Sierra Leone Cracks Down on Tax Non-Compliance Amid Deepening Revenue Crisis

By Abu Bakarr Kargbo

Sierra Leone’s government has launched an aggressive enforcement campaign against tax defaulters—both public and private—after revealing a deepening revenue shortfall driven by rampant non-compliance and illicit financial flows. As the country strives to strengthen its domestic finances, a wave of tax enforcement actions has targeted even prominent government agencies, signalling a more uncompromising stance from the National Revenue Authority (NRA).

On 24th April 2025, the NRA made headlines when it temporarily shut down the Electricity Distribution and Supply Authority (EDSA) operations and the Sierra Leone Roads Safety Authority (SLRSA). The move followed these institutions’ failure to utilise Electronic Cash Register (ECR) machines, which are key to the country’s digital tax collection system.

Conducted in accordance with statutory protocols, the enforcement operation saw staff and management evacuated from the Electricity Building in Freetown, which houses EDSA, and from SLRSA’s offices. The affected buildings were sealed pending resolution of the entities’ outstanding tax obligations.

“It is on record that EDSA owes NRA the sum of NLe 328,396,305.03 while SLRSA has a tax liability of NLe 15,336,611.76,” the NRA stated. Commissioner General Jeneba K. Bangura emphasised that such actions were not punitive but essential. “These measures are necessary steps in promoting transparency, accountability, and the responsible management of public revenue,” she said.

Non-Compliance Undermining Fiscal Targets

The government’s crackdown comes amid an alarming revenue crisis. More than 2,000 ECR machines—intended to improve tax compliance—were inactive in the first quarter of 2025, with many businesses, including multinationals and public institutions, deliberately refusing to use them. As a result, the government recorded a 25% shortfall in its projected first-quarter revenue, threatening its target of NLe 18.9 billion for the fiscal year. In 2024, the government collected NLe 14.5 billion.

Financial Secretary Matthew Dingie acknowledged the scale of the problem in an official interview, noting that “many businesses have bypassed ECR machines to avoid taxation,” which has contributed significantly to the country’s fiscal stress. “This trend is not just a setback—it jeopardises our ability to deliver essential services like healthcare, education, and infrastructure,” he said.

The failure to fully integrate digital systems into tax collection has worsened revenue losses. Commissioner General Bangura added that the underutilisation of ECRs has directly impacted the NRA’s revenue estimates and affected funding for critical national development programmes.

Systemic Issues and Technical Fixes

In response to the rampant non-compliance, the NRA, working with service providers, has reactivated all dormant ECR machines. While this technical fix has raised hopes for improved revenue collection in the coming months, experts caution that the problem runs deeper than just malfunctioning hardware.

Joe Stevens, a retired Revenue Collection Expert, noted: “The issue of inactive ECRs reflects a broader culture of evasion and reluctance to comply with fiscal obligations. Without a shift in business attitudes, these machines are just a stopgap.”

Sierra Leone’s challenges are not limited to weak enforcement or lack of technology. At the heart of the crisis is a fragile tax culture that spans across the formal and informal economy, as well as high-level institutional non-compliance.

A Culture of Evasion: High-Profile Defaulters

One of the most troubling examples of ongoing tax evasion is the case of Dingli Building Materials Company, a Chinese-owned firm operating in the Western Area. The company has faced public scrutiny for issuing handwritten receipts, violating Goods and Services Tax (GST) regulations.

Despite repeated customer complaints and media exposure, Dingli has failed to provide any proof of GST compliance. The company’s vague statements—asserting only that they “adhere to general government guidelines”—have raised serious concerns about its corporate accountability.

Internal sources at the NRA estimate that Dingli may have cost the country millions in lost tax revenue. “This is not just a case of oversight; it’s a clear example of how some foreign firms exploit regulatory weaknesses,” said one official who requested anonymity due to the sensitivity of the matter.

Illicit Financial Flows and Multinational Loopholes

The problem is compounded by IFFs, which have become a serious impediment to development across Africa. According to the UN Economic Commission for Africa (UNECA), Africa loses more than $50 billion annually through IFFs, including tax avoidance schemes, under-invoicing, and misreporting. Sierra Leone, with its limited regulatory infrastructure, remains particularly vulnerable.

The World Bank (2023) and IMF (2024) have repeatedly flagged weaknesses in the country’s tax system—particularly in sectors like mining and telecommunications, where multinationals dominate and oversight is limited.

“Illicit flows bleed the country dry,” noted Commissioner Bangura. “If we cannot hold large players accountable, no amount of petty tax collection will close the gap.”

Reform Agenda Meets Political Reality

The NRA is currently implementing 21 reform measures aimed at strengthening tax compliance. These include digitalisation, taxpayer education campaigns, and risk-based audits. But without broad political support and enforcement continuity, experts warn the reforms may falter.

“Reforms are only as strong as the will to enforce them,” said economist Alhaji Foday Muctar Kamara, a lecturer at a private university. “Corporations, government departments, and lawmakers must exemplify accountability and transparency in their dealings with tax obligations. Unless that top-down approach is realised, Sierra Leone risks not only losing billions of Leones in potential tax revenue but also jeopardising public trust—an essential element for fostering a stable and inclusive future.”

The Informal Sector and the Complexity of Compliance

The conversation around non-compliance often overlooks the complexities faced by informal traders, many of whom operate on razor-thin margins. Mamoud Bah of the Petty Traders Association argues that informal traders are frequently unfairly targeted in tax narratives.

“We support taxation, but we must also consider the realities faced by petty traders, who often work within limited margins and barely make ends meet,” Bah said. “Many want to comply with tax regulations but lack the understanding and resources to do so effectively.”

Bah’s comments underscore the need for tailored engagement and simplified compliance tools for the informal economy, which constitutes a significant portion of Sierra Leone’s GDP.

Restoring Trust and Reclaiming Revenue

The NRA has intensified its public outreach, urging citizens to demand GST-compliant receipts and report businesses that fail to meet tax obligations. The goal is to reframe taxation not just as a legal requirement, but as a civic responsibility.

Yet trust in the tax system remains low. Years of poor service delivery, coupled with high-profile cases of institutional evasion, have eroded public confidence. Experts believe rebuilding that trust is essential to long-term fiscal sustainability.

“If people believe their taxes are mismanaged or stolen, they will resist paying them,” said Kamara. “Transparency, accountability, and visible impact of tax revenue on everyday life must be prioritised.”

Commissioner General Bangura said, “Tax evasion is not just an administrative issue—it is a national crisis. Our development depends on everyone contributing their fair share.”

The project received support from the Thomson Reuters Foundation as part of its global work aiming to strengthen free, fair and informed societies. Any financial assistance or support provided to the journalist has no editorial influence.  The content of this article belongs solely to the author and is not endorsed by or associated with the Thomson Reuters Foundation, Thomson Reuters, Reuters, nor any other affiliates.