The Economic Community of West African States (ECOWAS) has stressed the need for the Government of Liberia to migrate to the Value Added Tax (VAT) program, which will focus on domestic revenue mobilization to be able to tackle current realities.
Mr. Tiemtore Salifou, ECOWAS Director for Trade, Customs Union, stated this on Monday, November 22, 2021, when he met with the Acting Finance and Development Planning Minister, Samora P.Z. Wolokolie, of the Support Programme for Fiscal Transition (PATF) in West Africa.
He said, “We must share experiences and move towards moving tax revenue and ensure that international tax standards are implemented.
“So we are in Liberia to encourage you to move forward and ECOWAS is here today to seek from the Minister of finance a strong commitment to support the ECOWAS and UEMOA Commissions reforms and so that the PATF is well understood, visible and widely valued, so the program is given a high priority in the planned reforms.”
He said, on the other hand, the VAT is a tax based on bookkeeping and its control implies a reconciliation of the data that are also necessary to calculate the tax on profits.
This, Mr. Salifou said, requires the integration of the tax data concerning the same company in a single file. It also implies that the companies subject to the VAT must be able to keep an account. This explains the need to set up a high threshold of liability for VAT.
He further disclosed that the progress made now in Guinea Bissau should be duplicated in Liberia.
According to him, working with key partners such as the World Bank, IMF and AfDB, in view of sharing their ambitions and objectives, will allow them to clearly define the intervention frameworks for better coordination of their activities.
Mr. Salifou added, “You need to hear that focal points should be able to provide assistance for a very close follow up; We will be delighted to hear from you what are your expectations, so we should work hand in hand, so we should accomplish this crucial challenge.”
The ECOWAS Director for Trade, Customs Union, who is currently in the country along with some of his officials, said Liberia, as well as Guinea Bissau and Nigeria, will benefit from specific supports that will enable them to catch up quickly with the implementation of the VAT community rules, to reinforce their better integration into the ECOWAS and UEMOA community regions.
The adoption of the VAT, Mr. Salifou said, is undoubtedly the most important tax reform that has taken place in several African states. It has contributed to increase the budget performance and it is a modern tax easy to administer.
As for now, Mr. Salifou said, Guinea's Council minister has validated the reform. The next step will be the adoption by the national assembly and, in a few months, Guinea will be complying with the VAT community rules.
“So Liberia should take advantage of these opportunities offered by the PATF Project by complying with VAT regional rules and implementing good practices aligned on the best international standards, such as: a broad tax base; single rate on all businesses; small number of tax exemptions and holidays; the implementation of digital process to better manage the VAT and other taxes,” he suggested.
For his part, the acting Finance and Development Planning Minister, Samora P.Z. Wolokolie, pledged the government's willingness and commitment to transition but, at the end of the day, they will need the blessings from President George M. Weah and the members of the National Legislature in such regard.
“So, in terms of willingness and commitment to this process, we are pleased to communicate, yes we are indeed willing to transition to the rest of ECOWAS as things have been portrayed. Let me use this occasion to explain that the truth regarding the tax exemption is very cardinal. It makes the country perform in the collection of their domestic revenue,” he said.
Acting Minister Wolokolie said, “Today, the presentation of our new budget, we are very ambitious but conservative to the extend we have raised our budget to the amount that pushes higher than any other budget that has been submitted to the national legislature, again arguably since the foundation of Liberia. We submitted US$785 million.”
He added that Liberia's budget has always been around US$560 million, even though they collected over six hundred million, making the budget to perform but the measure put into place by this government, especially with the vigorous revenue administration, policy and minimization of tax expenditure in respect thereof.
“So, with that we can tell you that we are not complacent. We welcome the efforts of the consultants and the technical pieces of advice that will be given to us as a country to improve further on that and maybe we can move the budget a bit to a billion dollars, which we are looking very ambitious in doing,” Wolokolie said.
The Acting Finance Minister, however, concluded by giving an assurance that Liberia, in the final analysis, will transition to Value Added Tax (VAT).