By: Aminata Sesay
The Budget Advocacy Network (BAN) has sounded the alarm over the increasing misuse of tax incentives and exemptions in Sierra Leone, warning that the country lost approximately Le 3.5 billion (3.5 trillion in old Leones) in potential revenue in 2023 due to weak oversight and lack of accountability.
During a high-level engagement with parliamentary committee chairpersons and their deputies, BAN’s Country Director, Abubakar Kamara, presented findings from the network’s latest report on tax exemptions in the industrial sector. Kamara explained that while incentives are designed to attract investment and stimulate economic growth, many have become channels for abuse.
“Tax exemptions are not inherently problematic—they can drive economic growth when applied properly,” Kamara said. “However, when misused, they result in the government losing critical resources that could otherwise fund essential services like education and healthcare.”
The report revealed that several companies benefiting from exemptions have failed to file tax returns or pay taxes on non-exempted goods, while others continue to enjoy concessions without fulfilling their obligations. Kamara disclosed that 73% of total tax arrears, amounting to NLe 248 million in 2024, stem from the misuse of exemptions.
He urged lawmakers to strengthen transparency and ensure that exemptions are granted only to companies and entities aligned with Sierra Leone’s national development priorities.
“As a country, we cannot afford to continue losing billions through poorly managed tax incentives. Every leone foregone must deliver a measurable public benefit,” Kamara added.
Members of Parliament acknowledged the concerns raised by BAN and agreed that the issue requires urgent attention. They noted that discretionary approvals granted by ministries and agencies have created opportunities for unfair advantages, undermining fair competition within the private sector.
Parliamentarians committed to collaborating with the Ministry of Finance and the National Revenue Authority (NRA) to enhance monitoring systems and enforce compliance more effectively.
The BAN report recommended that the Ministry of Finance publish an annual list of all entities granted tax exemptions, outlining their value and purpose. The report also suggested that the Ministry of Finance submit a comprehensive report to Parliament each year to facilitate better legislative oversight. Additionally, BAN called for exemption criteria to be clearly codified in law to prevent the abuse of discretion and favoritism.
The engagement underscored a growing consensus between civil society and lawmakers that reforming Sierra Leone’s tax exemption regime is critical to increasing domestic revenue and ensuring that public resources are used efficiently to benefit all citizens.