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For strongly upholding Finance Act; Local Investors Hail Bio’s New Direction

12,Jun 2018
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Local businesses across the country have applauded His Excellency President Julius Maada Bio for strongly upholding the 2015, 2016, 2017 Finance Act, thereby promoting local content policy and protecting local businesses in the country.

Some top local investors and business gurus who spoke to AYV newspaper over the weekend urged President Bio and parliament not to suspend the Finance Acts as it would only add burden on their already burdened business community.

The say when the Finance Acts were approved by the House of Parliament in the last administration, it paved the way for them as local indigenous businesses to thrive while increasing tax on imported drinks particularly.

Other benefits, they went on, include among other things the reduction of taxes and duties on all Small and Medium Enterprises (SMEs), adding that the purpose of the Finance Act 2017 was to continue to improve on tax and other domestic revenue collection.

It can be recalled that in 2016, the government adopted significant hikes on the tax rate for imported alcohol – a policy to increase revenue and promote domestic farmers and Sierra Leone Brewery Limited (SLBL), a subsidiary of the world’s second largest beer producer Heineken. The 2016 Finance Act was seen to give tax concession to local factories producing locally for the market; while boosting local production and use of sorghum which is mainly used in the production of beverages.

In 2016 also, parliament ratified a tax on imported alcoholic beverages. Alcoholic beverages with 10% alcohol content and below were taxed at $4.00 USD per liter while alcohol above 10% was taxed at $6.00 USD per liter.

Before August 2016, excise duty on alcoholic beverages was 30%. But parliament changed it to 40% for beverages below 10% and 45% for those above 10% alcohol content.

Another benefit of the Finance Acts according to the local investors is that they paved the way for reduction in importation of drinks (alcoholic and non-alcoholic) flooding the country which was deemed harmful for human consumption.

General relief on health issues connected to consumption of ‘adulterated’ imported drinks reduced drastically.

Furthermore, because of the Finance Acts, farmers involved in the cultivation of sorghum realized their full potential in harvesting larger quantities of the product which increased their economic might and enabled them pay college and school fees for their children; as well as elevating their status financially as a result of Sierra Leone Brewery Limited (SLBL) being the major buyer of the product which is used in the production of SLBL products.

The SLBL was also hit by the Ebola outbreak in 2014-2015 when the state of emergency was declared by the government of Sierra Leone to prevent overcrowding.

Notwithstanding these challenges, the SLBL is also faced with numerous challenges, one of which was the competition faced from foreign industries that import beer and alcoholic drinks into the country.

In spite of the fine quality of beer and alcoholic drinks and beverages produced by SLBL, ill motivated individuals are reportedly bent on throwing spanners to collapse one of Sierra Leone’s leading indigenous companies disregarding the economic benefit government derives from local industries particularly the SLBL.

It is no lie that a responsible government relies on revenue generated from local industries through tax to meet the cost of expenditure and salaries of government workers across the country.

Another area that would grossly be affected by suspension of the Finance Acts would be in the area of revenue collection. Importers who are not willing to pay tax for the drinks and other goods they import into the country have been known to be in the habit of using other conduits apart from the official ports to smuggle in drinks, food and other contraband; this depriving the government of much-needed revenue to build the economy, pay salaries among other obligations.

It is against this background that many Sierra Leoneans including owners of local SMEs are urging President Bio and Parliament to maintain the Financial Acts for effective economic mobilization of revenue and for maximum benefit to indigenous companies and owners of local SMEs.  Local manufacturing companies, restaurants, and other SMEs all stand to benefit. 

The withholding tax on management and technical fees shall be increased from 10 percent to 15 percent of the value of such services.

Any business employing a female employee in a management position between 1st day of January 2016 and 31st day of December 2018 shall be eligible to a tax credit at a rate of 6.5% on the PAYE of that female employee.

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