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‘Sale of wool has not changed our collection’

. . . LRA boss tells PAC

MATHATISI SEBUSI

MASERU – The Lesotho Revenue Authority (LRA) says it has not experienced any change in numbers with the collection of tax and VAT from the sales of Wool and Mohair, either in or outside the country.

The Wool and Mohair regulations of 2018, the tax authority says, have not affected their VAT and tax collection in any way.

LRA Commissioner General Thabo Khasipe noted as per Lesotho’s VAT Act and Income Tax Act, they are responsible for collecting Tax and VAT from all companies in the country.

“As per Lesotho’s Vat Act, every business that operates within the country and makes the turnover of M8 050 is expected to pay 15% VAT every month.

“Wool and mohair farmers and brokers are also expected to pay the 15% VAT if selling or marketing of the wool and mohair is done in the country.

“However, if the fabric is sold outside the country, no VAT is paid to exports since they are zero rated,” Khasipe said.

He noted that in the case of exporting the fabric, VAT will be paid to the destination country of the wool and mohair as per that country’s laws.

Khasipe further noted that income tax is paid annually by all companies either registered in the country or not as long as they are operating within the country and are making profits.

“As per the Income Tax Act of 1993, 25% income tax that is charged on the profit made is paid annually by all businesses but the Parliament reduced the Income Tax for commercial farmers to 10%”.

Khasipe revealed this before Parliamentary Ad-hoc Committee investigating the buying and selling of wool and mohair in the country.

The Parliament established the committee following the outcry by wool and mohair famers who petitioned the Government to remove Wool and Mohair regulations citing the Government is ruining them by the regulations that prohibit them from selling their fabric to South Africa.

The Wool and Mohair regulations of 2018 prohibit the sale and marketing of wool and mohair outside the country.

These revelations come after the Minister of Small Business, Co-operatives and Marketing, Chalane Phori, accused BKB of neither paying tax nor VAT to Lesotho for the past 45 years it has been working with Basotho farmers but paid it to the South African Revenue Services (SARS) which, according to him, was illegal as BKB was making profit from selling Lesotho’s fabric.

General Manager of BKB Isak Stats responding to the tax allegations noted: “I have been following South African Tax Law that notes that I should pay VAT and tax on every service rendered in the country,” he said.

Chairperson of the Ad-hoc Committee, Kimetso Mathaba, asked LRA officials to give them in detail the difference in the amounts of tax and VAT it has collected before and after the regulations from BKB and Lesotho Wool Centre.

“We are the lawmakers and there is nothing you have to hide from us pertaining the laws. We expect you to be straight with us and give us figures of how much you have collected before and after the regulations. If you do not want to reveal the figures in public rather ask to talk to us in private,” Mathaba said.

Answering Mathaba, Khasipe noted that without going into detail on individual companies’ tax and VAT filing to avoid breaching the VAT and tax laws that forbid him from revealing companies’ filing status, what Lesotho gains from selling wool and mohair in the country is that the money is remitted to Lesotho in foreign currency.

“The other thing that changed with the marketing of wool and mohair is the destination.

“Before the regulations, wool and mohair were send to South Africa and VAT was paid to SARS. Now after the regulations the wool and mohair destination is China, and VAT is paid to China,” he said.

Khasipe noted that the other thing that changed was that South Africa re-tests the fabric to ensure that the necessary tests are done and the fabric is disease-free and can transit through South Africa resulting in some trucks being denied access to pass at boarder gate.

He said in general, wool and mohair farmers and brokers have not been filing their tax and VAT well.

“Generally speaking, I am not satisfied with the compliance of all parties involved in the marketing of wool and mohair.

“We have also been struggling to encourage wool and mohair farmers to pay their income tax but have developed and will soon introduce a simplified way for farmers to pay their tax and VAT, instead of filing complicated forms,” Khasipe said.

Asked if they have been paying tax and to reveal the amount, Lesotho Wool Centre spokesperson Manama Letsie noted that the amount of tax they have paid since they started business is confidential but assured that they have been complying as expected.

“All I can say is that we are bringing a lot of money into the country. Since we started selling the fabric within the country, we have been able to bring to Lesotho over US$33 million (about M465million) in forex.

“This is unlike in the past where the farmers only received their payments after South African brokers had converted the dollars to the local currency,” Letsie said.

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