Sierra Leone making progress in taxation
The National Revenue Authority was created by an Act of Parliament in 2002 to among other functions, generate revenue for the smooth running of government. Prior to its creation, there were two main revenue collection agencies namely; the Customs and Excise and the Income Tax. However in 2002, these agencies were brought under one umbrella, the National Revenue Authority (NRA). (Photo: Haja Kalla-Kamara)
Since its establishment, the NRA has brought about a lot of achievements in relation to revenue collection. In 2003, Le 267,961 billion was collected against a target of Le 258,209 billion. This trend continued up to 2009 when the Authority collected Le 700,328 billion against a target of Le 668,343 billion.
2010 under review:
The year 2010 was a challenging one for the Authority. There were a lot of initiatives in support of His Excellency; Dr Ernest Bai Koroma’s Agenda for Change which required funding from domestic revenue. As a result, the Authority was expected to deliver on its mandate more than ever before. The annual target for 2010 was revised three times. Initially, it was set at Le 786.8 billion by government and was moved to Le864.3 billion in March 2010, Le889.0 billion in June and to Le 930.5 billion during the International Monetary Fund mission to Sierra Leone in September 2010. Nevertheless, the latter target was exceeded by Le 27 billion, representing 2.9% increase above the revised target of Le 930.49 billion. The total amount collected in 2010 is Le 257.13 billion more than what was collected in Year 2009 (i.e. Le 700.3 billion). In terms of GDP, this has increased from 10.7% in 2009 to 13.2% in 2010.
Why such an impressive performance:
There are several factors responsible for the impressive revenue performance by the NRA. First, the NRA has continued to put in place robust mechanisms in its revenue collection efforts. These involve embarking on compliance and enforcement strategies; public education and sensitization programmes on the need for taxpayers to meet their tax obligations. The NRA has also intensified its field audit and improved on staff/management partnership and collaboration. For example, distress actions like the sealing of offices of parastatals and business premises and the imposition of penalties on taxpayers for non-filing of returns and late payments produced positive results and sent the right message to tax defaulters. The introduction of the GST on the first of January 2010 also contributed to the outstanding performance of the Authority.
Since the inception of the NRA, considerable progress has been made to reform and modernize tax administration in order to maximize revenue collection and facilitate trade. Most significantly under the current leadership of Haja Kallah-Kamara, NRA has seen the strengthening of the Internal Audit Department and the introduction of the GST (Goods and Services Tax), the ASYCUDA (Automated System for Customs Data) and the DTD (Domestic Taxes Department). As a result of these programmes revenue collection has improved greatly.
The newly introduced GST replaced seven taxes namely; Telecommunications Tax, Entertainment Tax, Restaurant Food Tax, Hotel Accommodation Tax and Foreign Travel, Professional Services Tax and Sales Tax. Revenue collected from this tax stream in 2010 was Le 249 billion, compared to Le 167.4 billion in 2009.
The ASYCUDA is a computerized system which enables the Customs and Excise Department to provide timely, reliable and cost efficient service to stakeholders in the clearance of goods and trade facilitation. At present, this system has brought about greater efficiency and enhancement in the working relationship between Customs Brokers, Clearing and Forwarding Agents and the NRA.
The Domestic Taxes Department is the result of an administrative arrangement, which merges GST, Income Taxes and Local Excise Unit of the Customs and Excise Department, where taxpayers are segmented and structured on functional bases rather than tax type. This merger allows greater flexibility, enables better focus on service delivery, encourages specialization and improved economies of scale. It also helps to streamline and simplify processes and procedures and reduces compliance burden on taxpayers.
Currently, the NRA is working with Crown Agent/DFID on the newly redesigned Modernisation Programme which will see the roll out of ASYCUDA to Lungi, the automation of our support facilities and Domestic Taxes Department. The revenue target for Year 2011 is Le 1.156 trillion and the NRA is putting structures and processes in place to achieve this.
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