An Examination of the Direct Taxation System in Sierra Leone

This thesis examined the Direct Taxation System in Sierra Leone. The main important evidences, which emerged in this study, can be summarized as follows: Firstly, revenue from company tax and personal tax contributes a major part of revenue from direct taxes in Sierra Leone. This revenue has been increasing in nominal terms, but in real terms, it has failed to keep pace with inflation. Secondly, it was also disclosed that the cost of collection of direct tax revenue is very low in Sierra Leone compared with other developing countries example the Ghana and relative to the periods 1993/94-2002/2003, thus pointing to the need for more effective tax administration. Thirdly, the bulk of revenue from personal taxes is derived from the PAYE taxation. In the self-employed system of taxation, the bulk of its revenue is derived from Western Area Tax District.

Fourthly, the existence of a high rate of company tax and a high rate of tax on self-employed as disclosed in the thesis as one of the possible causes of tax evasion was noted. Fifthly, the dearth in statistical data was a noticeable feature of the direct taxation system. This could affect management’s ability to manage and control in addition to the lack of basic data for analysis in order to determine tax policy. Sixthly, the fact that many accounts submitted by taxpayers were inaccurate and returns scantily completed was mentioned in this study. Seventhly, the fact that it was more of routine desk examination of accounts submitted and no serious challenges of accounts or thorough field audit were made was also mentioned. Finally, the constitutional obstacle to court action in the direct tax system in Sierra Leone was highlighted.