Liberia Tax Reform Update: Tenfold Increase in Taxes Due Reported Via E-Filing

February 13, 2019

Liberian taxpayers reported $12.5 million in taxes due through e-filing during the fourth quarter of 2018, a tenfold increase over the $1.2 million in obligations reported via e-filing from the previous quarter. The dramatic increase marked a milestone for Liberia in its drive for more transparent and robust tax collection and administration.

The increase was spurred primarily by improved e-filing compliance by large taxpayers, which came as part of an 11-percent increase in the number of taxpayers enrolled electronically and 353-percent increase in the number of returns submitted, primarily withholding tax returns filed by large taxpayers. Data from the returns have been entered into the government’s new tax databases.

Liberia President George Weah demonstrates mobile tax filing during the platform's launch event in April 2018.

The increases are being attributed to reforms implemented by the Liberian Revenue Authority (LRA) with assistance from the U.S. Agency for International Development’s Revenue Generation for Governance and Growth (RG3) program. Reforms included a requirement beginning in October for large taxpayers to e-file tax returns. To support the reforms, LRA and RG3 established tax clinics to promote taxpayer filing and enrollment, conducted joint educational visits to taxpayers’ premises, and conducted SMS, social media, and other outreach.

In 2018, Liberia launched electronic and mobile options for filing and paying taxes.

“By strengthening systems for reporting and collecting taxes, the Liberian government will eventually possess much more ability to implement needed development,” said DAI’s Alexander Kitain, RG3’s Chief of Party. “Liberia has real needs in energy, roads, and schools, to name a few areas. By implementing permanent improvements to revenue collection, the country will ultimately be able to increase its domestic expenditure on these and other needs.”

While the impact of increased tax filings on actual revenues is still to be determined, Liberians are already benefitting from filing and paying taxes electronically through:

• Reduced time spent by taxpayers going to tax offices and standing in lines while away from their businesses, with e-filing and e-payment options available around the clock;
• Reduced costs for printing and processing paper returns;
• Decongested tax offices;
• Improved reconciliation between taxes owed and paid with faster tax credits/refunds;
• Increased transparency and data, improving the efficiency of risk management and audits; and
• Reduced opportunities for corruption between tax officers and taxpayers, especially in cash payments to tax officers in rural areas.