Understanding Withholding Taxes (WHT) in Sierra Leone
Introduction
Withholding Tax (WHT) is a key component of Sierra Leone’s tax system, governed by the Income Tax Act 2000 (as amended). Under this system, businesses act as collection agents for the National Revenue Authority (NRA) by deducting taxes at source and remitting them to the National Revenue Authority.
The tax deducted represents an advance payment on the recipient’s income tax liability. The recipient can claim a tax credit for the WHT deducted when filing their final tax return. This system enhances tax compliance and ensures efficient revenue collection.
How It Works
WHT is deducted at the time of payment and not when an invoice is recorded. Businesses using accounting systems should ensure that withholding tax liabilities are properly tracked.
Steps for WHT Payment in Sierra Leone:
- Register on the NRA’s Integrated Tax Administration System (ITAS) portal.
- File monthly withholding tax return by uploading deduction schedule
- Generate a payment reference number(PRN) for the withholding tax return submitted
- Make payment at a designated bank using the generated payment reference number.
- Receive bank receipt and an official acknowledgment receipt from ITAS.
Applicable Withholding Tax Rates
The following payments are subject to WHT under the Income Tax Act 2000:
Payment Type | Resident | Non-Resident |
Contractors (Goods & Services) | 6.5% | 11.5% |
Management & Professional Fees | 15% | 15% |
Rent | 10% | 15% |
Dividends | 15% | 15% |
Interest Payments | 15% | 15% |
Royalties & Natural Resources (Sec 120 & 122) | 15% | 15% |
Lottery Winnings | 15% | N/A |
Employment Income of Non-Residents | N/A | 25% |
Note: WHT rates may change based on amendments to the Income Tax Act 2000 (as amended).
Example Calculation
Scenario:
A company, Ant Enterprises, makes the following payments in March 2025:
✅ Rent to a local landlord – NLe 70,000
✅ Salary to a non-resident employee – NLe 60,000
✅ Management fees to a related party – NLe 40,000
💰 WHT Deductions:
📍 Rent: NLe 5,652 (after adjustments)
📍 Non-resident salary: NLe 15,000 (25%)
📍 Management fees: NLe 6,000 (15%)
The company then uploads the WHT schedule to ITAS, generates a payment reference number, and makes the payment through a bank.
Exemptions
The Income Tax Act 2000 provides exemptions for:
- Payments below NLe 1,000 per month for goods and services to local contractors.
- Payment for fuel.
- Transactions specifically exempt under agreements ratified by Parliament.
Penalties for Non-Compliance
Failure to comply with WHT regulations results in penalties:
Offence | Large Taxpayer | Medium Taxpayer | Small Taxpayer |
Late Filing (after 30 days) | NLe 5,000 | NLe 2,500 | NLe 500 |
Non-Filing (not filing after 30 days). | NLe 10,000 | NLe 5,000 | NLe 1,000 |
Incorrect Filing | 25% of the difference between the tax payable on the correct chargeable income and the incorrect return. | ||
Timely filing and payment through ITAS ensure compliance, reduces tax liability, and provides an audit trail.
Why Choose Gordon & Associates?
Navigating Sierra Leone’s tax system can be complex, especially for businesses operating across multiple jurisdictions.
At Gordon & Associates, we provide expert tax advisory and compliance solutions to help businesses:
✅ Avoid penalties & ensure compliance
✅ Maximize tax efficiency
✅ Simplify WHT filing & reporting
Let us help you stay compliant and focus on growing your business!
📩 Contact us today at info@gordonassociates-sl.com for tailored tax solutions.
