Employing in Liberia: What You Need to Know
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.
- Statutory Working Hours in Liberia
- Medical Leave in Liberia
- Annual Leave Accrual Entitlement
- Maternity Leave in Liberia
- Severance Pay in Liberia
- Termination of Employment in Liberia
- Probation in Liberia
- Pension in Liberia
Key Factors to Consider When Employing in Liberia
Employment in Liberia is mainly governed by the Liberia Labour Practices Law, 1956.
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Contracts
Liberian employment law recognises both fixed-term and indefinite duration contracts.
The maximum duration permitted for an oral fixed term contract is 6 months and 2 years for a written fixed-term contract. Fixed term contracts are deemed to automatically terminate at the end of the specified period, unless stated otherwise. Renewals may not exceed 18 months.
Employment contracts may either be written or oral. However, all fixed term contracts exceeding 6 months must be in writing.
Employee Entitlements
| Information | Explanation |
|---|---|
| Statutory Working Hours ? | Working hours cannot exceed more than 8 hours per day or 48 hours a week. Employees are also entitled to an uninterrupted period of 24 hours rest per week. |
| Medical Leave ? | Not provided for in the law. |
| Annual Leave Accrual Entitlement ? | Workers who have been with the same employer for 3 years are entitled to 2 weeks leave (by number of working days), increasing to 3 weeks for 4 years of service. Employees in 5 years of service with the same employer are entitled to 4 weeks leave. |
| Maternity Leave in Liberia ? | As one of the most generous policies in the world, female employees are entitled to 3 months paid maternity leave. |
Employment Termination
| Information | Explanation |
|---|---|
| Severance / Redundancy Pay ? | Unless guilty of a gross breach of misconduct, employees are entitled only to severance payments equivalent to their remaining wages due. Employees may also be entitled to redundancy/severance payments in cases where the company is bankrupt, in liquidation etc. |
| Termination of Employment ? | An employee may be dismissed if he or she is guilty of a “gross breach of duty” or a “total lack of capability to perform”. Examples of “gross breach of duty” include:
An employer may terminate the employment contract provided he or she gives at least 2 weeks written notice (casual employee) or 4 weeks (salaried employee). Compensation in lieu of notice may be given. However, employees guilty of a gross breach of duty may be terminated without notice or severance pay.
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Probation
| Information | Explanation |
|---|---|
| Probation Period ? | Under Liberian employment law, probationary periods may not be less than 1 month and cannot exceed 3 months.
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Pension
| Information | Explanation |
|---|---|
| Pension Requirements ? | All Liberian companies and employees are required to participate in the national social security scheme. Social Insurance Both the employee and employer’s monthly mandatory social security contribution is 3% of gross monthly remuneration. Workmen’s Compensation Only the employer is required to contribute to workmen compensation, equal to 1.75% of the gross monthly remuneration. |
GEO Solutions or DIY Employment in Liberia?
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.
Outsourcing Employment Through a GEO Employer of Record Service
Using Shield GEO Employer of Record Services in Liberia
Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Liberia. For companies which intend to employ their staff directly through their incorporated Liberian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Liberia.
As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Liberia.
The Shield GEO solution is an attractive alternative where
– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in Liberia
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Liberia
– the company needs help with tax, employment, immigration and payroll compliance in Liberia
Payroll
| Payroll | Liberia |
|---|---|
| Management Fee for Employer of Record Services / Monthly Payroll Costs | Please contact us for a quote |
| Notes | 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. |
| Currency ? | Liberian dollar, LRD |
| Tax | ||||||||||||||
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| Income Tax Rates | Liberian residents are taxed on a worldwide basis. Individuals resident in Liberia must pay tax on their employment income, regardless of where the services are performed or the employer is located. Non-residents are only subject to tax on their Liberian-sourced income. Individuals are considered resident in Liberia for tax purposes if they meet any of the following conditions:
An individual who was not a resident in the preceding tax year is not treated as a resident for the period preceding the day that the individual was present in Liberia during the tax year. Individuals are subject to Liberian personal income tax on income from the following categories:
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| Tax Returns Supplied | Yes |
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| 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. |
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| 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. |
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| 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. |
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Payroll and Tax in Liberia
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.
- Corporate Income Tax in Liberia
- Income Tax Rate in Liberia
- Corporate Tax Requirements in Liberia
- Employer's Social Security and Statutory Contributions
- Employee's Social Security and Statutory Contributions
- Payroll Tax in Liberia
- Sales Tax in Liberia
- Withholding Tax in Liberia
- Other Tax
- Time to Prepare and Pay Taxes in Liberia
- Time Required to Start a Business in Liberia
| Information | Explanation |
|---|---|
| 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. |
| 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 ? | The current corporate income tax rate is 25%.Liberian dollar, LRD |
Tax Figures
| Information | Explanation | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Corporate Income Tax ? | The current corporate income tax rate is 25%. |
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| Income Tax Rate ? |
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| Payroll Tax ? | No |
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| 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 threshold of LDR 5m has an obligation to register for GST. |
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| 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:
A reduced rate may be available under an applicable Double Tax Treaty. |
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| Other Tax ? |
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| Time to prepare and Pay Taxes ? | 139.5 hours |
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| Time required to start a Business ? | 4.5 days |
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Immigration and Work Permits in Liberia
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.
Use your own company?
A foreign company that wishes to employ foreign nationals must first set up its Liberian business entity. This Liberian entity is then required to apply for the relevant work permit for the employee before the employee commences work in Liberia.
Step 1: Application for a residence permit from the Bureau of Immigration and Naturalisation
It is a pre-requisite that all foreign nationals intending to work in Liberia (remain the country for more than 90 days) hold a valid residence permit. Applicants are required to contact their respective Liberian embassies/consulates for information on the relevant procedure/documentation.
Step 2: Submission of a formal letter of application
Companies must submit a formal letter of application to the Liberian Minister of Labour containing the following details:
- Name of Business/Institution where the applicant is seeking employment.
- Applicant’s Name, Position & Nationality
- Applicant’s Resident permit and passport #.
- Job description/Terms of reference
- Applicant’s contact number
Step 2: Completion of Pre-Qualification Form
The applicant is required to complete and submit the Pre-Qualification Form together with:
- Two passport size photos
- Current CV
- Copy of resident permit payment receipt
- Copy of passport and resident permit
- Any legal document for the entity/institution such as; Business Registration/License, Certificate of incorporation or Ministry of Planning certificate (NGOs)
- A proof of job advertisement done by the entity for the post that is to be occupied by the applicant along with the list of Liberians who applied for that post; (corporations, partnerships, (etc.)
- Ministry of Foreign Affairs letter for companies/institutions with bilateral agreement with the Government of Liberia.
Step 4: Screening by the Ministry of Labour
The Ministry of Labour will screen the application to certify that no qualified Liberians are available before his/her application can be approved. If approval is granted, the applicant will be provided with a billed form, which is valid for 48 hours.
Step 5: Payment
The applicant must make payment for the work permit, together with the billed form and approval letter at the Ministry of Finance, LBDI Annex. Upon the payment of work permit fee, the applicant shall proceed with the original copy of the GOL Revenue payment receipt to the Division of Alien Registration to be recorded and filed for the work permit booklet. A copy of the receipt will be given the applicant for reference purpose.
Use the Shield GEO Employer of Record Solution ?
Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.
Types of visas in Liberia
| Category | Description of Visa |
|---|---|
| Business | Persons from countries other than ECOWAS (Economic Community of Western African States) are required to obtain a visa to enter Liberia. Documents typically required: 1. Passport valid at least six (6) months when applying for Visa 2. Two (2) passport size photos. 3. Copy of Airline ticket or itinerary. If in transit, Visa for ultimate destination. A return flight departing from Liberia is required. 4. Processing fee 5. Completed Application Form. 6. Yellow Fever vaccination 7. Letter assuming financial responsibility from the sponsoring company or organisation. Duration: Up to 3 years |
Setting up a company in Liberia
When setting up a company you may want to consider these factors:
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Business Factors
Liberia imposes significant restrictions on foreign investments in many sectors such as the production and supply of stone and granite, ice manufacturing, commercial printing, cinemas, production of poultry and poultry products, bakeries, sale of pharmaceuticals, operation of heavy duty trucks and advertising agencies etc. Foreign investors may invest in the aforementioned business activities provided they invest no less than USD $500,000. If a Liberian partner maintains at least a 25 percent equity stake, foreign investors only need to invest USD $300,000.
Furthermore, infrastructure in Liberia is generally very poor and as only Liberian citizens may own land, signing a rental or lease agreement is usually difficult and cumbersome.
In deciding on whether to invest in Liberia, you may also want to consider the following when making your decision :-
- The industry and type of business that will be conducted
- Nationality of the headquarters / individuals (s)
- Presence of existing trade agreements or relationships
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Location
Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your need.
When setting up a company in Liberia, you have the following options:-
- Corporation
- Branch Office
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.
Corporation
In Liberia, there are several types of entities that can be set up, most commonly being:
- Limited liability company (LLC)
- Registered business company (RBC)
- Non-resident corporation
Liberian corporate entities can be utilised for a wide range of activities including:
- International Trade
- Real Estate Investment
- Joint Ventures
- Holding Securities and Bank Accounts
- Trust and Estate Planning
- Management of Investment Portfolios
- Asset Ownership
- Vessel Ownership
- Intellectual Property Holdings
- Professional Services
- Fulfilment Companies
- Any other non-licensable Business Activities
It is also worth noting that the Liberian authorities require the presence of a registered agent or an office in the country.
1.Limited liability company (LLC)
The LLC is usually the preferred form of entity for holding real estate and other forms of asset investment. The LLC is not a tax paying entity and any profits or losses are reported on the individual member’s tax return. Same-day incorporation of LLCs are common, and the LLC is not required to publicly file information about members or managers.
Members of a Liberian LLC have the same limited liability protection afforded to shareholders of a corporation.
Investment capital requirements
No minimum capital requirements. Only a single shareholder is required. Directors and shareholders can be corporate entities. There is no limitation on residency or nationality of members.
Management
No statutory requirements.
Formation
The LISCR Trust Company usually executes the Certificate of Formation for filing with the Registry for same-day incorporations. For detailed information, please refer here.
2.Registered business company (RBC)
There are three types of Registered Business Companies:
2. Limited by guarantee
3. Unlimited or a hybrid of both one and two
RBCs are required to file an annual return.
For more information on RBCs, investors are required to email the Liberian authorities at corporate@liscr.com.
3.Non-resident corporation
Liberian non-resident corporations are particularly suited for personal or business single-asset ownership as well as for use as holding companies. They may also be used as listing vehicles on a stock exchange.
Investment capital requirements
None. A minimum of one shareholder is required.
Management
A minimum of one director is required. Directors and shareholders can be corporate entities. There is no limitation on residency or nationality of members.
Formation
Step 1: Reserve a company name
Names may be viewed / searched online or at the Liberian Business Registry (LBR) help desk. The reservation lasts for 120 days.
Shelf companies are also available.
Agency: Liberia Business Registry
Time: 1 day
Cost: USD 20 for a foreign company
Step 2: Register at the Liberia Business Registry
Next, the applicant is required to submits the company registration application to the Liberia Business Registry (LBR) office. The application must include the following documents:
- Registration Form (RF – 001)
- Articles of incorporation
- Copy of ID documents as attachments to forms A or
- Empowered person form (A) or Registered agent form (B) in case of a company representative
- Incorporator(s) form (E)
- Shares and shareholder(s) form (F)
- Information for Tax authority form (Q)
LBR officers will review the application and request for a Tax Identification Number (TIN) and BPS from the Ministry of Finance on behalf of the entrepreneur.
The applicant is also required to pay the associated registration fees.
Agency: Liberia Business Registry
Time: 1 day
Cost: Varies, approximately USD 900 for a foreign corporation
Step 3: Receive the Business Registration Certificate
Once the application has been approved, a business registration certificate will be issued.
Agency: Liberian Business Registry
Time: 2 days
Cost: No charge
Branch office
While Liberian law allows for foreign corporations to set up branches, no public information is available regarding its formation.
Others
Given Liberia’s popularity as a maritime registry, one entity that is commonly used by shipowners is the Foreign Maritime Entity (FME).
A non-Liberian business entity, such as a foreign corporation, partnership, or other legal person, may own a Liberian-flagged vessel by registering the non-Liberian entity in Liberia as a Foreign Maritime Entity (FME). In order to register as an FME, the foreign entity must have legal existence in its underlying jurisdiction, the power to own a vessel, and the capacity to sue and be sued in its own name.
For more information on registration and incorporation process for FMEs, please refer here.
Outsourcing Employment Through a GEO Employer of Record Service
Whether to incorporate in Liberia, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.
If the company intends to have staff in Liberia, they must also decide whether they will administer that employment internally or use a Global Employment Organisation to handle payroll and employment responsibilities. A GEO Employer of Record solution is an attractive alternative where
- the company is looking to setup an office quickly
- the company wants to work within a defined budget
- the company wants to limit its initial commitment in Liberia
- the company needs help with tax, employment, immigration and payroll compliance in Liberia
The complexity of employment regulations in Liberia makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.
Shield GEO provides a comprehensive service in Liberia allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Liberia.
Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Liberia. Read more about outsourced employment through Shield GEO.
- Liberia Employer of Record Overview
Liberia
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