www.pwc.

com/globalmobility

Global Mobility Services:

Taxation of International
Assignees - Lesotho

Taxation issues &

related matters for
employers &
employees 2018/19
Last Updated: June 2018
This document was not intended or written to be used, and it cannot be used, for the purpose Menu
of avoiding tax penalties that may be imposed on the taxpayer.
Country:
Lesotho

Introduction: International assignees working in Lesotho 4

Step 1: Understanding basic principles 5
Step 2: Understanding the Lesotho tax system 8
Step 3: What to do before you arrive in Lesotho 9
Step 4: What to do when you arrive in Lesotho 10
Step 5: What to do when you leave Lesotho 12
Appendix A: Rates of tax 13
Appendix B: Double-taxation agreements 14
Appendix C: Lesotho contacts and offices 15

Additional Country Folios can be located at the following website:

Global Mobility Country Guides

Global Mobility Country Guide (Folio) 3

Introduction:
International assignees
working in Lesotho
PwC is the world's leading provider of
professional services. The People and
Organisation group works together
with its clients to find solutions for the
challenges they encounter when
transferring people from one country
to another.
This brochure is intended to inform
foreign nationals and their employers
4 People and Organisation
about tax, social security and
immigration issues in Lesotho.
This guide is not exhaustive and
cannot be regarded as a substitute for
professional advice addressing
individual circumstances.
Nevertheless, answers will be found to
most of the questions raised by an
expatriate or his/her employer. More
detailed advice should be sought
before any specific decisions
are made about these issues.
More information can be
obtained from our Lesotho
office specializing in People
and Organisation, Global
Mobility (see Appendix C).
Step 1:
Understanding basic principles
The scope of taxation in
Lesotho
1. A foreign national working in
Lesotho will, in general,
become liable to Lesotho tax
on Lesotho income. The main
taxes are:
– Income tax;
– Wage tax;
– Dividend tax;
– Capital gains tax.
The tax year
The tax year of assessment is for 12
months and is ending on the 31st of
March each year.
Determination of residence
An individual will be considered
resident in Lesotho for tax purposes
if they are present in Lesotho for
more than 182 days in any
consecutive 12 month period, or
have a normal place of abode in
Lesotho and are present in Lesotho
for any part of the year of
assessment.
Capital gains tax for
foreign nationals working
in Lesotho
Residents and non-residents are
liable to capital gains tax on assets.
In the case of resident taxpayers,
capital gains tax is charged
regardless of where the assets are
located.
Non-resident taxpayers are taxed
only on Lesotho sourced capital
gain. Capital gain is treated as
ordinary income and is subject to
income tax at the standard
progressive rates of 20% or 30%.
Ceasing tax residence
The Lesotho Revenue Authority
should be informed in writing when
an immigrant working in Lesotho
stops being a resident in Lesotho.
The immigrant should get
confirmation from the LRA that all
his tax affairs are in order before
leaving the country.
The tax position of the
spouse
Spouses are assessed separately for
tax in Lesotho. The Lesotho
legislation will apply equally to the
assignee’s spouse, notwithstanding
the fact that the spouse may not be
employed or working in Lesotho. A
spouse will be taxed separately in
Global Mobility Country Guide (Folio) 5
Lesotho on any income that the
spouse earns in Lesotho.
Short-term temporary
employment
Foreign nationals working in
Lesotho on a temporary basis may
not be subject to Lesotho taxation
on their employment income
provided certain conditions are met.
The tax exemption is provided
under a DTA and would therefore
only apply where a DTA has been
concluded between the foreign
country concerned and Lesotho.
Generally speaking, all of the
following conditions must be met
before the exemption would apply:
 The employee remains treaty
resident in their home
country, and
 The employee is not present
in Lesotho for more than 182
days in a twelve month
period beginning or ending
during the fiscal year
concerned,
 The remuneration is paid by
the non-resident employer,
and
 The remuneration is not
borne by a permanent
establishment that the non-
resident employer has in
Lesotho.
The wording of each DTA does vary
from country to country and
professional advice should be
obtained before relying on any such
exemption.
Employee stock option
plans and long term
deferred compensation
schemes
In most circumstances the
employee is taxed on the value of
the shares when the employee
exercises the options given. The tax
will be deducted by the employer by
means of PAYE. When the shares
are sold at a later stage, the
individual will pay tax on the
difference between the value when
the option was exercised and the
selling price. The taxable return will
be added to other taxable income
received and will be taxed according
to the tax tables.
We would recommend that
Taxation of residents
Tax residents are subject to tax on
their worldwide income and gains
(subject to certain exemptions);
whereas non-residents are subject
to tax on Lesotho actual or deemed
source income and gains arising on
assets situated in Lesotho.
The tax rate for individuals range
from 20% to 30% and there is an
annual tax credit of M7 260. The
first M61 080 is taxed at 20% and
the thereafter the taxable
percentage is 30%.

The cross-border income tax issues professional advice should be

arising from employee stock option
plans can be extremely complex.
sought prior to the exercise or
vesting of any share options and/or
the disposal of any shares acquired
under an employee share option
scheme. These provisions apply
equally to residents and non-
residents.

6 People and Organisation

The following income is exempt
from tax as per the Lesotho Income
Tax Order:

 The first M500 of interest

derived from one savings
account by a resident
individual who is not a
minor, bearing in mind that
the deposit is with a
institution in Lesotho
registered under the
Financial Institutions Act of
1973,

 War pensions and gratuities

paid by the Lesotho
Government in respect of
persons who retire before the
enactment of the Lesotho
Income Tax Order are exempt
from income tax,

 The first M1 500 of a

severance payment made
under section 79 of the Labor
Code Order 1992 is exempt
from income tax in Lesotho,

 A scholarship payable in
respect of tuition or fees for
full-time instruction at an
educational institution is
exempt from income tax,

 Property income of an
expatriate taxpayer is exempt
to the extent that it is not
Lesotho source income.

Global Mobility Country Guide (Folio) 7

Step 2:
Understanding the Lesotho tax system
Employment income
Fringe Benefit Tax
Fringe Benefit Tax (FBT) is paid by
the employer on behalf of
employees. The employer is
however allowed a deduction of the
fringe benefit tax. Fringe benefit tax
is imposed on the following fringe
benefits:
 Car fringe benefit
 Housing fringe benefit
 Utilities fringe benefit
 Domestic assistance fringe
benefit
 Meal or refreshment fringe
benefit
 Medical fringe benefit
 Loan fringe benefit
 Debt waiver fringe
 Excessive superannuation
contributions
Structuring remuneration
packages
Remuneration packages may,
subject to certain restrictions, be
structured in a tax efficient manner
as well as potentially reducing the
cost of employment to the
employer. The structure should take
8 People and Organisation
into account the policies and
procedures of the international
assignment policy of the employer
as well as the provisions of the
employment contract.
The following benefits and
allowances may be considered in a
remuneration package:
 Relocation allowance;
 Cost of living allowance;
 Provision of accommodation;
 Tax equalisation;
 Home leave;
 School fees;
 Travel allowance and
company car.
Your PwC tax specialist may assist
you in the structuring of a tax
efficient remuneration package.
Tax rates on employment
income
The following table shows the
annual tax table in United States
Dollars, and is charged on taxable
income after allowable deductions
(such as payments to approved
pension schemes, or a US$700
annual tax exemption granted on
bonuses). The taxable income must
be gross of the value of any fringe
benefits.
Exchange controls
Lesotho has exchange control
regulations. The commercial banks
in Lesotho are agents of the Central
Bank of Lesotho (CBL) for certain
foreign exchange purposes.
Retirement fund
contributions and medical
aid fund contributions
Pension and retirement annuities
are allowed as a deduction at the
time when the person is still making
contributions and the person gets
taxed at the time when payment is
withdrawn/received from the fund.
It is important whether the find is
Lesotho based or not as it will have
tax implications. We advice that
advice should be obtained should
this deduction being made.
Medical expenses are not allowed as
a deduction.
Step 3:
What to do before you arrive in Lesotho
Immigration formalities
in Lesotho
A work permit or at least a
notification to the Labor
Commissioner is required for
non-residents. No visa is
required if a South African
resident is working in
Lesotho. This is governed by
the Labor Code 1992 section 165.
Should the provisions of
section 165 of the Labor Code
not complied with, the employer
and employee will be guilty of an
offence and on conviction is
liable to a fine or six months
imprisonment or both.
The following types of visa can
be obtained for business visitors:
 72 hour visa: If you do not
have a valid visa to visit
Lesotho (and you are from
a country where you
cannot automatically get a
visa to enter Lesotho) the
Lesotho National
Development Corporation
can arrange for a 72 hour
visa. (this visa is usually
only available form certain
manufacturing sectors).
 Single and multiple entry
visas
Citizens from certain countries
can obtain business visas on
arrival and others must apply for
visas prior to arrival. For
information, the Ministry of
Foreign Affairs can be contacted.
In order to take up employment
in Lesotho, foreigners are
required to be in possession of a
valid work permit. In order to
obtain a work permit you
should:
 Complete the relevant
application form
 Submit the application
form to the Commissioner
of Labor in the Ministry of
Employment and Labor
 If the permit is approved,
the applicant should go in
person the Central Police
Station in Maseru and a
formal work permit will be
issued
In certain instances the foreigner
might have its primary residence
in Lesotho and a residence
permit should be obtained. In
order to obtain a residency
permit, the following should be
done:
 Complete the relevant
application form
 Submit an application to
the Immigration and
Global Mobility Country Guide (Folio) 9
Passport Services
located in the Ministry
of Home Affairs in
Maseru.
Business people who regularly
travel between Lesotho and
South Africa can apply for a six
month border concession that
will enable them to commute
between the two countries
without having to report to an
immigration officer. This will
only apply to land border posts
and not when the immigrant
flies to Lesotho. Currently this
concession is suspended.
Timing of departure and
arrival
Although it is not always
possible to plan the date of
departure from the home
country and arrival in Lesotho,
and vice versa, the timing of
these events could have a
significant impact on the tax
position of an international
assignee in both Lesotho and the
home country.
From a Lesotho perspective, it is
important to time the arrival and
departure to minimise the time
for a person to be considered tax
resident (or avoid becoming tax
resident) as described above.
Step 4:
What to do when you arrive in Lesotho
Registration as a taxpayer
A foreign national rendering
services in Lesotho is liable to
register as a taxpayer with the local
office of the LRA. This registration
should take place as soon as
possible after becoming liable for
tax in Lesotho.
Application forms are available
from the LRA website and should be
completed together with a certified
copy of the passport. The
application form is then submitted
to the LRA Advice Centre where a
Tax Identification Number (TIN) is
immediately awarded to the
individual.
Employees' tax
Employees' tax is income tax an
employer must deduct from
remuneration paid to an employee,
and pay over to the LRA. All
Lesotho employers paying
remuneration have an obligation to
account for employees’ tax. The tax
deducted will be allowed as credit
when the tax liability is calculated
after year end.
What to do at the end of the
tax year
Tax returns
Individuals should collate all
records necessary to complete the
tax return including those forms
detailing remuneration for the tax
10 People and Organisation
year. An income tax return should Withholding tax is applicable
be submitted by every individual to service income rendered
registered for income tax in by:
Lesotho. The income tax return is – Resident contractors
available from the LRA website and providing the following
should be submitted three months services: transport,
after year end, which is 30 June. construction, plant or
The tax returns should be equipment. 5% of the
completed and submitted manually gross income is
and cannot be completed and withheld;
submitted electronically.
– Non resident
Notice of assessment contractors: The tax
Lesotho is on a self assessment tax rate applicable is 10%
system. Any outstanding amount of the gross amount;
should then be settled to the LRA – Other service income
when your return is issued. that can be outsourced
by a client to
Objections may be lodged against
difference that might occur. consultants, lawyers,
doctors and technical
Withholding tax experts. The rate
The withholding tax rates could applicable is 5% for
differ should there be a double tax residents of Lesotho
agreement in place between the and 10% for non-
country of the one party and residents;
Lesotho.
 Other payments where
Withholding tax implications are as withholding tax is applicable
follows: are as follow:
– Interest: For Lesotho
 Withholding tax is governed
residents 10% is
in terms of section 107 of the
withheld with an
Income tax Order.
exemption of M 500
Withholding tax is deductible
from a savings account.
at source from payments
For non-residents 25%
made to independent
of gross is withheld
contractors, companies,
and to a South African
organizations and any other
resident 10% is
person not exempt from tax.
 withheld according to
the double tax
agreement;

– Management charge,
dividends, royalties
and natural resource
payments: The
withholding tax
applicable is 25% for
non-residents. For
South Africa it is 15%
on dividends and 10%
on management fees,
royalties and natural
resource payments
according to the double
tax agreement;

– International
transport: Withholding
tax is applicable if the
owner of the vehicle,
ship or aircraft is a
resident of Lesotho. 5%
is withheld and 10% if
it is a non-resident.

Social Security
Lesotho has no official conceptual
framework of social security but has
a number of social security
measures in place.

Global Mobility Country Guide (Folio) 11

Step 5:
What to do when you leave Lesotho
Ceasing tax residence
The Lesotho Revenue Authority
should be informed in writing when
an immigrant working in Lesotho
stops being a resident in Lesotho.
The immigrant should get
confirmation from the LRA that all
his tax affairs are in order before
leaving the country.
12 People and Organisation
It is advisable to discuss the date of be liable to tax in Lesotho under
your departure with a tax adviser, certain conditions. Planning for
as the timing can alter your tax such payments, if any, should be
liability. Furthermore, all undertaken with care.
reasonable steps should be taken to
avoid the possibility of dual
residence or double taxation after
your departure. Any payments or
bonuses received after departure in
respect of Lesotho employment may
Appendix A:
Income tax rates
Personal income tax rates for 2018

Taxable income (M) Tax

More than But not exceeding
0 36 300 0%
36 301 61 080 20%
61 081 30%

Global Mobility Country Guide (Folio) 13

Appendix B:
Double-taxation agreements
Confirmed agreements Under negotiation
South Africa Australia Namibia
Mauritius China Swaziland
United Kingdom India The Netherlands
Malaysia USA

14 People and Organisation

Appendix C:
Lesotho contacts and offices
Contacts
Hennie Smit – Senior Manager
Tel: +27 51 503 4100
Email: hennie.smit@pwc.com

Global Mobility Country Guide (Folio) 15

© 2018 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited
liability partnership) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of
which is a separate and independent legal entity.

“PricewaterhouseCoopers” and “PwC” may also refer to one or more member firms of the network of member firms of PricewaterhouseCoopers
International Limited (PwCIL), each of which is a separate legal entity.

PricewaterhouseCoopers does not act as agent of PwCIL or any other member firm nor can it control the exercise of another member firm’s
professional judgement or bind another firm or PwCIL in any way.