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The Finance Act 2023 represents a short-sighted approach to addressing revenue shortfalls and may harm economic growth and development in SierraLeone. While we recognize the government’s need for revenue to fund essential services, relying on overtaxing a small group of taxpayers is not a viable long-term solution.
The new tax and regulatory changes will have a significant impact on the aviation and tourism industry, with higher taxes and charges on air tickets and operations in the new terminal potentially discouraging tourism growth and driving more people to use the boat service via Guinea.
Furthermore, the revised GST Act Exempt Supplies list reduces the scope of GST exemptions, increasing the tax burden for businesses operating in certain sectors, including air transportation and financial services.
The amendment to Section 8 of the Goods and Services Tax Act, 2009 to include digital marketplaces and services is likely to result in increased tax revenue collection from online businesses operating in Sierra Leone.
The introduction of a new 2% Tourism Levy on accommodation, food, drinks, and related services offered by tourism establishments, coupled with the Annual Circulation Permit Levy of SLE 200 imposed on all vehicles (including boats and airplanes) except motorbikes and bicycles, is also likely to impact businesses negatively.
Finally, the new Minimum Alternate Tax (MAT) of 3% of turnover increases the tax burden on businesses in #SierraLeone and may hamper their growth potential, lead to job losses, reduction in expenses and investment, and see an increase in prices as companies look to increase their margins to find the 3% burden.
We understand that these measures were taken at the behest of the Bretton Woods institutions. Nonetheless, we believe that a more comprehensive approach is necessary, one that involves expanding the tax base, reducing government spending, and promoting economic growth. We urge the government to consult more with the business community and explore alternative solutions that ensure fairness and equity in the tax system and foster a healthy and sustainable economy.
