Liberia has launched a new law aimed at tightening control over tax exemptions and holidays as authorities seek to reduce revenue losses estimated at about 5% of GDP, or $240 million a year.
The Ministry of Finance and Development Planning on Tuesday unveiled the Tax Expenditure Management Act of 2025, a measure officials say will give the government a clearer framework for tracking, reviewing and reporting the cost of tax incentives granted to companies and individuals.
At the launch in Monrovia, Deputy Minister for Fiscal Affairs Anthony Myers, said the legislation is intended to improve transparency and accountability in Liberia’s public finances while ensuring that tax breaks produce measurable economic benefits.
“This Act reflects the Government’s commitment to modernizing Liberia’s tax system and ensuring that all incentives granted align with national development priorities while safeguarding public resources,” Myers said.
The law creates, for the first time, a comprehensive legal system governing the approval, registration, administration, monitoring, evaluation and reporting of tax expenditures across the economy, according to the ministry. It also covers deductions and other incentives extended to businesses and individuals.
Liberia has long relied on tax holidays and exemptions to attract investment, but the IMF has warned that such measures can erode the country’s revenue base if not carefully managed.
According to the International Monetary Fund and official data from the Liberia Revenue Authority, Liberia lost between US$227 million and US$240 million to tax incentives, holidays, and concessions. This amount represents roughly 5 percent of the country’s Gross Domestic Product.
Tax expenditures are the revenues a government loses when it offers tax benefits, such as reduced rates or holidays, to encourage businesses to invest.
The new law is designed to ensure that incentives are targeted and deliver tangible gains for the domestic economy, officials said.
Myers said the reform is part of a broader effort to strengthen domestic resource mobilization and improve the country’s public financial management framework. He urged stakeholders in the financial and economic sectors to support full implementation of the act.
The ministry said the legislation should help bolster investor confidence while improving fiscal transparency and supporting the government’s ARREST Agenda for Inclusive Development.
The launch drew officials from the Liberia Revenue Authority, the National Investment Commission, the National Legislature and several ministries, including mines and energy, commerce and industry, agriculture and public works.
– Festus Poquie
