By zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – A newly released Tax Exemption Report by the Budget Advocacy Network (BAN) has exposed a troubling financial imbalance in Sierra Leone’s construction sector: tax exemptions granted to the industry have far outpaced the revenue it contributes to the national treasury. The report, titled “Tax Exemptions in the Industry Sector: Who Wins, Who Loses?”, questions the effectiveness of tax policies and calls for urgent reforms to curb excessive revenue losses.
The construction subsector has seen remarkable expansion in recent years, with its value addition rising from NLe 3.23 billion in 2018 to NLe 10.44 billion in 2023. However, despite this impressive growth, its contribution to domestic revenue remains disproportionately low. Between 2021 and 2023, the sector accounted for less than 1% of total domestic revenue—showing only a slight increase from 0.17% in 2021 to 0.56% in 2023. BAN attributes this weak performance to widespread tax exemptions and low compliance levels among industry players.
A particularly glaring disparity emerges when comparing the sector’s GDP contribution to its revenue share. In 2023, construction accounted for 14% of the nation’s GDP but contributed only 0.6% of domestic revenue. This suggests that while government infrastructure projects—including road construction and school development under the free education initiative—have fueled sectoral growth, many of these activities have been shielded from taxation.
The cost of these exemptions has soared in recent years, further deepening the fiscal imbalance. According to BAN’s report, revenue losses from tax exemptions granted to the construction sector ballooned from NLe 54 million in 2018 to an alarming NLe 451.23 million in 2023. The most significant losses stem from Corporate Income Tax exemptions, which alone amounted to NLe 411 million in 2023. Additionally, import duty and import GST exemptions have contributed to substantial revenue leakage, with forgone Domestic GST revenues following an upward trend.
The report underscores a critical issue: from 2021 to 2023, the revenue lost through tax exemptions in the construction sector consistently exceeded the actual revenue collected from it. BAN warns that unless tax policies are recalibrated, Sierra Leone risks missing out on substantial public funds that could be reinvested in essential services and infrastructure.
With the government intensifying efforts to boost domestic revenue, policymakers face a pressing challenge—how to strike a balance between incentivizing construction growth and ensuring fair tax contributions from a sector that is booming but contributing minimally. As debates around tax reform gain traction, the construction sector remains a key focal point in the broader push for fiscal sustainability. ZIJ/1/4/2025
 has exposed a troubling financial imbalance in Sierra Leone’s construction sector: tax exemptions granted to the industry have far outpaced the revenue it contributes to the national treasury. The report, titled “Tax Exemptions in the Industry Sector: Who Wins, Who Loses?”, questions the effectiveness of tax policies and calls for urgent reforms to curb excessive revenue losses.){kind=link}