Fiscal and Financial Incentive and Special Zones
Although Sierra Leone is an attractive market in its own right, the government offers added fiscal and financial incentives to investors. Many of them are sector specific.
Including the establishment of the first special economic zone operated by First Step at Newton near Freetown.
All investors can take accelerated depreciation of 40 percent for plants and equipment the first year and 10–15 percent for most other items. It also offers a loss carry-forward of 50 percent of the previous tax year’s taxable income.
Tourism sector investors pay a 15 percent corporate tax for the first five years of a new investment, unlike the 30 percent rate charged to most corporations.
Tourism enterprises are exempted from import duties for new construction, extension, or renovation, applicable to building materials, machinery, and equipment not easily acquired in Sierra Leone.
The sales tax is zero for plants and machinery, while others are 15 percent at entry and production.
The import duty for raw materials, plants, and machinery is 5 percent, and malaria and HIV drugs are exempted. The import duty for intermediate products is 10 percent, while it is 5 percent for vehicles up to four years old, 20 percent for those four to 10 years old, and 30 percent for those older than 10 years.
Export licenses are not required for locally produced goods (except gold, diamonds, and a few other goods designated by the government).
As incentives to foreign investors, Sierra Leone offers accelerated depreciation of 40 percent for plants and equipment the first year and 10–15 percent for most other items. It also offers a loss carry-forward of 50 percent of the previous tax year’s taxable income.
Investors in the mining sector receive a 100 percent deduction for prospecting and exploration, a 40 percent deduction for the first year of production costs, 10 percent depreciation for research and development, and 10 percent amortization of startup costs. In addition, individuals can deduct 50 percent of qualifying investments, up to $150,000, from their personal taxes.
To encourage investment in rice and timber, a 10-year corporate tax holiday is granted to qualified investors.
Tourism investment may qualify for a five-year tax holiday, and tourism enterprises with up to six employees are exempt from the pay-as-you-earn tax for skills and expertise not readily available in Sierra Leone for the first three years of employment.
In keeping with plans to promote export diversification and competitiveness, the government of Sierra Leone plans to establish export processing zones and agroprocessing units in suitable locations as well as an industrial and economic zone in Freetown.