Tax laws Lesotho
Lesotho's taxation system is governed by the Income Tax Act of 1993 (as amended) and its associated regulations. The Revenue Services Lesotho (RSL) administers and enforces tax laws, ensuring compliance and collection of taxes.
1. Personal Income Tax:
Tax Rates: Lesotho employs a progressive tax system for individuals:
| Annual Taxable Income (LSL) | Tax Rate (%) |
|---|---|
| Up to 69,120 | 20 |
| Above 69,120 | 30 |
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Tax Credits: Individuals are entitled to tax credits, which reduce the overall tax liability. The tax credit amount is reviewed annually by the Minister of Finance. It's important to note that a negative or nil outcome from applying the tax credit does not result in a refund; it simply means the income is not taxable.
2. Corporate Income Tax:
Tax Rate: Companies are subject to a corporate income tax rate of 25% on their profits.
Provisional Tax: This is an advance payment of tax, typically made in three quarterly installments during the financial year. It helps businesses manage their tax liabilities by spreading payments throughout the year.
Advanced Corporation Tax (ACT): ACT is levied on dividends distributed by companies. It's imposed on shareholders receiving such dividends, not on the company distributing them.
3. Value Added Tax (VAT):
Rates and Scope:
| VAT Rate (%) | Application |
|---|---|
| 0 | Goods and services exported from Lesotho |
| 10 | Supply of electricity |
| 15 | All other taxable supplies of goods and services (standard rate) |
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Registration: Businesses with a turnover exceeding a specified threshold are required to register for VAT. VAT is imposed on the supply of goods and services within Lesotho and on imports into Lesotho.
4. Other Taxes:
Withholding Tax (WHT): WHT is deducted at source on certain payments, such as dividends, interest, and royalties. The rates vary depending on the nature of the payment and the residency status of the recipient.
Fringe Benefits Tax (FBT): Employers are required to pay FBT on certain benefits provided to employees. The tax is collected quarterly, with annual assessments upon submission of the income tax return by the employer.
5. Compliance and Deadlines:
Filing and Payment Deadlines:
| Tax Type | Due Date |
|---|---|
| Income Tax | Companies: Three quarterly installments due on 30th September, 31st December, and 31st March. |
| Individuals: Annual return due by 30th June. | |
| Fringe Benefit Tax | Quarterly returns due within 15 days after the end of each quarter. |
| Withholding Tax | Monthly returns due within 15 days after the end of each month. |
6. Recent Developments:
Training Expenditure Deduction: Taxpayers conducting business in Lesotho are allowed to deduct 125% of expenditure incurred for training or tertiary education of a Lesotho citizen.
Tax Registration: All businesses, including sole traders, partnerships, and non-profit organizations, must register with the Revenue Services Lesotho to ensure compliance with tax obligations.
Note: Tax laws and regulations are subject to change. It's advisable to consult with tax professionals or the Revenue Services Lesotho for the most current information and personalized guidance.
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