With just three days before the enforcement by the country’s national revenue authority of a 30-day ultimatum against businesses in arrears of the Goods and Services Tax, President of the Sierra Leone importers association says it will breed bitterness.
“Failure to properly inform us officially of such ultimatum before issuing it will result in bitterness and misunderstanding between business houses and the government”, Alhaji Alpha Tanue Jalloh told Politico.
He said they were planning to meet with the ministry of finance very soon to discuss the concerns, adding: “businesses are not only being badly affected by the deterioration in value of the leone [the country’s currency], but also by policies and procedures that do not favour the business community at all”.
On 3 October 2016 government issued a statement announcing the demand on businesses plus several other policy measures meant to “tackle economic slowdown” in the country.
Ahead of the ultimatum which expires on 3 November, the corporate affairs manager at the revenue authority, Mohamed Bangura, says they are bracing up to go after businesses that don't clear their outstanding owed in tax.
“We have been reminding tax payers of their obligation, but with the recent proclamation by government that within a month's time all arrears should be paid, the agency is ready to enforce compliance after the expiration of the ultimatum”, he told Politico.
Bangura said government was “working hard” to raise revenues locally since support from donors had either delayed or had not been coming in recent years.
He said that in the absence of external support government felt it was prudent to ensure compliance by business houses that owe the state or face “the full penalty of the law”.
“The authority was officially established as the country’s integrated taxation organisation in 2003 following recommendations by the International Monetary Fund to improve revenue collection”, he recalled, adding that they were therefore ready and willing to enforce government policies regarding the collection of arrears in taxes.
“We are determined to institute ‘the stick approach’ if defaulting businesses do not comply”, he said, adding that such punitive measures would include shutting down of defaulting business premises and giving them time to pay up.
“If there are goods, the NRA will auction them to the public and deduct the required revenue from the sales plus interest. If they are banking with any institution, we will instruct the banks to transfer the funds from the accounts of the defaulting business houses to the consolidated fund. If they are foreigners, NRA will prevent them from travelling out of the country, and ultimately if they are importers of goods, they will be prevented from clearing their goods”.
The Open Tax Initiative, a media-led advocacy tool for a fair and accountable tax regime has reacted, saying its implementation as stated by the revenue authority may be unfair to businesses and consumers.
“We feel this form of enforcement of a 15 per cent tax on domestic consumption of imported and locally-produced goods and services, paid as a percentage of their value at the time they are imported, sold, exchanged, or delivered, is likely to cause distress for the business community and affect access to goods and services,” OTI says in a statement. It also criticises the threat to close down business premises within a short notice.
The group had long suggested that improved enforcement would mean that lower tax rates and wider tax base could raise the same revenue, reduce distortions in the economy and contribute to equity. It added that tax education was very low, arguing that “most tax payers might be happy and willing to pay a fair tax but all they need in return are strategic and sustained tax education, effective and open access to information and the tax system, improved service and system responsiveness. Once these are provided, compliance will improve”.
Copyright (c) Politico 2016
