Given Liberia is one of the poorest countries in the world, the Liberian labour force is predominantly illiterate and unskilled. An overwhelming majority of the workforce is engaged in the informal sector, contributing to family businesses or small-scale farms.
Foreign companies operating in Liberia may find it challenging to deal with the complexities of the country’s tax system. The primary concerns for a foreign company that needs to comply with tax laws in Liberia are: Individual income tax (IIT) for employees in Liberia, social security costs, GST, withholding tax, business tax and permanent establishment concerns.
As in most other countries, the hiring of foreign nationals in Liberia is subject to the availability of qualified local candidates to perform the role. Foreign nationals are only permitted to work in Liberia if they have a local sponsor.
However, from February 2015, the Ministry of Labour has announced that it will not be issuing work permits for non-Liberians seeking employment for positions such as Accountants, Human Resource Managers and Administrative Managers.
When setting up a company in Liberia, you have the following options:-
This article provides a general guideline for foreign businesses on entering Liberia for business purposes. In particular, it looks at common pathways to establishing a business presence in Liberia, generally through a corporation or branch office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Liberian economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.
Data is based on the time of writing, November 2015 or closest available dates.
GEO Solutions or DIY Employment
Companies entering Liberia must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Liberia Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Liberian entity established that can run payroll.
A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
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Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.
|Tax Returns Supplied||
|Corporate Tax Requirements||
The Liberian tax year is the calendar year, unless specified otherwise. Companies must file a corporate income tax return within 3 months after the end of the fiscal year.
|Employers Social Security and statutory contributions||
Employers are required to pay 3% of an employee’s monthly gross remuneration towards social insurance and 1.75% towards workmen compensation. For more details, please refer to the section on Employment.
|Employees Social Security and statutory contributions||
Employees are required to pay 1.75% of an employee’s monthly gross remuneration towards social insurance. For more details, please refer to the section on Employment.
|Corporate Income Tax Rate||
The current corporate income tax rate is 25%.
GST is imposed on the supply of taxable goods and services in Liberia. Taxable persons charge GST on their taxable supplies (output tax) and are charged with GST on goods which they receive (input tax).
The current standard rate of GST imposed on taxable goods and services is 7%.
Any person who carries on any business of manufacture or business of providing taxable services exceeding an annual threshhold of LDR 5m has an obligation to register for GST.
Libera imposes withholding taxes (WHT) on payments made to both resident (R) and non-resident (NR) companies on certain classes of income earned:
A reduced rate may be available under an applicable Double Tax Treaty.