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Payroll & Tax in Liberia

Liberia payroll & taxation

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.

Your Payroll Options in Liberia

Remote Payroll

A remote payroll in Liberia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Liberia. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Liberia is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in Liberia under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Liberia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Liberian payroll and can fulfil all tax, withholding tax and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Liberian employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Liberia to a GEO, like Shield GEO. This is possible for both foreign workers and Liberian nationals. This is the easiest, fastest and safest way to payroll staff in Liberia.

Shield GEO manages all aspects of payroll for workers in Liberia, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Liberia

Information Explanation
Currency ?

Liberian dollar, LRD

Tax Figures

Information Explanation
Corporate Income Tax ?

The current corporate income tax rate is 25%.

Income Tax Rate ?
Grossed income Tax Rate (%)
0 - LIB 70,000 0
LIB 70,001 - 200,000 5
LIB 200,001 - 800,000 LIB 6500 + 15%
Above LIB 800,001 LIB 96,500 + 25%

*Non-residents are taxed at 15%

Payroll Tax ?

No

Sales Tax ?

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.

Withholding Tax ?

Libera imposes withholding taxes (WHT) on payments made to both resident (R) and non-resident (NR) companies on certain classes of income earned:

  • Dividends: 15%
  • Royalties: 15%
  • Interest: 15%
  • Natural resource payments: 15%
  • Rental income: 10% (R) / 15% (NR)
  • Management and consultancy fees: 0% (R) / 15% (NR)
  • Contract services: 10% (R) / 15% (NR)

A reduced rate may be available under an applicable Double Tax Treaty.

Employee Social Security (EE SS)

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.

Employer Social Security (ER SS)

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.

 

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