Seabata Mahao
Local traders and businesses have voiced concerns over significant challenges in cross-border trade with South Africa, highlighting issues of double taxation, high VAT rates, and lengthy customs procedures.
These grievances were aired during the ongoing Mphahlolle Tax and Customs International Instruments Campaign by the Revenue Service Lesotho (RSL), whose latest edition was held in Mohale’s Hoek this week.
Some traders highlighted the financial burden of paying VAT in both South Africa and Lesotho. Moeketsi Chere, a trader from Mafeteng, explained that the high costs often force them into non-compliance.
He recounted paying as much as M70 000 in VAT for goods worth M500 000, and noted that the system prioritises detecting undercharges but fails to address overcharges, which leaves traders in a difficult position.
Traders also reported that after paying VAT in South Africa, they are left to chase reimbursements on their own. This, coupled with the slow customs clearance process on the Lesotho side, leads to significant delays, customer dissatisfaction, and financial losses.
Chere described the situation as untenable, stating that the inefficiencies often result in South Africa benefiting more from VAT collections than Lesotho.
The Deputy Commissioner for Customs Advisory Services at RSL, Thapelo ‘Moleli, emphasised the importance of traders registering their goods with the (RSL) upon entry into the country.
This process, he explained, would allow for better VAT claims and minimise delays. He also encouraged traders to adopt the Authorised Economic Operator (AEO) program, which is designed to facilitate smoother trade for compliant businesses by reducing customs checks and providing flexible inspections.
According to Moleli, the program also improves Lesotho’s export efficiency by fostering cooperation with South African customs authorities.
Also speaking at the event, Acting Commissioner General of RSL, Rakokoana Makoa, acknowledged existing inefficiencies but assured attendees that the RSL was working to simplify VAT systems and improve compliance, aligning with broader goals of fostering economic growth and reducing poverty in Lesotho.
He also highlighted the potential benefits of international tax treaties and trade agreements. He underscored how these agreements reduce barriers, ensure fair taxation, and eliminate double taxation, creating an enabling environment for businesses to thrive.
“Tax treaties and trade agreements serve as cornerstones for fostering international cooperation and creating an enabling environment for businesses. By reducing trade barriers, ensuring fair taxation, and eliminating double taxation, these agreements make it easier for enterprises to expand across borders, attract foreign investment, and integrate into global value chains.
“One remarkable example is the African Continental Free Trade Agreement (AfCFTA), a transformative initiative aimed at creating a single market for goods and services across the continent. By reducing bureaucratic red tapes, improving logistics, and enhancing connectivity, the AfCFTA not only fosters regional integration but also positions African nations, including Lesotho, to compete effectively in the global marketplace,” he said.
He further mentioned that their focus on efficient customs tariff management helps businesses navigate complex tariff structures, ensuring compliance while minimising the cost of doing business.
“Through initiatives such as the SACU AEO program, we are working to streamline customs processes and enhance the competitiveness of Basotho businesses. The AEO program is designed to reward compliant traders with expedited customs clearances and other benefits, reducing costs and delays in cross-border trade,” Makoa stated.
