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Sierra Leone Finance Act 2019 Tax Measures

Sierra Leone's Finance Act 2019 was published in the Official Gazette on 31 October 2018. The main tax amendments are summarized as follows:

  • Restrictions were introduced regarding the deductibility of expenses arising from the assignment of use or right to use certain rights, such as copyrights and industrial property rights in trade and banking services, technical, scientific and similar know-how, knowledge, and skills such as plans, designs, and processes where:
    • The recipient of the income from the assignment of rights is a related party, vis-à-vis the debtor; or
    • The payer or recipient (direct or indirect) is already subject to a special preferential tax regime in Sierra Leone;
  • Where the Commissioner is satisfied that the beneficiary owner of an account held by any bank or other financial intermediary has failed to pay tax without lawful reason, the Commissioner-General is empowered to order the suspension of the operation of the account until the tax is paid;
  • Before engaging the services of a sub-contractor exclusively, a taxpayer must ensure that evidence of full compliance of the tax obligations of the contractors are provided prior to the conclusion or termination of a contract with such contractors; otherwise, the taxpayer will be jointly liable for all unpaid taxes including interest and penalties of the contractors;
  • Penalties for failing to pay income tax by the due date are imposed as follows, depending on the length of delay:
    • If not more than 30 days, the penalty is equal to 10% of the tax payable;
    • If more than 30 days and up to 90 days, the penalty is equal to 15% of the tax payable; and
    • If more than 90 days, the penalty is equal to 25% of the tax payable;
  • A penalty of SLL 5,000,000 is imposed for each GST return not filed by the due date;
  • Interest on any loan granted by a bank for the purposes of an agricultural investment is exempted from a withholding tax, provided that the rate of interest on the loan is not more than the base lending rate at the time the loan was obtained;
  • Interest on any loan granted as working capital by a bank to any legally registered company engaged in the manufacturing sector and for the sole use of such business is exempted from withholding tax, provided that:
    • The rate of interest on the loan is not more than the base lending rate at the time the loan was granted; and
    • The beneficiary company of the loan is using at least 40% of locally produced materials for its manufacturing
  • Interest on loans granted by banks to aid export activities is exempted from withholding tax as follows:
    • No exemption where the loan period is less than two years;
    • 50% exemption where the loan period ranges between 2 and 5 years;
    • 60% exemption where the loan period ranges between 5 and 7 years; and
    • 100% exemption where the loan period is greater than 7 years;
  • Income tax rates applicable to individuals are amended so that the top rate is reduced from 35% to 30%:
    • up to SLL 6,000,000 – 0%
    • over SLL 6,000,000 up to – 12,000,000 – 15%
    • over SLL 12,000,000 up to 18,000,000 – 20%
    • over SLL 18,000,000 up to SLL 24,000,000 – 25%
    • over SLL 24,000,000 – 30%

The measures of the Finance Act 2019 are effective from 1 January 2019.

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