THE Lesotho Revenue Authority (LRA) will soon introduce a new uniform tax rate for the informal sector as part of efforts to increase the tax base.
Commissioner General Thabo Khasipe recently said the new initiative dubbed the Flat Rate Taxation will simplify the usually cumbersome process followed by businesses to be tax compliant.
A 2015/16 survey conducted by the Ministry of Finance of micro, small and medium enterprises found that there were a total of 76 068 micro, small and medium enterprises in the country and only 13 899 were registered, meaning the rest did not pay tax.
61 percent of the enterprises indicated they were too small and therefore had inadequate financial resources to register. Twenty eight percent of them said they did not know how to register as the process was too complicated.
Speaking on the latest tax initiative, Mr Khasipe said the LRA wanted to “make it easy for the small and informal businesses to pay tax”.
“We want to attract and entice them into the tax net in order for them to comply voluntarily.
“So, we are going to make it easy for them by saying that in terms of the flat rate taxation, rather than they being required to keep very detailed accounts and records and then submitting detailed tax returns every year, which requires them to hire an accountant to compile their books, we are just going to ask them to simply pay a single flat amount per year.
“That single payment that will be discussed and agreed with the enterprise. There will be different rates for different sectors, because their sizes are not the same.”
Mr Khasipe said brick layers, hawkers, general dealers, public transport operators are some of the enterprises that would be covered under the new strategy.
He said they were in advanced talks with public transporters to pilot the tax scheme.
“We negotiating with the transport sector and the plan is to kick start the scheme next month. We will agree on an amount that they will pay once in order to be tax compliant for the rest of the year.
“The other sector that we will focus on is the wholesale and retail sector.”
Meanwhile, Lesotho Chamber of Commerce and Industry (LCCI) Secretary General Fako Hakane has welcomed the new taxpayer friendly strategies the LRA is shifting towards, saying these would enhance compliance.
“There is a perception that the LRA is pushing many enterprises out of business with their harsh compliance tax collection strategies and I believe the new initiatives meant to bring taxpayers closer and not to further alienate them are just spot on,” he told the Sunday Express in an interview.