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Taxes are paid primarily to raise revenue for the Government. The Government finances spending on public goods and services out of money collected from taxes. Examples of public goods and services include: construction of roads, hospitals, education, health, infrastructure development etc

 

Every person that earns income or runs a business within the borders of Lesotho is required by law to register for tax purposes.

 

Every individual, trustee, partnership and company that has a business in Lesotho and has a chargeable income must register with Lesotho Revenue Authority for income tax purposes.

 

  • A person who makes taxable supply of goods/services, whose turnover exceeds or is expected to exceed the registration threshold of M850, 000.00 per annum, is obliged to register; thus registration for VAT is compulsory for such a person.
  • A person may apply for voluntary registration even if the total value of taxable supplies is less than M850, 000.00 per annum. Registration in this regard may be authorised at the Commissioner General’s discretion.
A person who fails to register commits an offence and is liable, on conviction, to a fine or imprisonment or both.
 

The difference between VAT number and TIN (Taxpayer Identification Number) is that:

  • TIN is allocated to every taxpayer who has registered with LRA for tax purposes. It is a unique number given to each registered taxpayer and holds all the information regarding all the tax types that a taxpayer is registered for (including VAT).
  • VAT number however is only allocated to a taxpayer who is registered for VAT.
No. Only a person who is registered for VAT can charge VAT.
 
Terminal benefits although not part of the monthly salary form part of an individual’s taxable income or earnings.
 
Yes, overtime payment attracts tax. Overtime payment is part of individual’s employment income; therefore it is subjected to tax at applicable rates.
 
  • Yes, LRA staff members pay taxes at applicable rates just like any other employees elsewhere in Lesotho.
  • All taxes are collected on behalf of, and remitted to the Government of Lesotho (see FAQ 1).
 
This is not the case at the moment but LRA plans to implement this method of collection in future.
 
No. A tax clearance certificate is a document issued by the LRA to a Taxpayer who is compliant with tax laws or obligations. If a Taxpayer has an outstanding debt with LRA a tax clearance can be issued if and only if proper arrangements are made between the Taxpayer and the LRA for the Taxpayer to clear the outstanding debt. The taxpayer is expected to honor the agreement reached towards payment of the outstanding debt.
No, having IVCF only means that goods can be imported without having to pay VAT upfront at the port of entry. Payments for IVCF are expected on or before the 20th day of the month following the month in which goods were imported on credit.

Company tax is tax levied on company profits. It is calculated by taking into account all income (turnover) generated by a company and deducting business expenses that the company has incurred. Company tax is imposed at the following rates for the following categories of companies:

Manufacturing companies                                10%
Selling outside SACU market
Manufacturing companies                                10%
Selling within common SACU market
Non – Manufacturing companies                      25%

As opposed to company tax, PAYE is tax on an individual’s salary/earnings. PAYE is imposed to the individual earnings using the following rates:
  1. Income from M3, 025.00 up to M5, 090.00 is taxable at 20%, and
  2. Income above M5, 090. 00 is taxable at 30%,
  3. A non refundable tax credit amounting M 605.00 is to be deducted from the sum of (1) and (2) above, then the end product is PAYE.

Tax credit is granted under PAYE, but it is not granted under company tax.
Ask the Taxman