Sierra Leone’s Goods and Services Tax (GST) is a modern form of sales tax—a tax on the domestic consumption of imported and locally-produced goods and/or services, paid as a percentage of their value at the time they are imported, sold, exchanged, or delivered.
From the start date of 1st September 2009, GST is applied at a single rate of fifteen per cent (15%) on the majority of goods and services (including imports) supplied in Sierra Leone for local use or benefit.
It will replace seven existing taxes—Import Sales Tax, Domestic Sales Tax, Entertainment Tax, Restaurant 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 Government, the National Revenue Authority (NRA) and businesses.
Note 1: Non-tax charges, direct taxes such as Income Tax and Corporation Tax, and Import Duty, Excise Duty and Export Duty will continue to be charged, as previously, after the introduction of GST.
GST will be collected from customers only by registered businesses (mainly large businesses) when they make supplies of those goods and services that are not specified in the GST Act 2009 as exempt or zero-rated. (See the Section ‘Do I have to register for GST?’ below).
However, GST is not a tax on businesses. Although registered businesses will have to make regular accounting of the tax they have collected (known as output tax) they will be able to deduct from the output tax the GST they have incurred on their raw materials, goods purchased for resale and other legitimate business expenses that was directly related to the making of taxable supplies (known as input tax). They will pay only the difference to the NRA.
It was not possible to reclaim Sales Tax on business expenses under the previous regime. Therefore, operating costs for registered businesses will be reduced as a result of GST and they will have the opportunity to pass on savings to their customers.
Note 2: Payments of GST must be made to the Commissioner General of the NRA (the Commissioner General), who is the official appointed by law to administer the Tax.
What will be taxed under GST?
Under Sierra Leone’s GST Act 2009 there are four categories of goods and services collectively known as ‘supplies.’ These are:
Standard-rated supplies
Zero-rated supplies
Exempt supplies and Supplies outside the scope of GST
