Overview
Lesotho offers a targeted incentive framework designed to stimulate investment in strategic sectors including manufacturing, commercial farming, horticulture, tourism, and climate-smart agriculture. The modernized system includes:
- 10% corporate income tax rate for manufacturing and commercial farming (standard rate is 25%).
- VAT zero-rating on exports
- 125% training tax deduction for Basotho employees.
- LNDC support through factory shells, financing, and serviced sites.
- Tourism-specific facilitation via LTDC.
- Agriculture and horticulture support including credit guarantees and training.
Institutional and Legal Framework
- Revenue Services Lesotho (RSL): administers tax rates, VAT, and training deductions.
- Lesotho National Development Corporation (LNDC): provides industrial infrastructure, financing, and facilitation.
- Lesotho Tourism Development Corporation (LTDC): promotes tourism development and investment and facilitation.
- Ministry of Trade, Industry and Business Development (MTIBD): oversees trade and tourism policy.
Incentive Schemes by Category
| Scheme Category | Beneficiaries | Description | Legal Basis / Agency |
| 10% Corporate Tax Rate | Manufacturing and commercial farming firms | Reduced rate compared to standard 25% | Income Tax Act; RSL |
| VAT Zero-Rating on Exports | Export businesses | 0% VAT on goods exported | VAT Act; RSL |
| 125% Training Cost Deduction | Employers training Basotho workforce | Super-deduction for local skills development | RSL guidelines |
| Sector-Specific Loans and Guarantees | Horticulture and agri-business | Tailored loans and credit guarantees | LNDC Programs |
| Industrial Infrastructure Support | Manufacturing and agro-processing investors | Subsidised factory shells, serviced land | LNDC mandate |
| Tourism Project Facilitation | Tourism developers and hospitality | Investment licensing and facilitation support | LTDC programs |
| SME and Basotho Procurement Preferences | Local SMEs and investors | 10–15% preference margins and set-asides | Public Procurement Act, 2023 |
| Agriculture Commercialization Plans | Farmers and SMEs in agriculture | Strategic support under L-IB-NAIP and NSDP II | MTIBD / UNDP SDG Investor Map |
Investor Implications and Strategies
Practical Impacts:
- Reduced 10% corporate tax rate enhances sector competitiveness.
- VAT and training deductions incentivise export orientation and skills development.
- LNDC lowers entry costs through infrastructure and financing.
- LTDC and OBFC streamline tourism and cross-sector approvals.
Actionable Investor ChecklisConfirm eligibility for 10% corporate tax
- Structure exports to leverage inputs rebates and VAT zero-rating.
- Apply for 125% training deductions.
- Seek LNDC industrial shells or financing for expansion.
- Register tourism projects with LTDC for facilitation.
- Partner with Basotho SMEs to benefit from procurement preferences.
- Access agriculture-specific support through NAIP and SDG investor programs.
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