Lesotho’s tax regime is designed to be competitive and supportive of corporate investment, offering various incentives to both local and foreign entities. The country levies several key taxes, including Corporate Income Tax (CIT), Value Added Tax (VAT), and Withholding Taxes (WHT), which are administered by the Revenue Services Lesotho (RSL).
Understanding these tax obligations and the available exemptions and agreements, such as Double Taxation Agreements (DTAs) and Customs Duties under SACU, is crucial for businesses looking to establish or expand operations in Lesotho.
Taxation
Corporate Income Tax (CIT)
| Corporate Income Tax | Rate |
| Standard corporate tax rate: | 25% |
| Corporate tax rate for manufacturing and commercial farming sectors: | 10% |
Source: RSL – CIT
Individual Taxes
Individuals bear the responsibility for annually filing and remitting personal income taxes.
Note: For certain individuals, depending on their income source, taxes may be withheld at the point of income generation (refer to Withholding Taxes).
| Who should register for individual/personal taxes? |
| Employees |
| Sole traders |
| Directors of companies |
| Partners in partnerships |
| Executive Committee Members for NGO’s |
| Form of citizenship: |
| 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 RSL, 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 clients separately from their companies. As such, they must provide personal details and other relevant information regarding other sources of income. |
Value Added Tax (VAT)
| Value Added Tax (VAT) is a consumption tax on goods and services in Lesotho, including imports, charged where they are consumed. | |
| VAT registration threshold*: | Companies with a turnover of at least M2,000,000.00 per annum |
| *Companies may choose to register voluntarily for VAT even if their turnover is below the threshold. | |
| VAT rates: | |
| Exports and basic commodities | 0% |
| Electricity | 10% |
| Telecommunications | 15% |
| Other goods and services | 15% |
| Registering for VAT: | |
| Once you meet the VAT registration threshold, submit a written notification to the Commissioner Client Services. Once eligibility is confirmed, VAT registration will be processed. | |
| VAT categories: | Accounting principle |
| Input VAT – VAT a vendor pays on goods or services purchased from other vendors, including imports. | Claimed from RSL |
| Output VAT – VAT a vendor charges on goods or services sold to customers and collects from them. | Paid to RSL |
| Determining Paying VAT Returns: | |
| VAT Payable = Output VAT – Input VAT | Calculated at the end of the tax period. |
| 1. If output VAT is greater than the input VAT: | Remit the net amount (VAT) to RSL |
| 2. If input VAT is greater than the output VAT: | Claim a refund from RSL |
| VAT returns and payments date: | 20th of the month following the tax period |
| VAT guides: | |
| Revenue Services Lesotho | RSL – Value Added Tax |
Source: RSL – Value Added Tax
Withholding Taxes (WHT)
| Withholding tax is a provisional tax on Lesotho-sourced service income, deducted at source by the payer from the gross amount due. The withheld amount is credited to the payee when filing the annual tax return. | |
| WHT – parties involved: | |
| Withholding agent – party paying for services. | Liable to withhold tax when paying for services received. |
| Taxpayer (payee) – service provider being paid and liable for tax on the value of services. | |
| Which transactions are withholding taxes applicable on? | Rates* |
| Non-resident management, professional, technical, and consulting services. | |
| Payments to resident contractors | |
| Service fees paid under employment contracts; pay as you earn (PAYE) personal income tax | |
| Passive income; interest, dividends, royalties, management charge, patent fees, and trademark fees | |
| Creatives and entertainers; artistes, sportspersons and musicians (including professional clubs but excluding amateur sporting associations). | |
| *Some WHT rates for non-residents are subject to provisions under Lesotho’s double taxation agreements (DTAs). | |
| Paying WHT | |
| WHT is collected and accounted for monthly or whenever tax has been withheld by the withholding agent. | |
| WHT filing and payment date: | 15th of the month, following the month or tax period in which it was deducted and withheld |
| WHT guides: | |
| Revenue Services Lesotho | RSL – Withholding Tax |
Capital Gains Tax
Capital Gains Tax is applicable on the disposal of immovable property or marketable securities, where the gain is included in the taxpayer’s assessable income for the year. The tax rate applied to capital gains is the standard corporate income tax rate of 25%, unless the disposal is by a manufacturing or commercial farming entity, in which case the preferential rate of 10% applies. Source: RSL – Capital Gains Tax
| Taxable Entity | Capital Gains Tax Rate |
| General entities | 25% |
| Manufacturing and commercial farming entities | 10% |
Fringe Benefits Tax (FBT)
Fringe Benefits Tax (FBT) in Lesotho is applied to non-cash benefits provided by employers to their employees as part of their remuneration package. These benefits are considered part of the employee’s taxable income and are subject to FBT, which is ultimately borne by the employer. This ensures that all forms of compensation, whether monetary or in-kind, are taxed equitably. The tax is calculated on the taxable value of the benefit. Source: RSL – Fringe Benefits Tax
| Benefit Type | Tax Rate |
| Fringe Benefits | 25% |
Other Taxes and Levies
Tourism Levy
Snapshot of levy categories, bases and rates. Confirm applicability/updates with LTDC or the Tourism Levy Regulations (as amended).
| Category | Basis | Rate |
| Accommodation | Per room, per night | 1.5% of room rate |
| Attractions | Per person (per charge) | 1.5% |
| Events | Per ticket sold | 1.5% |
| Travel agents | Per flight ticket sold | M50 per ticket |
| Tour operators | Per tourist charged | 1.5% |
| Border ports – Local (Lesotho) Children | Per person | M5.00 |
| Border ports – Local (Lesotho) Adults | Per person | M10.00 |
| Border ports – Regional (SADC) Children | Per person | M10.00 |
| Border ports – Regional (SADC) Adults | Per person | M20.00 |
| Border ports – International Children | Per person | M20.00 |
| Border ports – International Adults | Per person | M30.00 |
| Border ports – Leisure vehicle | Per vehicle | M20.00 |
| Border ports – Leisure motorbike | Per bike | M10.00 |
| Border ports – Leisure boat / speed boat | Per boat | M10.00 |
Remittance and Returns:
Levy collected in a calendar month should be remitted by the 10th day of the following month, using forms/channels prescribed by LTDC.
Helpful links
- Tourism Levy Regulations, 2021 (as amended by Tourism Levy (Amendment) Regulations, 2022) – Schedule II.
Tobacco and Alcoholic Products Levy (TAPL)
This one-pager summarises current TAPL rates, scope and filing timelines. Confirm operational details with Revenue Services Lesotho (RSL) and the latest Government Gazette notices.
Scope and Definitions
- Levy applies to eligible tobacco and alcoholic products supplied in Lesotho and to imports.
- Levy is calculated ad valorem on the selling price (exclusive of VAT).
- Vendors should register, file TAPL returns and remit through RSL channels (e‑Services/e‑Payments where available).
Current Rates
| Item | Current levy rate | Basis / taxable value | Effective from | Who charges / collects |
| Tobacco products | 20% | Ad valorem on selling price, exclusive of VAT | 1 Apr 2025 | Vendors (domestic sales); RSL/Customs on imports |
| Alcoholic products | 10% | Ad valorem on selling price, exclusive of VAT | 1 Apr 2025 | Vendors (domestic sales); RSL/Customs on imports |
Filing and Payment Timeline
Returns and payments are due by the 20th day of the month following the month of sales/imports. Late filing/payment attracts penalties and interest as provided for by RSL.
Helpful Links
- RSL – Tobacco and Alcoholic Products Levy (TAPL)
- RSL – e‑Payments Guide
- Tobacco and Alcoholic Products Levy (Amendment of Schedule) Regulations, 2025
Plastic Levy
This one‑pager summarises the current plastic levy on shopping bags, scope and filing timelines. Confirm operational details with Revenue Services Lesotho (RSL) and the Environment (Plastic Levy) Regulations, 2022.
Scope and Definitions
- Levy applies to plastic shopping bags provided at retail points of sale in Lesotho.
- Levy is charged to the customer and collected by the vendor; registered suppliers file and remit to RSL.
- Legal basis: Environment (Plastic Levy) Regulations, 2022; implementation communicated by Government and RSL for December 2024 commencement.
Current Rate
| Item | Current levy rate | Basis / taxable unit | Effective from | Who charges / collects |
| Plastic shopping bag | M0.90 per bag | Per bag provided to a customer at point of sale | 1 Dec 2024 | Vendors charge customers; registered suppliers remit to RSL monthly |
Filing and Payment Timeline
Monthly returns and payments are due by the 20th day of the month following sales of plastic shopping bags. Late payment may attract interest (RSL currently publishes 22% p.a.).
Helpful Links
- RSL – Plastic Levy (overview page)
- RSL – Plastic Levy Guidelines (PDF)
- RSL – Plastic Levy Return Form (PDF)
- RSL – Filing of Tax Returns (Plastic Levy due dates)
- LesothoLII – Government Gazette: Environment (Plastic Levy) Regulations, 2022
- Gazettes.Africa – Legal Notice No. 88 of 2022
- Public Eye – Plastic levy implemented (news, Dec 2024)
- UNDP Lesotho – note on plastic levy commencement
Lesotho Tax Treaties
* Date of Entry Into Force not published on RSL website. Seek treaty-specific guidance from RSL.
Helpful links: