DOING BUSINESS IN SIERRA LEONE IN 2020
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Sierra Leone. Our services include i) Sierra Leone company incorporation ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
Summary table of Sierra Leone company registration
|Summary||LLC||Special Economic Zone company||Tourism company||Mining company||Representative office|
|Also known as||Ltd||SEZ Ltd||Touris Ltd||Mining Ltd||RO|
|Best use of company?||All products and services||Manufacturing and trading activities||Tourism, cultural tourism and related activities||Mining, production and related activites||Marketing and research|
|How soon can you invoice Clients/sign sales contracts?||10 weeks||12 weeks||10 weeks||12 weeks||Cannot invoice|
|How soon can you hire staff?||10 weeks||12 weeks||10 weeks||12 weeks||12 weeks|
|How soon can you sign a lease agreement?||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks|
|How long to supply corporate bank account numbers?||5 weeks||5 weeks||5 weeks||5 weeks||5 weeks|
|How long to supply company registration/tax numbers?||10 weeks||12 weeks||10 weeks||12 weeks||12 weeks|
|Corporate tax rate on annual net profits?||30%||0% for 1st 3 years, 30% therafter||0% for 1st 5-yrs for tourist facility cos, 30% for other activities||30%||No income|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants/incentives available?||Yes||Yes||Yes||Yes||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/legal representative required?||No||No||No||No||No|
|Minimum paid up share capital?||US$1||US$1||US$1||US$1||US$1|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||No|
|Corporate bank account location?||Standard Chartered Bank||Rokel Commercial Bank||Zenith Bank||Access Bank||Sierra Leone Commercial Bank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||Yes|
|GST payable on sales to local customers?||15%||15%||15%||15%||No sales|
|Average total business set up engagement costs?||US$17,100||Request a proposal||Request a proposal||Request a proposal||US$11,900|
|Average total engagement period?||4 months||5 months||4 months||5 months||5 months|
Sierra Leone company registration summary
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Advantages and disadvantages
Advantages of Sierra Leone company registration
- A Sierra Leone limited liability company (Ltd) can be incorporated with just 1 shareholder and 1 director of any nationality and whom can either be an individual or body corporate. Both the director and shareholder can be Sierra Leone non-residents;
- Contrary to popular belief that Sierra Leone is a war-torn country, especially fuelled by the 2006 movie “Blood Diamond”, the country is politically and economically stable and with significant economic potential attractive to foreign investors seeking new opportunities;
- The Sierra Leone government recently reduced the number of procedures of starting a business hence shortening the registration timeline to at least 2-4 weeks and additionally abolishing the requirement for a minimum paid up capital at incorporation;
- Entrepreneurs looking to establish their businesses in Sierra Leone will benefit from bilateral trade agreements between Sierra Leone and other countries and enjoy duty free access to larger markets such as the United States under the African Growth and Opportunity Act (AGOA) treaty and the European Union through the Everything But Arms (EBA) treaty;
- Companies engaged in agricultural produce and services will enjoy an exemption from corporate income tax up to the year 2020. Additionally, 50% of dividends paid by such companies are exempted from withholding taxes;
- Some of the incentives offered by the Sierra Leone government to foreign entrepreneurs include i) a 3 year exemption from import duty for importation of plant, equipment and machinery ii) 125% tax deduction on expenses on training and research and development and export promotion activities iii) 3 year tax exemption for foreign employees where bilateral agreements apply;
- The government of Sierra Leone recently established their first Special Economic Zone (SEZ) providing incentives to businesses including i) exemption from import and export duty ii) 3 year corporate income tax holiday iii) hastened government processes such as locational registration, immigration and customs services.
- Sierra Leone is an ideal location for tourism- based companies. This is due to provision of the following major incentives to entrepreneurs investing in tourism sector of the country:
- Exemption from paying of corporate taxes for a period of 5 years;
- If companies hire less than 7 employees who have skills that are not widely available in Sierra Leone, then these employees are fully relieved from their pay-as-you-earn tax for the first 3 years of their work.
- Lastly, the country serves to be an ideal tourism destination due to its breath-taking flora and fauna as well as the vibrant culture. In 2019, tourism contributed to 5% of Sierra Leone’s GDP. Therefore, there are massive untapped opportunities in this sector.
Disadvantages of Sierra Leone company registration
- Although the duration of starting a business in Sierra Leone has been significantly reduced to about 2-4 weeks, the process of obtaining business licenses still remains lengthy and a major impediment to investing. Every company must obtain a general business license and an additional sector-specific license for their intended operations;
- Another impediment to investing in Sierra Leone is the requirement for foreign investors to obtain self-employment or work permits as well as a residence permits issued by the Ministry of Labour. These permits costs at least US$2,000 and the timeline of obtaining the same is at least 10–16 weeks;
- The Republic of Sierra Leone lacks enough skilled labor force critical for smooth running of businesses and economic advancement as most of the country’s youth remain victims of the 1991-2002 civil war devastation. The total adult literacy rate still remains at a low 43.3% according to UNICEF;
- Wide spread corruption in Sierra Leone both in the private and public sector remains an obstacle to investment, especially for foreign companies. It is not uncommon for government officials, police officers or bankers to ask for bribes or kickbacks in order to secure contracts, solve disputes or secure credit facilities respectively;
- Branches of foreign companies in Sierra Leone will experience higher income tax rates compared to other legal entities. A branch is subject to an additional 10% tax applicable on repatriated income on top of the standard corporate income tax rate of 30%.
- Foreign entrepreneurs are most likely to face difficulties while hiring for their companies in Sierra Leone. This is majorly due to the low levels of productivity of the local workers which is a mere consequence of poor adult education levels of 48% in the country. As a result, foreign employers are most likely required to hire expatriates which further imposes additional financial and administrative burden on them.
Best uses for a Sierra Leone company
- Mining and resource companies: Sierra Leone has large caches of valuable resources, most notably diamonds. This makes it a lucrative destination for companies in these fields. However, companies engaged in mining and exploration activities are subject to an increased tax rate of 37.5% instead of the standard rate of 30%.
- Time to incorporate: Twenty weeks
- Cost to set up: US$17,100
- Minimum capital: US$1
- Physical office required: Yes
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 30
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: Limited company
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