Employers in Liberia have several tax responsibilities. One of these is the Pay-As-You-Earn (PAYE) system, where employers are responsible for withholding PAYE from employee salaries and remitting it to the Liberia Revenue Authority (LRA) by the 10th of the following month. PAYE rates are progressive, with higher earners paying a larger percentage of their income as tax.

Social Security Contributions

Employers in Liberia must contribute 3% of an employee's gross salary to the National Social Security and Welfare Corporation (NASSCORP). This contribution is redistributed as follows:

• 6% to the National Pensions Fund
• 1.75% towards the Employment Injury Scheme

Workmen's Compensation Insurance

Employers are required to obtain Workmen's Compensation Insurance for their employees. This insurance covers costs related to work-related injuries or illnesses.

Other Potential Employer Taxes

There are other potential taxes that employers may be liable for. These include:

• Unemployment Tax: Depending on the industry and size of the business, employers may be liable for unemployment tax contributions.
• Property Tax: Employers who own property are required to pay property taxes.

Record Keeping and Reporting

Employers are obligated to maintain accurate records of payroll, deductions, and tax remittances. Annual tax returns must be filed with the Liberia Revenue Authority to report the company's tax liabilities and compliance.

Income tax in Liberia operates on a Pay-As-You-Earn (PAYE) basis, where it is deducted by employers from their employees' salaries. The PAYE rates are progressive, meaning higher-earning individuals pay a higher percentage of income tax.

Social Security Contributions

Employees in Liberia are required to contribute to programs managed by the National Social Security and Welfare Corporation (NASSCORP). This includes:

• National Pensions Scheme: 3% of the employee's gross salary is contributed towards retirement savings.
• Employment Injury Scheme: A further 1.75% is deducted to provide coverage for work-related injuries or illnesses.

Additional Deductions

There are other deductions that may apply to an employee's salary.

• Union Dues: If an employee is a member of a trade union, union dues may be deducted from their salary.
• Voluntary Contributions: Employees may elect to make voluntary contributions to retirement savings plans, insurance, or other savings programs. These contributions may also be deducted from their pay.

Liberia has transitioned from a Goods and Services Tax (GST) system to a Value-Added Tax (VAT) system. The standard VAT rate in Liberia is 10%, and it is a consumption tax applied to the supply of most goods and services. Businesses add VAT to the price of their offerings, which is then passed on to the final consumer.

VAT Registration

Businesses with an annual taxable turnover exceeding L$ 3.5 million must register for VAT with the Liberia Revenue Authority (LRA). However, voluntary registration is also available for businesses with turnovers below this threshold.

Taxable Services

VAT applies to a wide variety of services provided in Liberia. These include professional services such as legal, accounting, consultancy, and architecture, telecommunications services, transportation services, hospitality, tourism, and entertainment services, and construction and repair services.

Exempt Services

Certain services are exempt from VAT in Liberia. These include financial services, educational services, health and medical services, and public transportation services.

Imported Services

Services imported into Liberia are also subject to VAT if they are consumed within the country. The importer of the service is typically responsible for accounting for and paying import VAT.

VAT Invoicing

VAT-registered businesses are required to issue tax invoices for all taxable supplies of services. The tax invoice must include the invoice date and number, the supplier's name, address, and VAT registration number, the customer's name and address (if the customer is VAT-registered), a description of the services supplied, and the amount of VAT charged.

VAT Returns and Payments

VAT-registered businesses must file VAT returns with the LRA on a monthly basis. The VAT return calculates the business's output VAT (the tax collected on sales) and input VAT (the tax paid on purchases). If the output VAT is greater than the input VAT, the business must remit the difference to the LRA. Conversely, if the input VAT is greater than the output VAT, the business may be eligible for a VAT refund.

The Investment Code of Liberia provides a range of tax incentives to attract investment, particularly in priority sectors.

Income Tax Exemptions

Eligible businesses may be granted an income tax exemption for up to 8 years. The duration of the exemption is dependent on the sector and the amount of investment.

Duty-Free Imports

Manufacturing businesses may qualify for duty-free importation of raw materials, machinery, and equipment.

Repatriation of Profits

Investors are assured the right to freely repatriate profits.

Strategic Sectors

Liberia prioritizes the following sectors for investment incentives:

• Manufacturing and Agro-processing
• Energy
• Tourism
• Infrastructure

Special Economic Zones (SEZs)

Liberia is in the process of establishing Special Economic Zones (SEZs) that offer additional incentives to attract businesses. These incentives may include reduced land rental fees, tax holidays, and simplified customs procedures.

Other Incentives

• Accelerated Depreciation: Businesses may claim accelerated depreciation allowances on qualifying capital assets.
• Loss Carryforward: Businesses can carry forward losses for up to five years to offset against future profits, thereby reducing their tax burden.

Eligibility and Application

Specific eligibility criteria apply to different tax incentives. Businesses interested in tax incentives must apply to the National Investment Commission (NIC).