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Liberia is preparing to implement a Value Added Tax (VAT) system by January 2026, replacing its current Goods and Services Tax (GSTGoods and Services Tax). The proposed VAT rate is set at 18%, a significant increase from the existing 10% GST.
The GST in Liberia is a single-stage sales tax applied at 10% on most goods and services, with an additional 5% surcharge on telecommunications services and a reduced 7% rate on travel services. Unlike VAT, GST does not allow businesses to deduct input taxes, leading to tax cascading—a situation where taxes accumulate at each stage of production, inflating costs and hindering economic growth.
The shift to VAT aims to broaden and stabilise Liberia’s tax base, enhance revenue generation, and eliminate the inefficiencies associated with GST. By allowing deductions of input taxes, VAT minimises tax cascading, making exports more price-competitive and fostering economic development.
This move aligns Liberia with the Economic Community of West African States (ECOWAS) regional integration program, which mandates member states to adopt VAT systems. As of now, Liberia remains the only ECOWAS member yet to implement VAT. The government’s commitment to this transition dates back to a 2009 memorandum of understanding with the ECOWAS Commission, underscoring its dedication to regional fiscal harmonisation.
The Liberia Revenue Authority (LRA) is actively preparing for the VAT rollout. Efforts include finalising implementing legislation and engaging in capacity building for tax officials. Public awareness campaigns are also planned to educate taxpayers about the new system. These initiatives aim to ensure a seamless transition and effective VAT administration upon its implementation.
The introduction of VAT is anticipated to enhance domestic revenue generation, improve tax compliance, and support national development. By adopting a more efficient and transparent tax system, Liberia seeks to strengthen its fiscal framework and fulfil its regional commitments.
