Liberia, Republic of

Income is based on International Financial Reporting Standards (IFRS) accounting principles and modified by the LRC to include:

• receipts from operations of a business, profession, vocation, trade, etc.
• non-exempt interest, rents, royalties, and non-exempt dividends
• payments received under a pension, retirement, or annuity
• distribution from a trust or estate, and
• the gain on disposition of property.

Inventory valuation

The value of inventory at year-end is the lower of cost or market value at that date.

Where particular items of inventory are not readily identifiable, a taxpayer may account for that inventory on the first-in-first-out method, the average-cost method, or the last-in-first-out method, but, once chosen, a stock valuation method may only be changed with the written permission of the Commissioner General.

A cash-basis taxpayer may calculate the cost of inventory on the prime-cost or absorption-cost method, and an accrual-basis taxpayer must calculate the cost of inventory on the absorption-cost method.

Dividend income

Dividend income is taxed at a rate of 15%. Dividends paid by a resident company to another resident company are exempt.

Interest income

Interest income is taxed at a rate of 15%.

Rental income

A payor who makes a payment to a resident of rent is required to withhold tax at a rate of 10% of the amount of each payment if the total amount of rental payments made during the 12-month period is expected to be LRD 70,000 or more.

A payor who makes a payment to a non-resident of Liberia-source rent is required to withhold tax at a rate of 15% of the amount of each payment.

Royalty income

Royalty income is taxed at a rate of 15% of the amount. This applies to both resident and non-residents.

Partnership income

Individual partners are liable to pay tax on their income. The partnership income for the tax year is the taxable income of the partnership determined as if the partner was a resident, less any foreign tax credit.

Unrealised gains/losses

For the purpose of computing taxable income, nominal gains and losses resulting from foreign exchange fluctuations are recognised only when they are realised through the completion of a transaction, that is, when payment is made or services are performed. If a taxpayer uses a different accounting treatment of foreign currency gains and losses for financial (as opposed to income tax) accounts, a statement reconciling the two sets of figures must accompany the tax return.