
INTEREST DEDUCTIONS
Interest deductions are restricted to 80% of the interest payable. This provision does not apply to banks.
LOSSES
Losses are allowable and can be carried forward indefinitely. However, the deduction for any year of assessment must not be such that the tax payable will be less than 50% of the tax due if the loss is not carried forward. Losses on the disposal of business or investment assets are allowable deductions. Foreign exchange losses can also be deducted.
Where there has been a change in the control and ownership of a company, the loss suffered before the change cannot be carried forward if the company engages in a new business investment at any point during the period of three years after the change unless the Commissioner of Income Tax's approval has been obtained.
FOREIGN SOURCED INCOME
Residents are generally taxed on their worldwide income. Foreign employment income of residents that has been taxed in a foreign country is exempt from income tax. There is an allowable tax credit for foreign income tax paid by a taxpayer on his income from a foreign source.
TAX INCENTIVES
There is an authorisation deduction of 10% for expenditure incurred to start a business. An investment allowance of 5% is also given on expenditure to purchase depreciable assets such as plant and machinery. A 5% allowance is given to businesses in the tourism industry on expenditure to acquire depreciable assets such as plant, machinery and buildings for commercial activities.
A tax deduction may be allowed for expenditure on research and development activities carried out for the purpose of producing assessable income. There are exemptions to persons/organisations and associations that promote social or sporting amenities.
Tree crop farmers are encouraged by an exemption from income tax for a period of ten years. 50% of dividends paid by companies in such farming can also be exempt from tax.
FOREIGN TAX RELIEF
A resident taxpayer may claim a tax credit for tax borne on assessable foreign source income (including capital gains). The foreign tax credit cannot exceed the Sierra Leone tax on the foreign-source income, which is determined by applying the average rate of Sierra Leone tax to the foreign-source income, reduced by any deduction properly allocated to that income.
CORPORATE GROUPS
No special rules exist for the taxation of groups.
RELATED PARTY TRANSACTIONS
Expenses incurred in these transactions are allowable. But the Commissioner of Income Tax has power to re-characterise a transaction entered into as part of a tax avoidance scheme.
WITHHOLDING TAX
Residents Non-residents
Employees 30% 25% Final
Contractors 5% 10%
Dividends (payment by one resident company to 10% 10% Final
another resident company is exempt)
Interest 15% 15% Final
Rent and royalties 10% 25% Final
Pensions and annuities 15% 25% Final
Natural resource payment 25% 25% Final
Beneficiaries and trusts 35% 25% Final
EXCHANGE CONTROL
Exchange control is under the direct supervision of The Bank of Sierra Leone. The following are broad guidelines:
REAL ESTATE TRANSACTIONS
Sierra Leoneans: Capital transfers for real estate transactions are not permitted.
Non-Sierra Leoneans: Non-Sierra Leoneans can purchase real estate from funds brought in by documented remittances through an authorised dealer.
HOLDINGS OF ASSETS ABROAD
Transactions under this category should be processed within the regulations governing foreign currency accounts.
BORROWING
Internal Borrowing (in Leones): It is permitted for an authorised dealer acting within the existing regulations to grant commercial and financial credits to a legal entity registered in Sierra Leone.
External Borrowing: It is permitted to contract external loans fully covered by external collateral acceptable to the lending institution. Documentation to assess the quality of the collateral should be available for inspection by The Bank of Sierra Leone.
GUARANTEES
The prior approval of The Bank of Sierra Leone should be obtained for the giving and renewal of:
(a) any guarantee or any other undertaking, the implementation of which would involve payment to a non-resident or payment in any foreign currency
(b) any guarantee to a resident in Sierra Leone on behalf of or in the account of a resident outside Sierra Leone. Commercial Banks may, without the prior permission of The Bank of Sierra Leone, give the following types of guarantees on behalf of their customers:
(a) guarantees in respect of missing documents
(b) the authenticity of signatures
(c) the release of under trust receipts and the like.
INVESTMENTS
All capital inflows for investment, whether public or private, are allowed by non-Sierra Leoneans. The repatriation of such capital inflows for investment is also permitted through an authorised dealer.
Sierra Leone GST (Goods and Services Tax) Rate
There is no VAT but a Goods and Services Tax (GST) in Sierra Leone. The rate of GST in Sierra Leone is 15%.
The new Goods and Services Tax (GST) in Sierra Leone replaces seven existing taxes: import sales tax, domestic sales tax, entertainment tax, restaurant tax and food tax, messages tax, hotel accommodation tax and professional services tax; thereby simplifying and streamlining the present system of indirect taxation and reducing the cost of administration for the Sierra Leone Government, the NRA and businesses.
Sierra Leone's Goods and Services Tax (GST) came into force on 1st January 2010. It must be charged by registered businesses when they make domestic sales of those goods and services that are defined in the Goods and Services Tax Act 2009 as 'taxable supplies.'
If you are not registered for GST you cannot to charge GST to your customers. It is important to note, however, that you will be liable for all the GST you should have collected from the time you were first liable to be registered, whether or not you were registered.
However, in the main only larger businesses - those that meet the conditions laid down in the Goods and Services Tax Act 2009 - are required to register. The rules for registration are as follows:
You must make an application to register for GST, within 30 days of the end of any month, if:
- your business has made taxable supplies above a threshold of Le 200,000,000 in the preceeding 12 or fewer months, or
- there are reasonable grounds to believe that your taxable supplies in the coming 12 or fewer months are likely to exceed Le 200,000,000, or
- your taxable supplies in the previous four calendar months have exceeded one third of the registration threshold (i.e. Le 66,666,666).
Irrespective of the conditions outlined above, you must register if you are:
- the promoter of public entertainment;
- the licensee or proprietor of a place of public entertainment; or
- a Government entity or a local council carrying out a taxable activity The rules for registration apply also if you take over a business as a going concern. It does not matter whether the last owner was registered: if the business is trading at a level above the threshold for registration, then you will need to register. Your effective date for registration will be the day you take over the business.
If you meet any of the above requirements you will be categorised as a 'taxable person' and you will be legally required to make an application for GST registration to the Commissioner General of the National Revenue Authority, who is the official responsible for the administration of GST.
30%
30%
15%
Sierra Leone
Income Tax Rate
Sierra Leone
Corporate Tax Rate
Sierra Leone
Sales Tax / GST Rate
Last Update: Nov 2010
(This page may show previous year's tax rates. Always check last update time)
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