Economic Overview
Sierra Leone’s monetary advancement has dependably been hampered by an overdependence on mineral misuse. Progressive governments and the populace all in all have dependably trusted that “precious stones and gold” are adequate generators of outside cash income and bait for venture. Subsequently, extensive scale farming of ware items, mechanical improvement and feasible speculations have been ignored by governments.
The economy could in this manner be portrayed as one which may be “exploitative” – a rentier state – and dependent on the extraction of unsustainable assets or non- reusable resources.
With the disclosure of iron metal in 2011, mining turned into the fundamental development driver, bringing about a remarkable development rate of 21% out of 2013. Be that as it may, following the descending pattern in the worldwide cost of iron mineral and the flare-up of the Ebola infection in 2014—the economy contracted 20.6% out of 2015.
Resumption of task by one of the two iron mineral organizations prompted a bounce back of the economy, with a development rate of 6.3% of every 2016 and an expected 5.7% out of 2017.
The standpoint for 2018 and past will keep on being trying, because of the vulnerability encompassing the universal costs of iron metal. Gross domestic product development is required to be 6.1% out of 2018 and 6.5% of every 2019.
The historically low fiscal revenue was exacerbated by the fall in international iron ore prices and subsequent closure of the iron ore sector.
Revenue fell from 13% of non–iron ore GDP in 2013 to 10% in 2015. Higher domestic borrowing is an issue, and government finance costs could rise substantially. Expenditure adjustment will be difficult in an election year, which may derail compliance with the International Monetary Fund’s Extended Credit Facility (ECF) program.
Source: African Economic Outlook (AEO) 2018
Main Sectors
The country possesses substantial mineral, agricultural, and fishery resources, but it is still recovering from a civil war that destroyed most institutions before ending in the early 2000s.In recent years, economic growth has been driven by mining – particularly iron ore.
The country’s principal exports are iron ore, diamonds, and rutile, and the economy is vulnerable to fluctuations in international prices. Until 2014, the government had relied on external assistance to support its budget, but it was gradually becoming more independent.
Industries in Sierra Leone cover diamond mining and petroleum refining alongside commercial ship repair. Extractive industries are popular in Sierra Leone due to the country’s wealth of diamonds, gold, bauxite, rutile and iron ore deposits, and mining now accounts for almost a third of GDP (CIA World Factbook, 2012).
The mining sector is controlled by strict regulations, and mining licenses can be obtained only from the government. The manufacturing sector in Sierra Leone is small-scale, generally producing beverages, textiles, footwear and cigarettes.
Taxes in Sierra Leone
In Sierra Leone, the Corporate Income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year.
Revenues from the Corporate Tax Rate are an important source of income for the government of Sierra Leone.
• Resident companies pay tax at up to 30% on their worldwide chargeable income.
• Non-Resident companies pay tax at the rate of 30% on income sourced in Sierra Leone.
• Capital gains tax is payable by a chargeable person at the rate of 30% of the capital gain accruing to or derived by that chargeable person from the disposal of a chargeable asset owned by a chargeable person (exemptions apply).
A branch in Sierra Leone of a non-resident company is subject to tax on repatriated income at the rate of 30% as though such income were a dividend taxable at the rate of 10%, this tax being in addition to income tax on the chargeable income of the branch.
The National Revenue Authority (NRA) in Sierra Leone administers most of the taxes payable including the major revenue contributors. The Domestic Taxes Department (DTD) of the NRA has been established as a ‘one-stop shop’ for the administration of all Sierra Leone’s domestic taxes – namely the Goods and Services Tax, Income Tax Pay-As-You-Earn (PAYE), Corporation Tax, Withholding Tax, Payroll Tax, Personal Income Tax, Rent Tax, Foreign Travel Ticket Tax and Donation In Kind (DIK).
BRANCH PROFITS TAX
A branch in Sierra Leone of a non-resident company shall be subject to tax on repatriated income at the rate of 30% as though such income were a dividend taxable at the rate of 10%, this tax being in addition to income tax on the chargeable income of the branch.
Investing in Sierra Leone
The Investment Promotions Act 2004 was enacted to promote and attract both domestic and foreign private investment for the development of production and value adding opportunities, to improve export and employment opportunities.
• Exile faculty with work licenses will be allowed to make settlements abroad through their business banks, subject to such withholding expense commitments as are contained in the Income Tax Act 2000.
• The settlement of benefits, after charges, earned by a remote financial specialist from a business undertaking, is ensured as establishing current universal exchanges in regard of which installments exchanged abroad will be permitted without limitation.
• A financial specialist may unreservedly repatriate continues got from the liquidation of a business endeavor and grants coming about because of any settlement of question in regard of such business undertaking.
• There will be no confinement on the exchange of reimbursements of essential and enthusiasm on an a safe distance outsider advance contracted outside Sierra Leone and enlisted with the Bank of Sierra Leone yet premium installments due on such advances might be liable to the withholding charge commitments in the Income Tax Act, 2000.