By Amin Kef (Ranger)
The Government of Sierra Leone has officially enacted the Finance Act 2026, introducing sweeping amendments to the country’s tax and revenue framework aimed at strengthening compliance, modernizing administration and boosting domestic revenue generation.
According to the official summary published by the National Revenue Authority (NRA) in January 2026, the Act has been signed into law by President Dr. Julius Maada Bio and approved by Parliament, with its provisions taking effect from 1st January 2026.
The new legislation amends key statutes, including the Income Tax Act, Goods and Services Tax (GST) Act, Excise Act, Customs Tariff Act and other related laws. The reforms are designed to improve tax administration, widen the tax base, enhance enforcement mechanisms and align Sierra Leone’s tax system with modern global standards.
Among the most notable changes under the Income Tax Act is the adjustment to the Minimum Alternate Tax. Under the new provisions, corporate income tax payable will be the higher of tax on chargeable income or a minimum tax calculated based on company turnover.
The Act also strengthens transfer pricing compliance. Entities engaged in related-party transactions are now required to submit a master file within one month of submission by the parent entity, a local file within two months of filing annual returns in Sierra Leone and a country-by-country report within one year from the end of the relevant tax period.
Failure to comply with those documentation requirements attracts penalties generally calculated at 3% of the transaction value, with a cap not exceeding 3% in cases of multiple violations.
Additionally, a new definition of “royalty” has been introduced. Royalty payments now explicitly cover copyrights, patents, designs, technical know-how, software use, film and video rights, ancillary activities and partial or total forbearance relating to such rights.
The Act repeals the investment allowance, which previously permitted a 5% deduction of qualifying asset costs from business income. Furthermore, redundancy payments and payments for termination or loss of employment are no longer subject to tax.
Corporate income tax and several withholding tax rates have been revised. Adjustments affect taxes on rent, dividends paid to non-residents, interest paid to non-residents, contractor payments to non-residents and management and professional fees for non-residents.
Corporate Social Responsibility (CSR) provisions have also been updated. Taxpayers engaging in CSR activities that complement Government priorities may now claim a 25% tax credit on qualifying expenses. In addition, rental income tax will apply to the imputed market value of owner-occupied premises used for business purposes.
The Finance Act 2026 introduces important changes to the Goods and Services Tax framework.
To promote affordability and support the energy transition, GST exemptions and zero-rated supplies have been expanded to include the supply of water (including sachet water, excluding bottled and high-end domestic water), mini-grids, renewable energy systems, solar home systems, raw fish imports (excluding processed or packaged fish), LPG cooking systems, clean-cooking equipment, and related accessories.
The Act clarifies that GST is payable at the end of the following month and updates enforcement provisions by repealing Section 40A and replacing Section 100 of the GST Act.
Significantly, digital services supplied by non-residents for use or consumption in Sierra Leone are now deemed taxable. Non-resident digital suppliers must charge GST on the value of digital services and are required to appoint a local representative if they do not have a physical presence in the country.
The law also strengthens Electronic Cash Register (ECR) compliance. Businesses must ensure continuous and uninterrupted use of compliant ECR machines and replace any faulty devices at a cost determined by the Commissioner-General and published in the Gazette.
Goods and services supplied to international organizations operating under parliament-approved agreements remain exempt from GST, subject to verification through the GST Relief Certificate regime.
The Act revises excise duty rates on several products, particularly tobacco and related items.
Unmanufactured and manufactured tobacco now attract NLe 98 per kilogram, while cigarettes containing tobacco are taxed at NLe 3 per packet of 20 sticks. Cigars, cheroots, and cigarillos are subject to NLe 38 per packet of 20 sticks. Electronic cigarettes are taxed at NLe 0.75 per milliliter, and vape cartridges at NLe 1.20 per unit. Shisha tobacco is taxed at NLe 98 per kilogram and NLe 225 per litre.
Excise duties on cement and petroleum products have also been introduced or adjusted. Cement is now subject to NLe 10 per 50kg bag, while various petroleum products, including kerosene, petrol, diesel, fuel oil, and lubricating oil, are subject to revised per-litre excise rates.
New excisable items now include bagged or packaged cement, fertilizer, cooking oil in containers, and bagged or packaged sugar.
The Act introduces new customs duties on selected imported goods. Imported tomato ketchup and sauces, tomato paste, eggs, bottled water, and Maggi cubes now attract a 35% tariff rate.
In contrast, to encourage clean energy adoption, LPG cylinders (6kg–12kg), LPG stoves and accessories, solar panels under 300W, and solar home system accessories are exempted with a 0% tariff rate.
Demurrage provisions have also been amended. The new law provides for 10 calendar days of demurrage-free period, excluding Sundays and public holidays. The provision applies to both imports and exports but excludes delays caused by carriers.
Updated royalty rates for granite and dimension stones take effect from May 2025. Stones other than dimension stones and marble are set at US$17.50 per metric ton, while dimension stones and marble attract US$35 per metric ton.
Annual Vehicle Circulation Permit levies have been revised. Cars, trucks, and three- and four-wheelers (excluding motorbikes and bicycles) are now charged NLe 500 annually, while motorbikes attract NLe 200. Large boats and vessels exceeding 15 seats are subject to US$1,000 or its Leone equivalent.
The fee for obtaining a Tax Clearance Certificate has been standardized at NLe 100 for all categories of taxpayers. Vessel manifests must now be submitted seven days before arrival to the Commissioner-General, with failure attracting a penalty of 25% of the value of the goods.
With these comprehensive reforms, the Finance Act 2026 signals a renewed drive by government to strengthen fiscal sustainability, enhance transparency, and ensure that businesses and individuals operate within a more robust and modernized tax regime.
