Lawmakers Review the Liberia Tax Amendment Act of 2024
Members of Liberia’s House of Representatives are currently reviewing a new draft law that proposes the imposition of royalties on iron ore, gold, and other base metals, as well as withholding taxes on gaming, betting, and services rendered. The bill, titled “An Act to Amend the Liberia Consolidated Revenue Code as Amended to be known as the Liberia Tax Amendment Act of 2024,” was presented for deliberation on Wednesday, with the House unanimously voting to delegate the matter to the Committee on Ways, Means, Finance, and Development Planning for further investigation and a report within 24 hours.
New Royalties on Iron Ore: Key Provisions and Implications
The proposed legislation aims to introduce a 5% royalty on iron ore, one of Liberia’s key export commodities. According to the draft law, royalties will be due to the Government of Liberia at the time of each shipment and calculated as a percentage of the value of the shipped mineral, regardless of whether the shipment is a sale or another form of disposition. This move is expected to generate approximately US$8 million in revenue, which will contribute to improving the country’s economic conditions and support the recast budget.
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Sections of the Revenue Code to Be Amended
The amendment focuses on Sections 704(a)(1), 704(a)(2), 806(c), and 806(e) of the Liberia Consolidated Revenue Code. The draft law stipulates that the newly defined royalties will apply to non-concessional iron ore, gold, and other base metals. The 5% royalty rate on iron ore represents a significant shift in Liberia’s approach to resource taxation, signaling a government effort to capture more value from its mineral wealth amid challenging economic conditions.
Economic Context: President Boakai’s Call for Action
President Joseph N. Boakai, Sr., submitted the proposed amendment, highlighting the urgency of the measure due to a mid-year revenue performance review that revealed a decrease of US$17.3 million in projected revenues. The President’s communication to the Legislature emphasized the critical role of the amendment in addressing the shortfall and stabilizing the national budget.
“I am pleased to submit to your Honorable Body for enactment: An Act to Amend the Liberia Consolidated Revenue Code as Amended to be known as the Liberia Tax Amendment Act of 2024,” President Boakai wrote. “Our mid-year revenue performance review showed that revenue estimates have decreased by US$17.3 million. This has resulted in a downturn in the prevailing economic conditions, thereby prompting this proposal to amend the Revenue Code of Liberia.”
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Broader Taxation Measures and Expected Revenue Impact
In addition to iron ore royalties, the amendment introduces withholding taxes on payments to nonresidents, including a 30% tax on gaming winnings and a 20% withholding tax on payments for Liberian-source services rendered by nonresidents. These changes are intended to broaden the government’s revenue base, targeting sectors previously under-taxed or untaxed.
The House’s swift action in probing the proposed law reflects the urgency of addressing Liberia’s economic challenges. As the amendment awaits legislative approval, its impact on the mining sector, particularly iron ore, is set to play a pivotal role in the country’s efforts to achieve fiscal stability.
