CHANGE OF DATE FOR IMPLEMENTING VALUE ADDED TAX(VAT)

The Government of Lesotho in its endeavour to promote social and economic development, has embarked on maximising revenue collection through among others, the enactment of Value Added Tax Law(Value Added Tax Act No.9 of 2001).The implementation of the Value Added Tax (VAT) was initially planned for April,2002.

VAT will replace the current Sales Tax that is notorious for favouring holders of exemption certificates, who often abuse the privilege. Sales Tax will also be phased off because it is difficult to administer and limits Lesotho’s competitive edge especially in the manufacturing sector as it is levied on all rental units. The VAT system will have no room for exemption certificates .It will be applied at every stage of the production and distribution cycle .It will demand the displays of the “actual” price of goods and the records of sales will be kept by vendors which will therefore enable self assessment. The administration will be made easier, thus promoting efficiency and effectiveness in the collection of Tax. One Tax rate will be applied across the board.

The Government has set out preconditions for VAT implementation to ensure readiness and sustainability of the new system, these include; the establishment of Lesotho Revenue Authority(LRA).The plan was to launch VAT six months after the establishment of LRA, to introduce Tax payer registration, public awareness campaigns and to train staff to manage the VAT system.

Because Government wishes to introduce VAT systematically and to get it right, it has not been possible to achieve all the necessary steps to put the LRA in place as originally planned. The new time –table indicates that with the support of Lesotho’s partners, the earliest possible time for putting LRA in place will be July 2002. This means that VAT can only be introduced in the next financial year (2003/2004). In the mean time, Sales Tax will continue to be operational. Members of the public, particularly the business community, are urged to fully cooperate with the Tax authorities in order to facilitate the smooth implementation of VAT to the benefit of all concerned.

	CHANGE OF DATE FOR IMPLEMENTING VALUE ADDED TAX(VAT)
	The Government of Lesotho in its endeavour to promote social and economic development, has embarked on maximising revenue collection through among others, the enactment of Value Added Tax Law(Value Added Tax Act No.9 of 2001).The implementation of the Value Added Tax (VAT) was initially planned for April,2002. VAT will replace the current Sales Tax that is notorious for favouring holders of exemption certificates, who often abuse the privilege. Sales Tax will also be phased off because it is difficult to administer and limits Lesotho’s competitive edge especially in the manufacturing sector as it is levied on all rental units. The VAT system will have no room for exemption certificates .It will be applied at every stage of the production and distribution cycle .It will demand the displays of the “actual” price of goods and the records of sales will be kept by vendors which will therefore enable self assessment. The administration will be made easier, thus promoting efficiency and effectiveness in the collection of Tax. One Tax rate will be applied across the board. The Government has set out preconditions for VAT implementation to ensure readiness and sustainability of the new system, these include; the establishment of Lesotho Revenue Authority(LRA).The plan was to launch VAT six months after the establishment of LRA, to introduce Tax payer registration, public awareness campaigns and to train staff to manage the VAT system. Because Government wishes to introduce VAT systematically and to get it right, it has not been possible to achieve all the necessary steps to put the LRA in place as originally planned. The new time –table indicates that with the support of Lesotho’s partners, the earliest possible time for putting LRA in place will be July 2002. This means that VAT can only be introduced in the next financial year (2003/2004). In the mean time, Sales Tax will continue to be operational. Members of the public, particularly the business community, are urged to fully cooperate with the Tax authorities in order to facilitate the smooth implementation of VAT to the benefit of all concerned.
	SOURCE: Ministry of Finance