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RSL demonstrates resilience despite economic challenges

Business

Seabata Mahao
Seabata Mahao
Seabata Mahao is a general news reporter with special focus on Business and Sports. Started working at Newsday in 2021. has an Associate Degree in Journalism and Media.

In exceeding its revenue collection target for the 2024/2025 financial year by three percent, the Revenue Services Lesotho (RSL) has demonstrated strong resilience amid Lesotho’s ailing fiscal landscape.

The RSL has certainly come a long way since the 2023/24 financial year, where it missed its revenue target of M9.78 billion, managing to remit only M8.87 billion.

‘Mathabo Mokoko, the RSL’s Commissioner General, announced at a media briefing held on April 1, that the organisation remitted M9.74 billion to the government, surpassing the set target of M9.48 billion by M261.19 million, marking a three percent positive variance.

The performance also represents an 11 percent increase compared to the previous year.

The overall tax collection comprised Income Tax, Value Added Tax (VAT), Tobacco & Alcohol Products Levy, and Gaming Levy. Customs duties were excluded as they form part of the Southern African Customs Union (SACU) pool.

Income Tax had an annual target of M4.93 billion, with actual remittances standing at M5.25 billion, exceeding the target by M325.89 million, representing a 6.6 percent increase. Value Added Tax (VAT) was targeted at M4.35 billion, but actual remittances stood at M4.3 billion, falling short by M49.64 million (1.1 percent).

The Tobacco & Alcohol Products Levy had a target of M168.45 million, with collections amounting to M160.80 million, reflecting a shortfall of M7.65 million (4.5 percent). The Gaming Levy, however, exceeded expectations, with a target of M7.13 million but actual remittances at M16.40 million, surpassing the target by M9.27 million, marking an impressive 130 percent increase.

Additionally, RSL processed refunds totaling M1.05 billion, with VAT refunds at M914.60 million and Income Tax refunds at M134.34 million, representing a 25 percent increase.

Despite this commendable performance, Mokoko highlighted ongoing economic challenges. Global economic growth remains stagnant, with the International Monetary Fund (IMF) projecting GDP growth of 3.3 percent in 2025 and 2026, still below the pre-pandemic average of 3.7 percent. Regionally, Sub-Saharan Africa is expected to grow at 4.2 percent in 2025 and 2026, while South Africa’s GDP is forecasted at 1.5 percent in 2025 and 1.6 percent in 2026. Lesotho’s economy remains stable at a 2.5 percent growth rate, though with decreasing momentum.

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.

Despite these challenges, the tax-to-GDP ratio increased from 22.5 percent to 23.5percent, with an annual remittance growth of 10 percent. Activities of extraterritorial organisations and bodies recorded a 51.5 percent increase, while the education sector grew by 28.9 percent. Information services saw a 22.5percent rise, and water supply registered an 18.8 percent increase.

Mokoko emphasised the importance of compliance, noting that while there is growing adherence among taxpayers, issues such as tax evasion, under-declaration of income, and non-adherence to payment arrangements persist.

She stated, “Non-compliance robs our country of its ability to provide for its citizens. It defeats the very purpose of taxation, which is to ensure proper redistribution of income.”

To address these challenges, RSL is implementing strategic interventions under its three-year strategy, LESOKOANA, focusing on employee well-being and motivation while enhancing operational efficiency through data and technology.

Initiatives include the auto-issuance of tax clearance certificates, integration with various institutions to streamline tax payments, and the development of data science models to enhance client understanding and decision-making.

Mokoko expressed optimism about pending tax bills in parliament, stating, “We remain highly optimistic that the pending tax bills in parliament will be enacted soon. These Bills, once legislated, will enhance revenue collection and further enable our capability to modernize our tax administration.”

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