The National Revenue Authority (NRA) has set up a Debt Recovery/Enforcement Unit which is strategically placed under the Office of the Commissioner General and chaired by his Deputy. Responding to question on the effectiveness of the Authority’s enforcement arm to go after tax payers who fail to file their returns and make payments on the statutory deadlines, Commissioner General Samuel Jibao said that they will be making sure that those that defaulted in 2018 and previous years must clear their books by the end of the first quarter. “Unlike previous years when the debt collection was not too robust, which led the ACC to intervene as it run into years, now, we will not allow that to repeat again as with this unit we will monitor the debt collection” he said. “So any debt that has elapsed for 90 days and more will be escalated to that unit for enforcement, so which means it is no longer with the operational department, it is with the Deputy CG.” The Authority is now at an advanced stage in getting the data from Statistics Sierra Leone for effective implementation of the rental income tax which came into effect when the 2018 Finance Act was passed by Parliament. The new tax plan affects property owners, landlords and tenants. Under the current law, rental income is classified under the “income tax” and the person earning that income has the obligation to pay to the NRA. This however means that the previous law which prohibits private tenant from withholding tax on rent has been repealed, so now whether a private tenant or an institution you should withhold it and pay to NRA. The taxable rental income threshold is $1,000 USD, and the law has mandated the landlords to have a Tax Identification Number (TIN) which will enable them file returns on the income they collect. Previously, filing of rental income tax was due within 90 days but that has also been changed to 30 so that it will be consistent with other tax timelines. Pursuant to Section 11, “…the rate of tax on taxable rental income shall be 10% with the taxable rental income being arrived at by granting to the landlord- (i) non-taxable threshold of Le 6,000,000 in the aggregate; and (ii) a tax deductible allowance of 10% of the gross rental income that is in excess of the non-taxable threshold.” The Section has been amended in the Income Tax Act, 2000 Section 120 by repealing and replacing subsection (3) with that new subsection. Also the non-taxable threshold of Le 3.6 million has been replaced. In other words, if you are paying rent that is Le12 million, you will have to deduct Le 6 million which is the non-taxable threshold in the aggregate. This now means that you are left with Le6 million. From that amount, you are to deduct 10 percent for wear and tear. The person doing the deductions is now left with Le5.4 million, it is now from this amount the tenant will again deduct another 10 percent which will be Le540, 000 and pay to NRA. Tenants who have now withheld such percentage will have to make such payment to NRA account at the bank, the payment slip and receipt collected should be given to the landlord who will use it as an advance tax. But if your total taxable rental income is below the threshold of $1,000 listed above you are free from any tax payment. These set of property owners, are obligated to pay other form of tax to the local council that administers property tax that is paying for the house you have.
By Zainab Iyamide Joaque
Monday January 21, 2019.