REVENUE Services Lesotho (RSL) has initiated a strategic partnership with the textile industry to boost collaboration and tax compliance.

Focusing on outreach programmes, RSL is tackling sector-specific challenges and enhancing tax remittance by engaging various sectors.

During a pivotal meeting held on May 3, the revenue collection body discussed the taxation challenges facing the textile industry and explored ways to improve compliance. The session covered critical customs-related compliance issues, including registration, declarations, PAYE, VAT, and income tax.

It also introduced participants to RSL's compliance model, underscoring the organisation's commitment to strengthening stakeholder relations.

The Commissioner-General of RSL, ’Mathabo Mokoko, unveiled the 2024–2027 strategy to key stakeholders in the textile sector, emphasising the industry’s vital role in maintaining tax regulations to bolster the nation’s economy.

She highlighted opportunities for the sector, including the Authorised Economic Operators (AEO) programme, which could significantly aid industry growth.

Conversely, the Secretary General of the Lesotho Textile Exporters Association (LTEA), 'Malibakiso Majara, commended the RSL for its proactive engagement with the textile sector.

She expressed optimism about the potential for improved tax compliance and highlighted the challenges her sector faces with tax remittance.

Majara urged the RSL to address these issues promptly. Both parties agreed to hold regular meetings to foster stronger cooperation.

In its performance report for the fiscal year 2023–24, the RSL disclosed that it did not meet its revenue collection target, falling short by 9.3% as it collected M8.87 billion in taxes, below the government's target of M9.78 billion. Despite this shortfall, the Commissioner General pointed out that revenue collection had risen by 12.5% compared to the previous fiscal year, which saw collections of M7.83 billion.

“We were able to remit to the government of Lesotho M8.87 billion against the set target of M9.78 billion," said Mokoko while presenting the RSL 2023/24 revenue performance report.

Despite falling short of its target by 9.3% for the 2023–24 financial year, RSL is pleased to report a 12.5% increase in revenue collection compared to the previous year.

Mokoko acknowledged the challenges faced during an exceptionally tough fiscal year, noting that the expected economic rebound from global disruptions did not materialise as hoped.

"The economic outlook at the beginning of the financial year had depicted a projected growth of 2.1 percent, but in reality, the economy grew by about 0.9 percent at the close of 2023, and this negatively affected the collections across the board,” she explained,

However, Mokoko noted that the construction sector has had a minimal impact on the economy, contributing only an average of 2.7 percent to the Gross Domestic Product (GDP), thereby affecting the main tax types.

"The annual inflation rate was expected to average 6.6 percent in 2023, then gradually moderate to 5.3 percent and 5.0 percent in 2024 and 2025, respectively, since the supply and demand imbalances that drove inflation to record highs in 2022 were expected to gradually diminish,” she said.

She also explained that inflation has remained high, reaching 7.3 percent since February 2024, which has adversely affected collections from the wholesale and retail sectors, leading to fewer VAT collections as inflation impacted consumer spending patterns.

Despite these challenges, Mokoko reported notable successes, including the registration of almost 1,000 new taxpayers, primarily from the agriculture, retail, and construction sectors, in the 2023–24 fiscal year.