Section 2: The Income Tax Act, 2000 is amended —

(a) by the repeal and replacement of section 120 by the following:– 120 (1) Subject to subsections (2), (3) and the Sixth Schedule, a person resident in Sierra Leone who pays royalty shall withhold tax on the gross amount of the payment — (a) in the case of payment made to a person resident in Sierra Leone, at the rate prescribed in Part IV of the First Schedule; and (b) in the case of a payment made to a nonresident person, at the rate prescribed in PartII of the Second Schedule. (2) Subsection (1) shall not apply to royalties– (a) in respect of property owned by a person or organisation referred to in section 8 or 9; (b) the payment of which the Commissioner-General certifies to be exempt from the requirements of this section. (3) This section shall apply to rental income as follows:– (a) the rate of tax on taxable rental income shall be 10% with the taxable rental income being arrived at by granting to the landlord– (i) non-taxable threshold of Lel,500,000 in the aggregate ; and (ii) a tax deductible allowance of 20% of the gross rental income that is in excess of the non-taxable threshold; (b) individual tenants shall withhold tax on rents payable to non-resident landlords but not on rents payable to resident landlords; (c) institutional tenants paying rent to either resident or non-resident landlords shall withhold tax on the rent payable; (d) a landlord receiving rent above the nontaxable threshold shall provide details of the tenancy agreement to the National Revenue Authority not later than 90 days after the conclusion of the agreement, failing which he shall be liable to the prescribed penalty; (e) the due date for the payment of tax on rental income and the filing of the relevant returns shall be — (i) the first day of each lease year (that is to say, the calendar day and month on which the lease or tenancy agreement came into force) with a grace period of 90 days; (ii) in the case of a tenancy in respect of which there is no written agreement, the first day of January of each calendar year with a grace period of 90 days; (f) any amount in respect of tax on rental income remaining unpaid beyond the grace period of 90 days shall attract interest at the rate of 35% per annum for as long as it remains unpaid; 2 3 Commencement Amendment of Act No. 8 of 2000. “Payment of royalties (g) any profit accruing from a sub-lease or other sub-letting arrangement shall be taxed as if it were rental income.”; (b) in section 129, by inserting the following immediately after subsection (3) thereof:– “(4) Without prejudice to any action available to the National Revenue Authority to recover the tax due from the payer or payee, where a person has failed to deduct withholding tax from any payment from which tax should have been withheld, such payment shall not be allowed as an expense for the purpose of ascertaining the income of that person.”; (c) in section 174 by renumbering the existing section as subsection (1), and inserting immediately thereafter the following:– “(2) The certificate of tax clearance referred to in subsection (1), shall not be issued unless the applicant therefor produces to the satisfaction of the Commissioner-General or such other officer deputed in that behalf by the Commissioner-General, evidence that he has discharged such other tax and non-tax liability arising under any of the enactments specified in the First and Second Schedules to the National Revenue Authority Act, 2002, as applicable”.