Sierra Leone’s income tax system applies progressive rates for residents: earnings up to 6,000 SLL/month are tax-free, 15% for 6,001–35,000 SLL, and 30% above 35,000 SLL. Non-residents pay a flat 30% on local income. Corporate tax varies by sector: 25% standard, 15% for agriculture, and 30–37.5% for mining. A 10% withholding tax applies to non-resident dividends, interest, and royalties. VAT is 15%, excluding essentials, while social security contributions total 10% (split equally between employer and employee). The National Revenue Authority oversees tax collection, though enforcement gaps and informal sector challenges persist. Recent reforms aim to digitalize processes and broaden compliance.
Section 91: Exemption for Foreign Employment Income
Resident individuals in Sierra Leone are exempt from domestic income tax on foreign-source employment income if:
- The income is earned through employment in a foreign country.
- The income is subject to taxation in that foreign country.
Key implication: Prevents double taxation on income taxed abroad.
Section 90: Foreign Tax Credit Relief
Resident taxpayers may claim a credit against their Sierra Leonean tax liability for:
- Foreign taxes paid on assessable foreign-source income.
Purpose: Mitigation of double taxation.
Tax Residency Criteria (Section 10, Income Tax Act 2000)
An individual is classified as a tax resident if they meet either criterion:
Physical Presence Test
- Presence in Sierra Leone for 183 days or more within any 12-month period overlapping the tax year.
Ordinary Residence Test
- Established residency in Sierra Leone.
- Must not spend >183 days in another country during the tax year.
Key Features of Sierra Leone’s Tax System
Self-Reporting Mechanism
- Individuals/entities self-declare taxable income.
- Incorporated businesses require annual audits (enforcement is inconsistent).
Capital Flow Flexibility
- Funds transferred to Sierra Leonean entities = treated as capital inflows.
- Repatriation faces minimal restrictions (no banking scrutiny).
Tax Residency Certificates
- Issued by the National Revenue Authority (NRA) for compliant taxpayers.
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