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What is a tax refund?

A tax refund is money that is paid back to the Taxpayer by the Lesotho Revenue Authority during or at the end of the year of assessment. Subject to certain conditions, a Taxpayer will be paid a refund if the amount of tax actually paid by the Taxpayer is more than the amount owed by the Taxpayer in a given year of assessment.

Who is entitled to a tax refund?

 

The following persons may be entitled to a tax refund:

  • Individuals,

  • Businesses,

  • Temporary importers and exporters,

  • Diplomats and Diplomatic Missions,

  • Tax Exempt organizations ,for example, NGO’s and public international organizations,

  • Non-residents.

 

How does a Taxpayer apply for a tax refund?

 

  1. Individuals and businesses
    To apply for a tax refund, a registered Taxpayer must apply for a tax refund in writing to the Commissioner Domestic Taxes. Upon receipt of the application letter, a tax audit will be conducted to verify the tax refund claim before it is processed. The LRA will complete the tax audit within three (3) months depending on the complexity and merits of each case. Upon completion of a tax audit, the LRA shall process a tax refund within twelve (12) working days.

 

  1. Refund claim for provisional tax
    To claim a tax refund on temporary importation, the importer must lodge an application for a tax refund in writing and such a letter should be addressed to the Commissioner Domestic Taxes. Additionally, the following documents should be attached to the application letter for a tax refund:

      • Original receipts issued,
      • Memo issued by Customs Border Officials
      • SAD 500 CN1 and CN2 forms issued upon entry
      • Declaration documents upon re-export

     

 

Refunds relating to provisional payment/s on temporary imports will be made within twelve (12) working days.

 

Diplomats and Diplomatic Missions

 

Lesotho Diplomatic Privileges Act 1969 provides for exemptions to officials of diplomatic missions and members of their families in a manner prescribed in the Vienna Convention on Diplomatic Relations.

 

The following documents should be attached to the application for a tax refund:

 

  • A prescribed form should be filled

  • Separate spreadsheets should be prepared for Lesotho and Republic of South Africa (RSA) tax invoices

  • Originals should be submitted for RSA issued tax invoices. These should be attached to a completed LRA VAT Refund form, available at all commercial Border Posts.

  • Refund claims on RSA issued tax invoices should strictly be lodged in the subsequent month from the month of purchase or earlier.

  • A Taxpayer is allowed to lodge a claim of refund on the tax invoices issued in Lesotho within a period of fours (4) years from the date of issuance.

  • The tax refund claims should be submitted at any LRA Advice Centre.

  • Diplomats and diplomatic missions’ tax refunds will be issued within twelve (12) days.

For any other employees of a foreign government or public international organization based in Lesotho are advised to contact the LRA for assistance and guidance.

Tax Exempt organizations (exemption by way of refund)

 

To ascertain whether an organization is exempt from tax in Lesotho, firstly, such organization should apply for tax exemption to the Lesotho Revenue Authority to determine whether it is eligible for exemption or not. The law provides that tax exemption will be granted by a way of refund. This implies that a tax exempt organization will still be required to pay tax when buying goods and services and it will subsequently claim the refund on the tax paid.

 

Although an organization may be exempt from both Income tax and Value Added tax in Lesotho, the law provides that it should still register for other taxes such as employees’ tax.

 

Therefore a tax exempt organization should register for employees’ tax or Pay As You Earn (PAYE).

 

  • A tax exempt organization should lodge an application for a tax refund using a VAT refund form, which is obtainable at Refunds Processing Office at LRA Headquarters.

  • The tax refund claims should be lodged on a monthly basis and be strictly for tax paid on purchase of official goods and services that are directly related to the mandate of the organization.

  • The tax exempt organization ought to provide original tax invoices as well as copies of tax invoices upon lodgment of a tax refund claim.

  • Lastly, a tax exempt organization need to prepare a schedule listing all the invoices on which a refund claim is made on. The schedule should show the name of the supplier, VAT charged, tax invoice number and date.

Ask the Taxman