The Finance Act 2024 was formally signed into law by President Dr. Julius Maada Bio, marking a substantial change to the economic landscape of Sierra Leone.
The ratification of this legislative milestone by Parliament in November marks the beginning of a new era of fiscal policies that prioritize the mobilization of income and the promotion of economic growth. The introduction of many taxes and fiscal adjustments under the Finance Act 2024 is expected to have an effect on consumers, businesses, and Sierra Leone's overall economic trajectory.
Overview of the Finance Act 2024:
1. Import Duty on Rice:
One of the notable changes brought about by the Finance Act 2024 is the introduction of a 5% import duty tax on imported rice. This levy is set to take effect in January 2024, with plans for an increase to 10% from January 2025. The government aims to bolster local rice production and reduce dependency on imports through this measure.
2. Minimum Alternate Tax (MAT)
Reduction:
The Act includes a reduction in the Minimum Alternate Tax (MAT) rate from 3% to 2%, accompanied by adjustments to its applicability. This move is designed to ease the tax burden on businesses and stimulate economic activities.
3. Taxation on Digital
Products and Services:
In a bid to capture revenue from the digital economy, the Finance Act introduces income tax on digital products and services provided by global tech giants such as Google, Meta, and Amazon. This tax is aimed at consumers in Sierra Leone who engage with these digital platforms.
4. Adjustments to Withholding
Tax Rates:
The Finance Act Addresses Withholding Tax rates, standardizing them at 15% for Dividends, Management and professional Fees, Rent, and Lottery Winnings. Additionally, a 1% Education Levy has been introduced to support educational initiatives in the country.
5. Harmonization of Excise
Duty Rates:
A significant move towards fiscal policy streamlining is the harmonization of Excise Duty rates for both domestic and import sectors. Excise Duty is now applicable to petroleum and plastic products, reflecting the government's commitment to sustainability.
6. Excise Duty on Gambling,
Betting, and Lottery Activities:
The Finance Act introduces a 5% Excise Duty on gambling, betting, and lottery activities. This measure not only generates revenue but also aligns with efforts to regulate and monitor these sectors.
7. Stamp Duty Adjustments:
Stamp Duty undergoes adjustments, with multiple rates applicable to property and other transactions. These changes aim to ensure fairness and transparency in real estate and financial transactions.
8. Goods and Services Tax
(GST) Threshold Increase:
The Goods and Services Tax registration threshold sees a substantial increase from SLE 100,000 to SLE 500,000. This adjustment is geared towards providing relief to smaller businesses, fostering entrepreneurship, and boosting economic inclusivity.
9. GST Exemption for Plant and
Machinery:
Recognizing the importance of
specific sectors, the Finance Act 2024 reintroduces GST exemption for plant and
machinery in the agriculture, manufacturing, mining, and petroleum sectors.
This move aims to encourage investments in key industries that contribute to
economic development.
10. Duty Exemptions for
Manufacturing Sector:
In a strategic move to bolster the manufacturing sector, the Finance Act introduces duty exemptions for plant and machinery related to specific manufacturing elements. This incentive is designed to stimulate growth and innovation within the manufacturing industry.
11. Demurrage Days Adjustment:
The Act adjusts demurrage days, shifting from weekdays to official working days. This modification is aimed at improving efficiency in trade and logistics, reducing costs for businesses engaged in import and export activities.
The Finance Act 2024 is a comprehensive piece of legislation that aims to enhance revenue mobilization and promote economic growth in Sierra Leone. The Act introduces several new taxes and fiscal adjustments that are expected to provide relief to taxpayers and promote economic growth.
