MASERU – Lesotho Revenue Authority (LRA)’s two-day Tax Expo offered a bouquet of tax related issues to participants which included; Lesotho Fiscal Policy and the Role of Taxation, Base Erosion and Profit Shifting (BEPS), Safeguarding Lesotho’s Tax Base by Curbing illicit Financial Flows, Sharing Economic Rent in the Extractive Industry, Deepening the Role of Tax Agents in Enhancing Tax Compliance and Building a Culture of Voluntary Compliance in Lesotho.
business
Dec. 6, 2018
LINEO MABEKEBEKE
2 min read
LRA opens up for public discussion on tax
Speaking on the Lesotho Fiscal Policy and role of Taxation, Mokhethi Mabea, tax organisation project manager indicated that taxation is the major way of generating government revenue in order for the government to spend for the survival of the nation. He said different taxes like income tax, capital gains from investment, property and sales taxes legitimate formulate an administration. The budget proposal, Mr Mabea explained, is made every fiscal year in order to achieve fiscal stability and sustainability hence budget speeches, and the government of Lesotho strives to spent funds that it has budgeted for, in order to avoid financing its projects with public debt, while the budgetary policy provides guidelines to avoid deficit.
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He said: “According to the FinMark Trust Does access to finance matter March 2017 report, 55% of Small and Medium Enterprise (SME) owners in Lesotho start business because they believe that they are entrepreneurs, 25% for additional income and 20% out of desperation.” Participants were of the view that small to medium enterprises (SME) sector is not exceptional. Using tax to enhance and develop the SME sector, research and development is crucial as the market challenges to SME are lack of project preparation financing, the limited access to innovation finance or assistance and the barriers to entry due to lack of standards, which limit most people in doing business in Lesotho.
The observation was that in the absence of invoice factoring services, supply chain financing, overdraft facilities and unfavourable credit terms from suppliers and unbearable payment terms from large organisations, and government SME are always in serious cash flow constrains. With the withholding tax practice SMEs miss out on money that could have been used more on productive projects and operations. However, tax rates, exemptions and deductibles will encourage formulised structures that will invest locally and injected the needed CARPEX in the economy, and reskilling and up skilling worker should be part of doing business in Lesotho.
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