Taxes in Lesotho

RSL administers assessment, collection, enforcement, refunds and taxpayer services under the Income Tax Act 1993, VAT Act 2001 and Customs and Excise Act 1982. The Ministry of Finance and Development Planning sets tax policy through its Tax Policy Unit. The reviewed official sources show national administration without a separate regional or municipal tax system for the matters covered here. The year of assessment runs for 12 months to 31 March. Companies may use a substituted accounting period only with the Commissioner's approval. Individuals, companies, trustees, partnerships, organisations and businesses that earn income or operate in Lesotho generally need tax registration. One Taxpayer Identification Number (TIN) covers income tax, Customs and Excise and VAT. Registration is available through RSL electronic services or an RSL Digital Service Centre; the reviewed sources do not establish a separate tax-registration fee. Income tax applies to individuals, trustees, companies and non-residents with Lesotho-source income. Chargeable income generally starts with gross income and subtracts allowable deductions and capital allowances where the relevant rules permit them. Resident individuals are generally taxed on worldwide income, while non-residents are generally taxed on Lesotho-source income. Residence can depend on normal abode, physical presence exceeding 182 days in any consecutive 12-month period, government status and wider facts such as family, home and business ties. From 1 April 2026, resident individual income tax is 20% on the first M77,760 per year and 30% on the excess. A non-refundable personal credit of M12,240 per year applies. This means that gross salary of up to M5,100 per month can result in no tax payable because of the credit; it is not a general exemption from income tax. Employment income can include salary, wages, bonuses, allowances, overtime, leave pay, commissions, gratuities, severance payments and employment-related gifts. Employers calculate and withhold PAYE, meaning Pay As You Earn, and generally remit it by the 15th of the following month. Employees may still need to file and pay an annual balance by 30 June, with withholding tax credits taken into account where applicable. Company income tax, commonly called CIT, is generally 25% of chargeable income. Manufacturing companies and commercial farming companies may fall under a 10% rate when the applicable conditions are met. A branch of a non-resident company is generally taxed at 25%. Companies and business individuals generally make provisional tax payments in three instalments due on 30 September, 31 December and 31 March; the RSL guide describes each instalment as 30% of the previous year's liability. The remaining balance may be payable with the annual return, which is generally due with payment by 30 June. A sole trader is generally taxed under individual income tax, while each partner is taxed on the partner's distributive share of partnership income. Fringe benefits tax, or FBT, is an employer tax charged at 40% of the taxable benefit and is separate from PAYE. Benefits can include a car, housing, utilities, domestic assistance, meals, medical benefits, low-interest loans, debt waivers and excessive superannuation. Taxable housing is generally capped at 20% of salary. FBT returns and payments are generally due on 14 July, 14 October, 14 January and 14 April for the preceding quarters. Withholding tax, or WHT, requires the payer to deduct tax from specified payments and remit it to RSL. The listed rates include 5% for resident contractors, 10% for non-resident contractors and services, and 7.5% for non-resident technical services from South Africa. Domestic rates for many passive payments to non-residents, including dividends, interest, royalties, natural-resource payments and management charges, are generally 25%, although specific categories may have different treatment. WHT returns and payments are generally due by the 15th of the following month. The payee may receive a credit or face final-tax treatment depending on the payment category and applicable election. VAT is a destination-based tax on taxable supplies and imports. Registration is generally compulsory when taxable turnover exceeds M2,000,000 per year, and auctioneers must register regardless of turnover; voluntary registration may be available below the threshold. The standard rate is 15%, telecommunications are listed at 15%, electricity at 10%, and exports and specified basic commodities can be zero-rated. From 2026, listed cooking oil, fresh fruits and vegetables and sour milk have additional zero-rating subject to legislative conditions. VAT returns and payments are generally due by the 20th of the month following the tax period. Import VAT is collected at entry. Output VAT less input VAT determines the amount payable or the possible refund position. VAT E-Invoicing Regulations No. 25 of 2026 provide for the Lekuka or Invoice Data Management System and accredited Electronic Billing Systems. The system is intended to transmit invoice data to RSL and support real-time tracking and pre-population, but implementation details and guidance remain a compliance risk. Businesses should retain accurate invoices and records and monitor RSL instructions as the system is implemented. Other liabilities include the Tobacco and Alcoholic Products Levy, listed by RSL at 20% for tobacco and 10% for alcohol, and a Plastic Levy of M0.90 per plastic shopping bag. Customs duties and excise are separate import and export charges. Importers use HS classification and may use RSL tariff, eTariff, eCustoms and ASYCUDA services. Imports from South Africa also involve SACU customs and trade rules. Tax returns must be correct, complete, signed or certified where required, filed on time and supported by records. e-Tax supports company income tax, individual income tax, resident individual income tax, trust and estate tax, VAT and PAYE filing, amendments, balances, histories and account statements. Electronic payments can use services such as EcoCash, M-Pesa, Standard Lesotho Bank, Unayo, Nedbank, FNB and Lesotho Postbank for VAT-only payments; a non-integrated bank payment may require proof of payment to be uploaded. An electronic tax clearance certificate, or e-TCC, can be applied for, verified and printed online. Late filing, late payment and non-filing can create additional tax listed in the RSL material at 22% per year. The provisional-tax guide lists a 3% charge on an overdue instalment, compounded monthly. Failure to register for VAT can lead to retrospective liability and a penalty of up to 200% of unaccounted VAT under the RSL guide. False TIN information and certain registration breaches can also create criminal exposure. The exact liability depends on the assessment and the applicable rule at the time. VAT refund applications generally follow quarterly deadlines of 30 June, 30 September, 31 December and 31 March and are submitted in writing to the Commissioner Core Operations. RSL may verify or audit the claim before paying it in cash or offsetting it against another liability. Income-tax refunds are generally requested through the return, and the reviewed sources state no fixed separate application deadline. A taxpayer can object in writing to an RSL assessment or decision. An Income Tax Act objection is generally due within four months after assessment, although amended-assessment rules can change the calculation. The taxpayer carries the burden of proof. An objection decision can generally be taken to the Administrative Tribunal for Tax Appeals within 60 days, followed by a possible High Court appeal generally within 60 days of the Tribunal decision. An objection does not automatically remove payment or enforcement risk, so the assessment and available relief should be checked with RSL or a qualified adviser. Lesotho's treaty network evidenced in the research includes Eswatini, Botswana, Mauritius, South Africa and the United Kingdom. Treaty relief can reduce withholding tax or prevent double taxation, but the claimant generally needs residence evidence, identity, address, TIN or PIN details and, for dividends, interest or royalties, proof of beneficial ownership. Without an applicable treaty, domestic rates apply. Foreign-government exemptions and treaty residence tie-breakers depend on the specific facts and instrument.