Corporate Tax Breaks Too High in Sierra Leone
April 17, 2014 Taxation in Sierra Leone
FREETOWN – The government of Sierra Leone is spending eight times more on tax breaks for foreign companies than it is on the national health system.
Earlier this week the international development agency Christian Aid released a new report showing that the tax exemptions and incentives offered to multinational corporations operating in in Sierra Leone are too generous, and drastically reduce government tax revenue.
According to Christian Aid, over the course of 2012, foreign businesses operating in Sierra Leone received approximately SLL 966.6 billion (approx. USD 223 million) worth of exemptions from customs duties and GST.
The revenue foregone by the government is seven times bigger the national spending on education, or eight times bigger the government’s expenditures on health care, and equal to 8.3 percent of the national GDP that year.
The significant revenue losses could rise to as much as USD 240 million per year, as the government is currently looking to extra breaks on corporate incomes to multinational corporations working in the national mining sector.
In its report Christian Aid also noted that the tax exemptions may not provide any significant benefit for Sierra Leone, as recent studies on foreign direct investment in Africa have shown that “…investment incentives, particularly tax incentives, are not an important factor in attracting foreign investment.”
Photo by: Ricki Melchior