Sierra Leone News: DTD Commissioner talks on enforcement measures for 2018

The Commissioner of Domestic Tax Department (DTD) at the National Revenue Authority (NRA) Ibrahim Sorie Kamara, talks to Zainab Iyamide Joaque, on the new Finance Act 2018. He discusses the Authority’s drive to formalise the economy and broaden the tax base. He also spoke about tightening controls on tax exemptions as announced by the President.
Awoko: As part of the IMF 2017 measures, it was agreed that government should eliminate all duty and GST exemptions, except those required by international multilateral or bilateral agreements, and where possible, the government will seek to terminate GST exemptions this year. Did that ever take effect?
Comm. Kamara: Well, normally to terminate a waiver is a legal issue, because most of those that are beneficiaries have laws in Parliament that gave them the right. So, what we advised is that is to focus more on the discretionary waivers to stop or reduce waivers that are not supported by law or to continue with them.
But the Ministry of Finance and Economic Development (MoFED) will be able to tell how much they have controlled it. We only do processing on documents, they authorize concessions but one thing that I know is that discretionary waivers reduced last year. The NRA is currently compiling its report for first quarter and we will come out with those numbers publicly.
GST compliance is also improving but it is very challenging as well, especially on compliance for GST securitized receipts. Some business people will ask you which of the receipts you want whether the normal one with lower charge or the one with the higher charge.
It is difficult to catch people on that because we are not everywhere. We sometimes give our officers money to go and buy as customers and those that do not give the right receipt we fine them and charge them. But we cannot be everywhere at the same time. Going forward we are working on automated machines that will minimize or solve the problem as the case maybe, but as at now transition is going on we still have to renegotiate it and get it up and running.
Question: What legal provisions are there in place to enforce such measures?
Comm. Kamara: The 2018 Finance Act is out, it will also help us, few of the areas it touches on are rental income tax thereby making it clearer in terms of filing of returns and that all those with properties should register it with NRA and will be issued a TIN.
Additionally, all those that get contracts, whether with government or not, should send the information to NRA. The law has made it compulsory now. Other things have to do with customs regarding clarification of packaging materials, some people in the past have problem distinguishing between packaging and raw materials, so the law has given some guidelines.
Also the Common External Tariff (CET) has been enacted in this new Act and was signed by former President Koroma on the 15 January 2018. It has become effective, which harmonizes all import duties across the regions so that it will be uniformed and minimize trade diversion.
Question: Since the CET went live in December, what is its current status?
Comm. Kamara: Since it came into law in January, I only received a copy on the Monday 16 April. We are only starting the monitoring now, so by the end of second quarter we will make known the effect.
But recently, ECOWAS sent a team to monitor how far we have gone in the terms of the legal provisions. Looking at the ECOWAS Trade Liberalisation Scheme (ETLS), talking about the rules of origin for goods that comes from the region. They came here to do a checklist of how far we have gone in implementing those laws. We told them our challenges and what we have done. Even though they were impressed with the developments, we are also still very slow. We have a plan of action going forward.
Question: But, I found out from MoFED that the ETLS is part of the suspension order by the President. Does this is any way affect our relationship with ECOWAS?
Comm. Kamara: Well, ETLS also is part of international agreements but in the Executive Order only Vienna Convention was cited. So the Finance Act 2018 that just went through we still have to engage the Ministry for further directives.
I will have to have a special meeting with the Financial Secretary (FS) and other key players to discuss how we will start to implement, but definitely the idea is that apart from the Vienna Convention, government has to reconsider those other protocols, especially when they are international agreements that the country is a signatory to.
It is Vienna that looks outstanding, but I am sure the intention was to keep those intact but we will clarify that with the Ministry moving forward.
Awoko: Is there a target for 2018?
Comm. Kamara: Not yet confirmed and will not want to comment on it for now until the IMF team say, now the minister designate and the FS are at World Bank Spring meetings in Washington.
For last year, our target was Le3.4 trillion but we only collected Le3.2 trillion, so we have to go back to the base to adjust. It might be more or less. looking at the economic factors roughly it will be over Le4 trillion.
I can’t give the exact amount now, but considering the new measures by the government that all parastatals collecting money should be paid to the Treasury Single Account (TSA) at the Bank of Sierra Leone (BSL) coupled with the suspension of the waivers all of these and new revenue areas which were never factored in establishing their target it might increase.
Whilst we look at going forward because this is temporary and we have to go back to the drawing board as a government, we have to look at the legal implications and advise government as to the implication and that people are treated fairly in the process.
Awoko: Is there a set target for these new measures that are contained in the Executive Orders?
Comm. Kamara: We have to advise on the current trend, but there is no new target for these temporary measures. We will advise based on trend analysis specifically on what we are to get from our teams, they are working on it but we are yet to come out with numbers.
But for now, most of those affected have to wait and see. They still believe to do further lobbying so we need to look at it and see how we can do a realistic projection for government.
We have started collecting revenues from duty as some people will not wait. But arrangements are in place to fully account for those funds. In fact, in our meeting on Saturday we advised that a separate account be set aside for those monies to be paid in to, to see how much this is giving us and those that have genuine refund after we have resolved everything they can be paid back.
Awoko: There is also a ban in place for the export of timber. Is there any refund mechanism in place for timber exporters who had already paid for their consignment just waiting for shipping?
Comm. Kamara: If they have paid, the money is still theirs. The government will decide whether to refund or hold on to it until the suspension period ends, but we get on the average about Le20 billion a month on the export of timber, it is a huge revenue area.
But, at the same time we have to look at the environmental factors and a lot more issues behind the suspension that I cannot comment on as it is not my area, but the fact is we are not supposed to export even when it brings in revenue to government whether regulated or not. So for now we have put a hold on collections on that end, no one has come forward to claim any money paid and we really don’t know how long it will last for.
Awoko: So, generally what was the importation rate in this first quarter?
Comm. Kamara: We experienced a decline in the first quarter on economic activities generally, whether its importation, normal merchandising activities, service providing sectors. Everything got a slow down because of the uncertainty around the electioneering process.
Now that the elections are over we will start monitoring what it will look like, we will come out with something shortly.
Awoko: Thank you very much
Comm. Kamara: You are welcom
Thursday April 19, 2018.