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Corruption risks in tax administration

Liberia case study

Corruption risks in tax administration can arise as a result of overly complex tax codes, lack of autonomy on the part of revenue authorities, weak sanctioning regimes, a lack of meritocratic recruitment, poor professional ethics standards and high discretion in the collection of taxes – a problem exacerbated where such collection is based on frequent in-person interaction. In Liberia, the central drivers of corruption risks relate to arbitrary tax concessions, poor oversight over the allocation of concessionary contracts, insufficient audit capacities, the abuse of duty-free privileges and poor infrastructure for implementation of e-filing system in rural areas.

17 October 2021
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Main points

  • Corruption risks in tax administration can be assessed according to whether they occur at the policymaking, organisational resources or client interface stages.
  • Key drivers of corruption risks in tax administration include overly complex tax regulations, a weak sanctioning regime, a lack of meritocratic recruitment, a lack of checks and balances, modes of tax collection based on frequent in-person interaction.
  • In Liberia, key underlying drivers of corruption include arbitrary tax concessions, poor oversight over allocation of concessionary contracts, insufficient audit capacities, abuse of duty-free privileges, poor infrastructure for the implementation of their e-filing system.
  • Potential mitigating strategies in Liberia include introducing a database of existing tax concessions for evaluation, improving audit capacities of the LRA, strengthening broker certification requirements, reviewing tariffs and payment systems, particularly with regards to excise tax, improving infrastructure to enable broader access to automated tax payment.

Cite this publication


Resimić, M.; (2021) Corruption risks in tax administration. Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2021:17)

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Miloš Resimić

Disclaimer


All views in this text are the author(s)’, and may differ from the U4 partner agencies’ policies.

This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0)

Keywords


Liberia, taxation