Alarming Revelation… NLe 3.5 Billion Lost To Unregulated Tax Exemptions

JKM

FREETOWN, Sierra Leone — Nov. 5, 2025 —

Lawmakers, civil society representatives, and development partners convened Wednesday in Committee Room One of the Sierra Leone Parliament to examine the growing fiscal impact of tax exemptions. The engagement, led by the Budget Advocacy Network (BAN) in partnership with Christian Aid and ActionAid, spotlighted a staggering NLe 3.5 billion revenue loss in 2023 attributed to unregulated tax exemptions.

Opening the session, Julius Moriba Songa, Director of Committees in Parliament, emphasized the constitutional duty of lawmakers to oversee fiscal policy and protect national revenue.

“We cannot ignore that billions are being foregone through exemptions that are not systematically tracked or evaluated,” Songa said. “BAN’s evidence-based research gives us a roadmap to ensure accountability and align fiscal incentives with national development priorities.”

He cited Section 110 of the Constitution, mandating that taxation can only be imposed or altered by an Act of Parliament, and Section 93(3), which empowers committees to investigate policy implementation and revenue management.

Christian Aid Highlights Policy Implications

Mr. Dimoh, Country Director of Christian Aid, stressed that while tax incentives are intended to stimulate investment, mismanagement can significantly undermine public revenue and social investment.

“The 2023 loss of NLe 3.5 billion shows that even well-intentioned exemptions can have far-reaching consequences if they are not evidence-based and performance-linked,” Dimoh noted.

He emphasized that BAN’s research equips lawmakers with the data needed to ensure that fiscal incentives promote equitable and sustainable development.

Hon. Mustapha Sellu, Deputy Chairman of the Parliamentary Finance Committee, described the dialogue as timely and critical for safeguarding Sierra Leone’s fiscal space.

“Parliament must now examine the tangible effects of exemptions on our national projects. Revenue foregone is revenue that could fund education, health, and infrastructure,” Sellu said. “We need a system where incentives benefit both investors and citizens alike.”

BAN’s Findings: The Cost of Unchecked Exemptions

The NLe 3.5 billion lost in 2023 reflects a combination of weak oversight, low compliance among exempted entities, and the absence of measurable development outcomes. Key insights from BAN’s research include:

Transparency Gaps: Most exemptions lack public disclosure; citizens and Parliament have limited oversight.

Low Compliance: Entities enjoying exemptions often default on other tax obligations.

Corporate Income Tax (CIT) compliance: 55.4%

Goods and Services Tax (GST) compliance: 60.1%

Arrears owed by exempted entities: NLe 2.48 billion (73% of total arrears)

Weak Development Linkages: Few exemptions are tied to job creation, technology transfer, or industrial growth.

“Each exemption not properly monitored represents lost opportunity for national development. The 2023 figures are a wake-up call,” said BAN.

BAN’s Policy Recommendations

Transparency and Public Reporting: Publish all exemptions with beneficiaries, values, and justifications; produce biannual public reports.

Strengthen Compliance: Verify tax compliance before granting exemptions; revoke exemptions for non-compliance.

Tie Incentives to Development Outcomes: Require annual reporting on employment, local value addition, and technology transfer.

Institutionalize Multi-Stakeholder Engagement: Include civil society, Parliament, and oversight institutions in exemption approvals.

“To recover lost revenue and achieve fiscal justice, exemptions must be transparent, accountable, and tied to measurable national benefits.” — BAN

Looking Ahead

The dialogue reinforced the urgent need for reform in Sierra Leone’s exemption regime. BAN urges Parliament to take decisive action to close revenue leakages, strengthen oversight, and ensure that public resources contribute to equitable national development.

Key Fiscal Figures

Indicator

Value

Estimated revenue lost due to exemptions (2023) NLe 3.5 billion

Industrial sector contribution to revenue 12.81%

CIT compliance (2024) 55.4%

GST compliance (2024) 60.1%

Arrears owed by exempted entities

NLe 2.48 billion (73% of total).