Liberia Tax Guide 2012

Transcription

1 Liberia Tax Guide 2012

2 foreword A country s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for 100 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Kaarji Vaughan, PKF Melbourne for co-ordinating and checking the entries from countries within their regions. The WWTG continues to expand each year reflecting both the growth of the PKF network and the strength of the tax capability offered by member firms throughout the world. I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Jon Hills PKF (UK) LLP Chairman, PKF International Tax Committee jon.hills@uk.pkf.com I

3 important disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II

4 preface The (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of 100 of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current as of 30 September 2011, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at PKF INTERNATIONAL LIMITED APRIL 2012 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION III

5 about pkf international limited PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,200 partners and more than 21,400 staff. PKFI is the 10th largest global accountancy network and its member firms have $2.6 billion aggregate fee income (year end June 2011). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide. Services provided by member firms include: Assurance & Advisory Corporate Finance Financial Planning Forensic Accounting Hotel Consultancy Insolvency Corporate & Personal IT Consultancy Management Consultancy Taxation PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy, insolvency and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network. Please visit for more information. IV

6 structure of country descriptions a. taxes payable FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES b. determination of taxable income CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES c. foreign tax relief d. corporate Groups e. related party transactions f. withholding tax G. exchange control H. personal tax i. treaty and non-treaty withholding tax rates V

7 international time Zones AT 12 NOON, GREENwICH MEAN TIME, THE standard TIME ELsEwHERE Is: A Algeria pm Angola pm Argentina am Australia - Melbourne pm Sydney pm Adelaide pm Perth pm Austria pm B Bahamas am Bahrain pm Belgium pm Belize am Bermuda am Brazil am British Virgin Islands am C Canada - Toronto am Winnipeg am Calgary am Vancouver am Cayman Islands am Chile am China - Beijing pm Colombia am Croatia pm Cyprus pm Czech Republic pm D Denmark pm Dominican Republic am E Ecuador am Egypt pm El Salvador am Estonia pm F Fiji midnight Finland pm France pm Guernsey noon Guyana am H Hong Kong pm Hungary pm I India pm Indonesia pm Ireland noon Isle of Man noon Israel pm Italy pm J Jamaica am Japan pm Jersey noon Jordan pm K Kazakhstan pm Kenya pm Korea pm Kuwait pm L Latvia pm Lebanon pm Liberia noon Luxembourg pm M Malaysia pm Malta pm Mauritius pm Mexico am Morocco noon N Namibia pm Netherlands (The) pm New Zealand midnight Nigeria pm Norway pm O Oman pm G Gambia (The) noon Georgia pm Germany pm Ghana noon Greece pm Grenada am Guatemala am P Panama am Papua New Guinea pm Peru am Philippines pm Poland pm Portugal pm Puerto Rico am VI

8 Q Qatar am R Romania pm Russia - Moscow pm St Petersburg pm s Sierra Leone noon Singapore pm Slovak Republic pm Slovenia pm South Africa pm Spain pm Sweden pm Switzerland pm T Taiwan pm Thailand pm Tunisia noon Turkey pm Turks and Caicos Islands am U Uganda pm Ukraine pm United Arab Emirates pm United Kingdom (GMT) 12 noon United States of America - New York City am Washington, D.C am Chicago am Houston am Denver am Los Angeles am San Francisco am Uruguay am V Venezuela am Vietnam pm VII

9 Liberia liberia Currency: Liberian Dollar Dial Code To: 231 Dial Code Out: 00 (LRD) Member Firm: City: Name: Contact Information: Monrovia Nim ne Mombo a. taxes payable COMPANY TAX Tax leviesare as follows: (a) Annual Business Registration for a foreign-owned company is US$1,000. For a company owned by Liberian nationals, the rate is L$4,200 (equivalent to US$56 at current prevailing exchange rate). (b) The Company Tax is 25% of net taxable income. Advance payment is calculated at 4% of gross revenue if past or expected annual revenue is less than US$500,000; or 2% of gross revenue if past or expected gross income is US$500,000 or more. This prepayment is creditable against actual tax liability computed at year end (31 December). Excess payments are refundable or, by prior agreement with Tax Office,credited against any future tax including corporate income tax liability. (c) Rent tax is assessed at 10% of amount paid. CAPITAL GAINs TAX Capital Gains Tax is not applicable. BRANCH PROFITs TAX No specific branch profits tax applies in Liberia. To operate in Liberia, a permanent establishment is required which, for tax purposes, is treated the same as a domestic corporation and is subject to taxes outlined above. sales TAX/VALUE ADDED TAX There are none as such. However, some (but not all or very many) goods and services are taxed at 7% of gross charge. Seller has the option to bill a single inclusive price or to separate elements of the charge, ie, basic amount plus tax. If all inclusive, then sales amount = amount charge/1.07. FRINGE BENEFITs Under the old law, basic salary was grossed up to 120% as the basis for computing personal income tax, regardless of actual commercial value of fringe benefit. Under the current law, the commercial value of fringe benefits plus actual earnings is determined to comprise taxable income. The new law is widely considered to be excessive, unfair and impracticable and not generally followed. There is a proposed change (back to old law or modified version of it). LOCAL TAXEs These taxes vary by locality but generally consist of assessments for garbage collection and other sanitation charges. OTHER TAXEs Generally, the only other taxes are: immigration residency and work permits for non-nationals airport taxes usually included in price of air ticket. b. determination of taxable income The following are allowed in the determination of taxable income: Capital allowances Depreciation Tax office provides the allowable rates Stock/Inventory cost of goods sold must be calculated Capital gains and losses are includable and calculated at the same rate as regular taxable income or loss Dividends are fully tax exempt if from one domestic corporation to another. If the recipient is a resident taxpayer,it is not treated separately but includable in gross income for purpose of determining net taxable income. It is taxed at 15% if remitted overseas to non-resident taxpayer The deduction for interest paid is fully allowable Losses may be carried forward up to five years Foreign-sourced income is generally excludable unless income earning activity takes place in Liberia Incentives are not generally applicable but, where applicable, are excluded from taxable income. 1

10 Liberia c. foreign tax relief If a company or individual is filing as a resident taxpayer, then 100% of taxes paid overseas are credited, provided the revenue to which the taxes pertained is not derived from Liberia. No special tax treaty is required. d. corporate Groups There are no special provisions for corporate groups. e. related party transactions Imports are subject to review by an independent assessor for duty purposes. Duty is paid on assessed value regardless of actual invoiced value. On that basis, any related expense accepted and treated as generally applicable for standard accounting purposes is allowed. Remittances relating to other charges (ie,licence fees etc) are taxable at 15% of amount paid. f. withholding taxes 1. Personal income tax withholding tax is on a progressive scale. 2. Social Security Taxes are 3.0% for the employee and 4.7% for the employer on employee gross earnings. G. exchange control There are no exchange controls. Liberia has two national currencies, the Liberian dollar and the US dollar. The exchange rate between these two currencies is dictated by the market, although the Central Bank of Liberia does regularly intervene by selling/buying one currency against the other. Otherwise, exchange rates are strictly market determined. There is no remittance control, except that maximum cash allowable on the person or in the luggage of the traveler is US$10,000 (ten thousand US dollars) or its Liberian dollar equivalent. H. personal tax Personal tax is assessed according to a progressive scale specified in tax law of Liberia. i. treaty and non-treaty withholding taxes See item C above. 2

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