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What is registration?

Registering is providing the Lesotho Revenue Authority (LRA) with personal details such as full names, address and details of income earned; these details are provided through a registration form available in all the LRA Advice Centres. The effect of registration is, first, to allow the LRA to allocate a specific taxpayer identification number (TIN).  TIN is common to both Customs and Value Added Tax (VAT) as well.  That is, only one TIN is allocated for purposes of Income Tax, Customs and Excise, and VAT. The TIN is allocated only after all the requirements of registration are met, and must be quoted at all times when corresponding and communicating with the LRA or when completing tax forms.  A person who knowingly uses a false TIN commits a criminal offence that is punishable by fine or imprisonment or both.

Second, registration also allows the LRA to tax the person appropriately, which then allows the taxpayer to meet the requirements of other bodies who may provide services or benefits there from.

Why register?
Registration is required by the tax law for any person that earns income or runs a business within the borders of Lesotho. Furthermore, registering for income tax is required by other statutory and regulatory bodies like the Departments of Trade, Immigration, Labour, etc.

Who should register?
Every resident individual, trustee, partnership, and company that has a registered business in Lesotho and has a chargeable income must register with Lesotho Revenue Authority for income tax.  Chargeable income is gross income less related expenses.  Gross income includes any of the following: business income, employment income, property income, and any other income.  For any further information, the LRA Advice Centres may be contacted for assistance.
What Happens if I Fail to Register?
Failure to register is a criminal offence and may lead to heavy fines or imprisonment.  There may also be heavy penalties on those who fail to register.

Registering for Income Tax as Individuals and Partnerships

Self-Employed Individuals: Self-employed persons are people, other than companies, who are in business on their own.

Resident Individuals: To register as a self-employed individual, the following should accompany a completed registration form: trader’s license and certified copy of passport of the owner.

Non-resident Individuals: If the individual is a non-resident intending to operate in Lesotho, in addition to registration form, traders license, copy of passport or identity document of the owner, a certified copy of a valid work permit should also be submitted when registering.

Partnerships: Partnership is considered as collection of individuals because each partner gets taxed on their share of the partnership profits. Accordingly, each partner must register for tax on his or her own.
To register the partnership, the following are required:

  • Trader’s license
  • Certified copies of partners passports
  • Partnership deed

 

Registering Companies for Income Tax

The first step in registering a company is to complete a company registration form which may be obtained from any of the LRA Advice Centres.  The registration form requires all the particulars of the company, together with full names and addresses of shareholders and directors.

Non-resident Directors: In the case of non-resident directors, every company carrying on a business or having an office in Lesotho must appoint a Public Officer, who is the company’s representative in all dealings with the LRA, and must be resident in Lesotho.   The Public Officer may be interviewed to acquire additional information about the company and its directors.

Resident Directors: Resident directors also must register as taxpayers separately from their companies.  As such they must provide personal details and other relevant information regarding other sources of income.

Certified copies of documents to be attached to the registration form:

  • The Memorandum and Articles of Association
  • Certificate of Incorporation
  • License: Trader’s, manufacturing, farming etc (depending on business type)
  • Copies of passports of the directors
  • A schedule listing all members of employees and benefits offered.

 

Download registration forms
 
The registration threshold
In order to ensure that the legislation does not impose unnecessary burden on small businesses, there is a turnover limit for registration for VAT - referred to as the VAT registration threshold. If your turnover exceeds the minimum threshold (currently M850,000.00 per annum), you must register for Value Added Tax (VAT). But you can also register even if your turnover is less than the threshold (this is mentioned later in this Guide). The registration threshold may be revised by the Minister by notice published in the Government Gazette.

Who has to register for VAT?
If you are a vendor and a provider of goods/services and your turnover exceeds the registration threshold, registration for VAT is compulsory. You may register as a:

  • a sole proprietor
  • a partnership
  • a limited company
  • a club or association or trust
  • It is important to note that registration will cover all parts of your business.

Do I have to register if I live or work outside Lesotho?
There is currently no legal requirement to register if you live or work outside Lesotho, except where you have a business that makes/undertakes supplies of goods and services in Lesotho. In such a case, you should appoint a representative who lives in Lesotho to undertake all your tax affairs. You should also register if you have a place of business in this country but you only supply goods or services abroad. That is, you should register for VAT even if your business is exclusively carried for export purposes.

How do I work out whether I have to register?

When calculating your turnover to see whether it exceeds the registration threshold, you add together all the sales of taxable goods and or services you have made since you started operating a business; both made in and outside Lesotho. You do not include supplies that are exempt from tax. But, you must remember to include supplies that are made for no consideration in the normal course of your business. For example, taxable benefits provided to an employee or a relative etc including goods taken for your own or your family’s use.

Normally, you only have to consider the value of the taxable supplies you have made within the past 12 months. But if at any point in a 12 month period you discover that your sales of taxable supplies exceed the registration threshold, or will exceed the threshold by the end of 12 months, you must notify the Commissioner immediately and apply for registration.

It is against the law to deliberately omit other business activities whereby taxable supplies of goods or services are made so that you fall below the threshold. For example, it would be unlawful for a vendor to deliberately fragment a business and set up a number of small businesses where none exceeds the registration threshold; the Commissioner Taxpayer Services would add together the taxable turnover of the associated businesses to determine the actual turnover and issue a compulsory registration with effect from the time you should have registered. In such situation, an assessment would be raised for all the VAT that should have been paid to the LRA and appropriate penalties would also be imposed.

Can I register if my turnover is below the limit?
If your turnover is below the registration threshold, you may apply for voluntary registration. Once you are registered, you will have to account for the tax you charge on your taxable supplies, but you will be able to claim credit on the tax you pay on the purchase of goods /services for your taxable supplies. You will also have to submit your VAT returns on a monthly basis to the LRA. In order to be able to comply accordingly, you should keep proper accounts and records of your business. It is necessary to think carefully about whether registering will really benefit you, if you do not have to register...

Can I register before I make taxable supplies?
If you are not yet making taxable supplies, but you have started a business, you can register as long as you will be making taxable supplies in the future. However, the Commissioner Domestic Taxes may delay approval of your application unless you provide proof that you are going to make taxable supplies. Proof may include:

  • Details of the arrangements you have made
  • Copies of business contracts
  • Other details, which should include the evidence of what you have bought for your business.

What happens if I have taken over someone else’s business?
If you have taken over a business, you should look carefully at the last owner’s taxable turnover to decide whether you need to register. If the turnover is at a level above the threshold, you must register, and your date of registration will be the date you took over the business; thus the date from which you will be liable to account for VAT. If you are already registered for VAT in respect of some other business, you should obtain  Form VAT 5 from your nearest LRA Advice Centre, which is the form that is used for  any business expansion or changes to management of a VAT registered business.

I have been registered before; will this affect my new application?
When you apply for registration, you should notify the Commissioner of Domestic Taxes if you have been registered before for VAT, Sales Tax or Income Tax.

How do I register?
You must visit your nearest LRA Advice Centre to obtain Form VAT1. Do not delay completing the form and any other documents the Commissioner may send you.

I should have registered but I failed to do so. What is my position?

Once you meet the registration threshold, you are obliged to register for VAT as your business is regarded as a registerable business. If you are a vendor and you fail to register, you will be liable to pay the VAT on all the taxable supplies you have made, regardless of whether you have actually charged and collected the tax. The Commissioner Domestic Taxes is entitled to consider your entire liability by even looking back to the date you became liable to register and consequently recover the tax due for earlier periods.


In addition, the Commissioner can impose an additional amount of tax as a penalty for your failure to comply. This additional tax may be charged at the maximum rate d of 200% of the unaccounted tax liability.  It is important, therefore, that you are aware of the obligation to register if the law requires you to do so. It is also important that you get your date of registration right. If it is found out later that it was a date earlier than the one you have shown on the registration form, you will have to pay the VAT on the taxable supplies you made from the earlier date, together with the penal additional tax.

Do I get a registration certificate?

Yes, and you will also receive a VAT registration number. If you do not qualify to be registered for VAT, you will receive a notification from the Commissioner Domestic Taxes explaining the reasons why you have not been approved for registration. The certificate when issued must be displayed in a prominent position at your business so that customers and visiting tax officials may see it.


The registration thresholds are currently two as follows:
  • Auctioneers - zero
  • Any other business - M 850,000

Download registration forms
 

Guidelines for Registration as a Clearing Agency

  • A written application letter to the Chief Legal and Policy Officer
  • Applicant and staff must attend both oral and written interviews
  • Submission of completed form CE 185.10 (Obtainable from Customs and Excise)
  • Submission of license issued by the Ministry of Trade, Industry, Cooperatives and Marketing
  • Submission of Certificate of Incorporation from the Registrar of Companies
  • Submission of a certified copy of Managing Director’s ID document or passport (pages 1, 2, and 3)
  • Submission of a bank statement (from local bank)
  • Submission of a duly signed surety bond (from local bank) which shall have been determined by Customs and Excise
  • Submission of Memorandum and Article of Association of the company requesting registration
  • A license fee of M100.00 shall be payable to the Commissioner for Customs and Excise at State warehouse.

NB: The registration will be valid once all the above mentioned requirements have been fulfilled.
The following instruments are a must for a Clearing Agency in order to operate effectively and efficiently:

  • Customs & Excise act 1982 as amended (act no10 of 1982)
  • Customs & Excise rules and regulations 1984
  • Customs & Excise tariff book

Guidelines for Registration as a Manufacture (470.03)

  • A written application letter to the Chief Legal and Policy Office
  • Submission of completed form CE 185.10 (Obtainable from Customs and Excise)
  • Submission of license issued by the Ministry of Trade, Industry, Cooperatives and Marketing
  • Submission of Certificate of Incorporation from the Registrar of Companies
  • Submission of a certified copy of Managing Director’s ID document or passport (relevant pages)
  • Submission of a bank statement (from local bank)
  • Submission of a duly signed surety bond (from local bank) which shall have been determined by Customs and Excise
  • Submission of Memorandum and Article of Association of the company requesting registration
  • A license fee of M100.00 shall be payable to the Commissioner for Customs and Excise at State warehouse
  • Submission of a site plan where manufacturing process is going to be executed with specific proof that a separate rebate store exists where raw materials imported under rebate will be stored.

Guidelines for Registration as a Bonded Warehouse

  • A written application letter to the Chief Legal and Policy Office
  • Submission of completed form CE 185.10 (Obtainable from Customs and Excise)
  • Submission of license issued by the Ministry of Trade, Industry, Cooperatives and Marketing
  • Submission of Certificate of Incorporation from the Registrar of Companies
  • Submission of a certified copy of Managing Director’s ID document or passport (relevant pages)
  • Submission of a bank statement (from local bank)
  • Submission of Memorandum and Article of Association of the company requesting registration
  • Submission of a duly signed surety bond (from local bank) which shall have been determined by Customs and Excise
  • A license fee of M100.00 shall be payable to the Commissioner for Customs and Excise at State warehouse
  • Submission of a site plan where Bonded warehouse is going to be executed

Download registration forms