By Alfred Koroma
The leadership of the National Revenue Authority (NRA) on Friday had a fruitful engagement with the business community in Freetown over the misconception around the installation of the Electronic Cash Register (ECR) used to calculate Goods and Services Tax (GST).
For the whole of Thursday, shop owners within the central business area of the Freetown Municipality apparently closed their shops in protest against the installation of the ECR machine by the National Revenue Authorities (NRA).
The ECR machine is used to collect 15 percent GST from consumers buying in shops that have over one hundred million Leones turn over .
The traders request is that the collection of the GST from their shops should be moved from the one hundred million Leones threshold. This means the 15 percent GST should not be applied to business within hundred million and below. There is also the complaint of traders not having sufficient knowledge on how the ECR machine operates in shops.Rumours of the protest against NRA have been going round over a week before the actual protest which could have been prevented, took place on Thursday.
After several engagements with business stakeholders, NRA a press conference made a presentation to educate the public on the issue between them and the business community with regards the said ECR machine and the GST. Here is what the Commissioner General of NRA, Dr. Samuel Jibao said about the ECR, GST and the set of the traders involve.
Addressing pressmen and a few members of the civil society, Deputy Minister of Information and Communications, Solomon Jamiru disclosed that traders have agreed to open their shops and also agreed to establish a trader-NRA tax force that would in charge of educating the public about the ECR machine.
In his presentation, Commissioner-General of NRA Dr. Samuel Jibao said the ECR machine is basically meant to analyze data actions and report sales at real time.
“The machine has been programmed to automatically do deduction and informs the buyer what has been deducted for GST through receipt coming from it.The machine reduces the cumbersome task on traders using a calculator to check what they have to deduct for GST from their sales,” he said.
Dr. Jibao said that “GST is not on all goods. Therefore, ECR machine is not meant for all the shops. The machine is just a sales machine that sends information to NRA about all tractions done on the machine. If the machine is dormant for a number of days, NRA will ask questions to the trader handling it. That helps NRA know the business challenges facing traders in the environment,” he clarified.
The NRA boss added that the 2022 Finance Act stipulated the value of business the ECR machine in question is meant for.
He emphasized that the machine is meant for business with a turnover of 100 million Leones and above, further elaborating that if a business is within 10 million to 100 million, that business is categorized in the special regime or the turnover regime which is a flat regime of three percent.
He said new businesses with turnover of 10 to 100 million are exempted from the payment of the three percent for one year.
The NRA Commissioner General noted that GST is not a business tax.
“GST is a consumption tax. The intention of GST is to move the tax burden from the producer or seller to the consumer. Because the tax is on the consumers, sellers have the leverage to deduct from the GST whatever they pay at customs and give the balance to Government,” he said.
The ECR machine was introduced in tax collection to improve compliance and to mitigate the challenges faced by NRA in collecting GST from business people. GST is a 15 percent tax collected by NRA from every product sold in shops or business establishment valued at one hundred million Leones and above.
At the introduction of GST in 2009 by an Act of Parliament, NRA which was given the mandate to administer the tax was only operating in a manual system which involved giving physical receipt books to traders. The revenue collection office had no proper system at the time to collect the tax, making the tax collection ripe for abuse. This poses a range of challenges in printing the receipt which were being pirated.
The GST which eventually gave birth to the said ECR was introduced in Sierra Leone by an Act of Parliament in 2009 but only began operation in 2010.
Before that, according to the NRA boss said Sierra Leone was having a multiple tax system called the Sales Tax – the Entertainment Tax, Import Sales Tax, and the Telecommunications Tax, which were combined to become known as GST.
Unlike the GST which focuses on taxing the consumer, the sales tax had it focus more on taxing the productive sector.
“The law provides opportunity to the businesses to serve as withholding agents for the Government. For instance if a customer get to a shop and buy any goods at the beginning of a month and GST is charged from what the customer buys, the money which the business person collect from the customer will be kept by the business owner until the end of the month before it collected,” said Dr.Jibao.
“The GST in Sierra Leone is actually VAT (Value Added Tax). This is the same that operates in Ghana, Guinea, Senegal and other French speaking countries in West Africa. Guinea, Senegal and other French speaking countries in West Africa charge VAT at 18 percent.”