MASERU — Revenue Services Lesotho (RSL) closed the 2024/25 fiscal year with M9.74 billion remitted to government, M261.19 million (3%) above its combined annual target and 11% higher than last year—an outturn that lifted the tax-to-GDP ratio from 22.5% to 23.5% despite muted macro conditions. The performance underscores a year of tighter compliance, heavier use of data and automation, and a more assertive service posture—even as value-added tax (VAT) collections lagged their goal amid a shift in the import mix and pressure on household purchasing power.
What moved the numbers
The engine of the over-performance was Income Tax, which reached M5.25 billion against a M4.93 billion target—up 6.6%—driven by Personal and Corporate Income Tax, Withholding Tax and Fringe Benefits Tax. By contrast, VAT ended at M4.30 billion versus a M4.35 billion target (-1.1%), a shortfall the RSL links to a 3% decline in taxable importsalongside a parallel rise in non-taxable imports, and to inflation-led shifts in consumer baskets toward lower-taxed items. Smaller lines diverged sharply: the Gaming Levy more than doubled its target (M16.40 m vs M7.13 m), while the Tobacco & Alcohol Products Levy under-shot marginally (M160.80 m vs M168.45 m). Overall composition for the year: Income Tax 54%, VAT 44%, and the two levies 2%.
Refunds, service, and credibility
A defining—and fiscally meaningful—feature of 2024/25 was the administration of M1.05 billion in refunds (M914.60 m VAT; M134.34 m Income Tax), marking a 25% jump and signalling both stronger compliance cycles and improved cash-flow fairness for businesses. Processing refunds at scale without eroding net collections depends on tight controls and fast, data-driven verification; RSL’s report points to precisely that blend, including near-real-time issuance of tax clearance certificates (down from 24 hours for compliant taxpayers) and automated bank reconciliations that shorten end-to-end timelines.
Sector signals beneath the headline
Beneath the aggregate, several sectors posted outsized growth in collections—Arts, entertainment and recreation (+527.1%), Activities of extraterritorial organizations (+51.5%), Education (+28.9%), Information (+22.5%), and Water supply (+18.8%)—a pattern consistent with normalization in services and targeted compliance interventions. While some of these gains ride small bases, they highlight where the tax net is widening and where audit and filing behaviours have shifted most visibly.
Macro headwinds—and why hitting target matters
The outturn came against a subdued backdrop: the remarks cite global GDP at ~3.3% in 2025–26, sub-Saharan Africa at ~4.2%, South Africa near 1.5–1.6%, and Lesotho at ~2.5% with slowing momentum—alongside declining SACU receipts and a weaker foreign-aid posture internationally. In this context, beating target is not just a scoreboard win; it’s a statement about domestic resource mobilisation as the primary engine for fiscal resilience.
Compliance culture: progress with pockets of risk
RSL notes rising registrations, filing and on-time payments, but flags persistent pain points: under-declaration, broken payment arrangements, and appeals lodged to delay settlement. The message is unambiguous—non-compliance has direct social costs in constrained health, education, infrastructure and pensions—and the administration is coupling service improvements with firmer enforcement expectations. The immediate proving ground: Filing Season runs 1 April–30 June, with the authority pledging guidance and assistance to keep processes smooth and timely.
The reform spine: people, data, and plumbing
Performance improvements are anchored in LESOKOANA, RSL’s three-year strategy focused on employee experienceand operational efficiency through data and technology. Concrete steps over the year include:
- Auto-issuance of tax clearance certificates via e-services (near real-time for compliant taxpayers);
- A customer-experience feedback loop at border posts;
- Acquisition of an AI-based CRM to unify taxpayer correspondence and measure service standards across channels;
- Automated bank reconciliation to accelerate downstream processes;
- Systems integration with five institutions (and two more underway) to streamline payments, verify registrations, and automate PAYE compliance;
- In-house data-science models to sharpen risk and service analytics; and a cybersecurity strategy with continuous monitoring and resilience measures.
Each of these upgrades reduces friction and raises the ceiling on what auditors, service agents and analytics teams can deliver per hour of effort.
Sustainability: three tests for 2025/26
First, VAT credibility must catch up to Income Tax momentum. With import composition still volatile, sustaining VAT requires continued e-process discipline, faster refund integrity checks, and vigilant audit selection to counter a shift toward non-taxable flows. Second, service metrics—refund turnaround, dispute-resolution times, first-contact resolution—need to improve in step with digitalisation to harden trust gains. Third, legislative follow-through matters: the pending tax bills in Parliament—framed as enablers of modernization and revenue—are a lever for codifying practice improvements and closing residual loopholes.
Bottom line: RSL’s 2024/25 result is more than a target beat; it’s evidence that data-led administration, better service, and firmer compliance can move the fiscal needle even in a tight macro year. The challenge now is to institutionalise the wins—especially on VAT and refunds—while pushing the next wave of integration and analytics so that revenue growth remains broad-based, predictable, and pro-investment.
Source : Revenue Services Lesotho—Media briefing remarks by Commissioner General Mathabo Mokoko on 2024/25 revenue performance, 1 April 2025.
