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Global Mobility Services: Taxation of International Assignees - Liberia

Taxation issues & related matters for employers & employees 2017

Last Updated: March 2017

This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.

Global Mobility Country Guide (Folio) 3

Country: Liberia

Introduction: International assignees working in Liberia

4

Step 1: Understanding basic principles 5

Step 2: Understanding the Liberian tax system 6

Step 3: What to do before you travel to Liberia 8

Step 4: What to do after you arrive in Liberia 9

Step 5: What to do before departure from Liberia

10

Appendix A: Tax tables containing rates of taxation 11

Appendix B: Typical tax computation 12

Appendix C: Double-taxation agreements 13

Appendix D: Liberia contacts and offices 14

Additional Country Folios can be located at the following website: Global Mobility Country Guides

4 People and Organisation

Introduction: International assignees working in the LiberiaThis folio is intended to assist foreign nationals sent to work in Liberia with their tax planning. It gives a broad background to taxation in Liberia and other important aspects to be considered

by a foreign national working in Liberia on a temporary basis.

This folio is not intended to be a comprehensive guide. It merely attempts to give an overview of the issues involved. Accordingly,

professional advice should be sought before making important decisions.

For further information or assistance, please contact one of the individuals listed in Appendix D.


Step 1: Understanding basic principles

The scope of taxation in Liberia

1. Income tax is levied on residents on income derived from all sources. Non-residents are subject to tax on Liberia source income.

2. Other taxes for which individuals may become liable are:

Social security – 3% of wages; – Goods and Services Tax – 10%, 15%;

Capital gains tax – Graduated scale; – Property tax/Real estate tax – Varies;

Withholding tax - 15%, 10%.

The tax year

3. The tax year runs from 1 January to 31 December.

Method of calculating Liberian tax

4. Income tax on resident individuals is levied on a sliding scale at rates that vary between 0% and 25%. Resident expatriates are levied on the same sliding rates as residents

on taxable income sourced in Liberia.

5. A non-resident expatriate is taxed at a flat rate of 15% on taxable income sourced in Liberia.

Husband and Wife

6. A husband and wife are treated as separate taxpayers in Liberia.

Determining residence

7. An individual is deemed tax resident in Liberia for a full year if he/she has a normal place of abode in Liberia and is present in Liberia at any time during the tax year, or resides in Liberia for a period exceeding 182 days in a twelve month period that ends during the tax year, or is an employee of the Government of Liberia posted abroad during the tax year.


Step 2: Understanding the Liberian tax system

Taxation of employment income

8. Taxable income includes salaries, wages, bonuses, commissions, director's fees, other cash allowances, and any other cash and non-cash benefits.

9. Employment income is subject to monthly withholding tax deducted by the employer and paid over to the tax authorities on a monthly basis within 10 days of the end of the month payments are made.

Benefits

10. Non-cash benefits received from employment are also taxable at the employee’s graduated tax rate, i.e.:

– Use of company car;

– Use of household furniture;

– Company provided accommodation;

– Use of coupon for fuel for private use;

– Utilities paid by the company; and

– Other collateral benefits.

11. The following benefits or income are not included in an employee’s taxable income;

– Non cash benefits not exceeding L$ 100, 000 (approx. US$ 1,098) in aggregate during the tax year;

– Gifts and transfers received in a donative transfer or transfer by death;

– Gains from the disposal of personal use property of not more than L$ 1,600,000 (approx. US$17,582);

– Interest income of less than L$ 200 per tax year;

– Health insurance, disability insurance or benefits and death benefits, or proceeds of a life insurance policy. Exemption does not include medical insurance or medical expenses of a person.

Deductions

12. The standard deduction (basic tax free allowance) of L$ 70,000 per annum (approx.US$ 769) allowed to an individual.

13. Donations made by the individual to a qualifying organization are allowable. The deduction for charitable contributions is limited to 15% of the individual’s taxable income (computed before reduction for charitable contributions but after inclusion of any gain on disposal).

Social Security Contributions

14. Every worker employed in Liberia is required to contribute to the mandatory social security schemes unless specifically exempt.

15. The general mandatory monthly social security contribution rates for employers and employees are 3% and 4.75% respectively of the employees’ total wages which is paid to the National Social Security and Welfare Corporation (NASSCORP) by the last of the month in which payments are made. 6% of


contributions made to NASSCORP is redistributed to National Pensions Fund and 1.75% to the Employment Injury Scheme.

16. Foreign nationals working in Liberia whether on short term or long term assignments are currently required to make social security contributions to NASSCORP.

17. Persons excluded from remitting social security contributions include but are not limited to: employers of less than 5 employees and their employees, persons employed upon a vessel, domestic workers, members of the Armed Forces, diplomats, etc.

Individual Income Tax Rates

18. Please refer to Appendix A for the applicable tax rates.

Estimation of value of non cash benefit

19. Non-cash benefits are valued at 100% of the fair market value of the benefit granted to the employee.

20. The cost to the employer of providing the benefit is not determinative of the fair market value but in appropriate circumstances, may be evidence of that value.

21. In circumstances where inclusion of non-cash benefits according to market value poses a hardship on the employee, non-cash benefits inclusion is phased in gradually at a rate of 50% in the first year and increased by 5% per year until the rate reaches 100%.

22. An individual qualifies for purposes of the hardship rule if the market value of the non-cash benefit in kind is at least 50% of the employee’s cash salary.

Dividend Income

23. Dividend income is an economic benefit which is treated as taxable income in Liberia.


Step 3: What do to before you travel to Liberia

Immigration and travel documentation

24. Ensure to acquire all relevant travel documentation before travelling to Liberia such as a passport and a visa. Contact your local Liberian embassy or consulate to determine visa requirements. As Liberia is an ECOWAS member, all individuals with ECOWAS passports do not generally require an entry visa.

25. For extended stays in Liberia (30 or more days), a visa extension is required for all visa holders. This must be issued by the Liberia Immigration Service (LIS) within the 30 day period in Liberia.

26. For multiple entry visa holders and Liberian residents holding foreign passports, a re-entry letter issued by the LIS is required to re-enter the country, regardless of your visa status.

Work and Resident permit

27. If you intend to stay in Liberia for more than 90 days, a resident permit issued by LIS is mandatory. The resident permit allows one to stay in Liberia and usually valid for one year, renewable thereafter. A resident permit is a prerequisite before an individual is granted a work permit.

28. Any non-Liberian intending to work in Liberia for any duration of time must acquire a work permit from the Ministry of Labour before commencing work. A work permit is valid for one year, renewable thereafter. Please note that a work permit can only be issued to a holder of a resident permit.

29. Resident and work permits are acquired after arrival in Liberia.

Health and vaccination

30. Evidence of yellow fever vaccination is mandatory at arrival.

31. Most vaccines and drugs can be easily purchased from any pharmacy or medical centre across the country. However, it is advisable to carry along a first aid kit and other prescribed drugs for emergencies.

32. Frequent use of hand sanitizers and disinfectants is highly recommended while in the country. These can be easily purchased from any store.

Transport and Accommodation

33. Ensure to book or secure your accommodation in advance of travelling to avoid inconvenience.

34. Taxis are available at the Robert International Airport but organization of own transport in advance of travelling is highly recommended.


Step 4: What do to after you arrive in Liberia

TIN and NASSCORP registration

35. After acquiring a resident permit and work permit, an individual should register for social security with the National Social Security and Welfare Corporation (NASSCORP) and thereafter apply for a Tax Identification Number (TIN) from the Liberia Revenue Authority where applicable.

Individual annual income tax return

36. Annual individual income tax returns should be filed by 31 March of the year following the year of assessment.

37. The return is due if a resident individual has other income other than employment income on which tax has been withheld by the employer and where such other income exceeds 10% of the employee’s gross income.

38. A Non-resident individual is not required to file tax returns. If a non-resident person elects to file a tax return, then he/she is subject to tax as a resident individual for that tax year and required to file returns for four succeeding tax periods thereafter.


Step 5: What do to before departure from Liberia

NASSCORP Refund claim

39. Before departure from Liberia, an expatriate who intends to leave Liberia permanently may consider applying for a NASSCORP refund for social security contributions made by him/her and by his/her employer for his/her benefit. It is advisable to start application process at least three months before departure.

TIN de-registration

40. Before departure from Liberia, it is recommended for a person to de-register for tax purposes with the Liberia Revenue Authority.


Appendix A: Tax tables containing rates of taxation

Bands From (LIB $) To (LIB $) Tax rate

1 0 70,000 0%

2 70,001 200,000 5% of Excess over 70,000

3 200,001 800,000 6,500 + 15% of Excess over 200,000

4 800,001 Above 96,500 + 25% of Excess over 800,000


Appendix B: Typical tax computation Individual tax calculation – Year ending 31 December 2014 Assumptions

Resident husband and wife with two children. Husband is provided with fully furnished accommodation and use of an official car with fuel. The family also received company paid medical health care of L$ 50,000 during the year Income includes monthly salary of L$ 126,000 and cash allowances totalling L$100,000 per year.

Tax computation L$ L$

Basic annual salary 1,512,000 1,512,000

Allowances 100,000

Total cash emolument 1,612,000

Rent element (2% of basic salary) 30,240

Car element (2% of basic salary) 30,240

Medical benefit 50,000

Total income 1,722,480

Chargeable income 1,722,480

Tax thereon:

On first 70,000 0

On next 130,000 6,500

On first 600,000 90,000

On remaining 922,480 at 25% 230,620

Tax payable 327,120

Less: Medical Tax Credit 20,000

Net Tax Payable 307,120

Medical tax credit carried forward 5,000

Notes:

1. Medical tax credit is determined as the lesser of 50% of approved medical expenses and 50% of reasonable insurance premium.

2. Reasonable insurance premium is set at L$ 20,000 per annum for one natural person, L$ 20,000 per annum for two natural persons and L$ 40,000 per annum for a family.

3. Any excess of the medical tax credit claimed over 50% of approved medical expenses is carried forward.


Appendix C: Double-taxation agreements

Germany Countries with which Liberia currently has double-taxation agreements:


Appendix D: Liberia contacts and offices

Contacts

Taweh Veikai

Country Senior Partner

Monrovia

Tel: [231] (888) 999 555

Email: [email protected]

Edward Gomado

Partner

Monrovia

Tel: [231] (888) 999 555

Email: [email protected]

Robert Smallwood

Associate Director – Head of Tax Services

Monrovia

Tel: [231] (770) 999 555

Email: [email protected] [email protected]

Offices

Monrovia

PricewaterhouseCoopers

9th Street,

Payne Avenue, Sinkor

Monrovia,

Liberia

Tel no: +231-888-999 555

Tel no: +231-770-999-555

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