RSL surpasses tax collection target

Remits M9.74 billion to government

RETHABILE MOHONO

MASERU – Revenue Services Lesotho (RSL) has recorded an 11 percent increase in tax collection, remitting M9.74 billion to the government for the 2024/2025 financial year. This amount exceeds the government’s annual revenue target of M9.48 billion by M261.19 million, marking a 3 percent positive variance. The announcement was made by Commissioner General. ‘Mathabo Mokoko, during her address on the country’s tax performance.

Mokoko emphasized that tax revenue collection serves as a crucial indicator of a country’s economic growth, investment potential, and citizen compliance with tax laws.

“The collection of tax revenue is a critical indicator of a country’s success in fostering economic growth, development, and investment,” she said. While the 2023/2024 financial year saw RSL remitting M8.86 billion – an increase of 12.5 percent from the previous year – this fell short of the set target by 9.3 percent. However, the improved collection this year demonstrates resilience and progress in domestic revenue mobilization.

The tax revenue was sourced from various streams, including Income Tax, Value Added Tax (VAT), Tobacco and Alcohol Products Levy, and Gaming Levy. Customs duties were excluded as they form part of the Southern African Customs Union (SACU) revenue pool. Income tax remittances reached M5.25 billion, surpassing the target of M4.93 billion by M325.89 million, representing a 6.6 percent increase. VAT collections, however, stood slightly lower at M4.3 billion, missing the target of M4.35 billion by M49.64 million.

The Tobacco and Alcohol Products Levy generated M160.80 million, falling short of the M168.45 million target by 4.5 percent, while the Gaming Levy performed exceptionally well, collecting M16.40 million against a target of M7.13 million, marking a 130 percent increase.

RSL also processed tax refunds amounting to M1.05 billion, with VAT refunds accounting for M914.60 million and Income Tax refunds totaling M134.34 million, representing a 25 percent increase from previous years.

Despite the strong performance, Mokoko highlighted ongoing economic challenges affecting tax collection, including stagnant global growth, inflationary pressures, and declining taxable imports.

“Inflation has impacted purchasing power, shifting consumer spending to lower-taxed goods and services. Additionally, taxable imports declined by 3 percent, while non-taxable imports increased by a similar percentage, negatively affecting VAT collections,” Mokoko stated.

Several sectors showed remarkable growth in tax contributions, with the top five performers being art, entertainment, and recreation, which saw a 527.1% increase, activities of extraterritorial organizations and bodies at 51.5 percent, education at 28.9 percent, information at 22.5 percent, and water supply at 18.8 percent.

Mokoko stressed the need for increased tax compliance, urging businesses and individuals to fulfill their tax obligations to support national development.

“The days are gone when we relied on other nations to support our development agenda through their taxes. If we do not see this as a wake-up call, then we are in serious denial,” she warned, calling on citizens to take responsibility for domestic resource mobilization.

Under its three-year strategy, LESOKOANA, RSL has implemented various initiatives aimed at enhancing operational efficiency, including auto-issuance of tax clearance certificates through an online e-services platform, the implementation of an AI-based customer relationship management system, automation of bank reconciliation processes, integration with financial institutions to streamline tax collection and compliance, and strengthening cybersecurity measures to safeguard digital assets.

Mokoko expressed optimism that pending Tax Bills in parliament would soon be enacted to further strengthen revenue collection. She also reminded taxpayers that the annual filing season, running from April 1 to June 30, is a crucial period for filing returns and making tax payments.

“Compliance with tax laws is not just a legal obligation; it is a civic duty that contributes to national development and supports vulnerable sectors of society.”