By Festus Poquie
Liberia’s fiscal agencies said it will raise the standard goods and services tax (GST) rate to 13% from 12% effective May 1 as part of a broader revenue-mobilization push that paves the way for a value-added tax (VAT) scheduled to start on Jan. 1, 2027.
The Ministry of Finance and Development Planning and the Liberia Revenue Authority said in a public notice, the modest GST increase is intended to smooth the transition to an anticipated 18% VAT, which President Joseph Boakai confirmed in January.
The agencies said exports will remain zero-rated and telecommunications services will be taxed at 15%.
The fiscal measures follow the Liberia Tax Amendment Act passed in December 2025 and approved by lawmakers and President on March 24, 2026.
They were agreed with the International Monetary Fund as part of efforts to shore up public finances amid falling external revenues.
In its lending request, the IMF projected the reforms and stronger tax administration could raise government revenue by about 2.3 percentage points of GDP annually by 2027.
Liberia — the only Economic Community of West African States member yet to adopt the bloc’s VAT regime — currently levies GST as a turnover-style charge without input deductions, a structure that can cause tax cascading and distort production.
The incoming VAT will allow input tax credits, aligning Liberia’s system with standard VAT practice and reducing compounding effects that can slow manufacturing and investment.
The government has signaled a suite of other tax measures to broaden the base and raise more revenue: cuts to corporate tax expenditures, harmonized excise taxes on domestic and imported goods, strengthened collection from the natural resources sector, and expansion and better administration of real property taxes.
Authorities said the aim is to finance growing public spending needs as foreign direct investment stagnates and the private sector struggles. The West African nation plans to raise $1.2 billion in revenue for the 12-month period end December 2026.
But the timing comes as Liberia grapples with large unexplained gaps in reported mining revenues. Trade and customs data show a dramatic boom in mineral exports — gold receipts reached $1.03 billion in 2024, and iron-ore shipments surged with ArcelorMittal reporting plans to ship 10 million tonnes in late 2025.
Yet a U.S.-based Forest Trends analysis comparing Liberia’s export declarations from 2007–2023 with partner-country import records found Liberian-declared mining exports of $5.1 billion versus $7.8 billion recorded by importers — a discrepancy of roughly $2.7 billion.
That shortfall, industry analysts say, underscores weak oversight of mineral chains and concessions, and means billions in potential public revenue are effectively slipping away even as the government turns to higher consumption taxes that tend to hit low-income households hardest.
Economists caution that while VAT can be more efficient than a turnover-style GST, the distributional impact depends on exemptions, thresholds and compensatory social spending.
In other countries, rapid tax overhauls have sparked public unrest when perceived as unfair or when social protections are inadequate — a specter Liberia’s government will want to avoid as it implements the reforms.
The authorities say export taxation will remain competitive and that the shift toward a structured natural-resource fiscal framework is intended to improve compliance and ensure mining projects more equitably share risks and benefits. However, progress on reforming concession practices and closing the reporting gap has been limited to date.
