LRA beats target

MASERU-THE Lesotho Revenue Authority (LRA) has exceeded its 2020/2021 target despite operating in a tough environment brought by the Covid-19 pandemic. The LRA was initially given a target of M7.5 billion which was later revised to M5.6 billion due to the impact of the Covid-19 pandemic on the economy. The LRA Commissioner General, Thabo Khasipe, announced yesterday during a press conference that the LRA had remitted M6.3 billion. “This means that the LRA has collected M745 million more than the given target,” Khasipe said. He said the LRA registered a 13 percent surplus, “the largest that the authority has registered in over 10 years”. Although both Income Tax and VAT performed badly during some of the months when the LRA had given relief measures against Covid-19, both taxes were able to pull through, he said. Income Tax had a target of M3.27 billion and the LRA managed to collect M3.74 billion exceeding the target by M455.94 million – which is equivalent to a 14 percent increase. Meanwhile, the VAT target was M2.33 billion and the LRA collected M2.607 billion exceeding the target by M276.86 million, a 12 percent increase. “Both Income Tax and VAT have exceeded their respective targets by the highest margins over the five-year period,” Khasipe said. Khasipe said the tertiary sector (retail, wholesale, services etc) contributed significantly towards the above-mentioned collections with 80 percent of Income Tax and 72 percent of VAT contributed by the sector. The primary sector (mining, agriculture) came in second place with a contribution of 11 percent in Income Tax and 22 percent in VAT. Mining is said to have contributed over half of the collections in this sector. The secondary sector (manufacturing, construction etc) contributed nine percent in Income Tax and six percent in VAT. Although the LRA registered a significant surplus in over 10 years, they also refunded the highest amount this year. “Refunds paid to clients have increased to 16 percent, with M1 billion paid to clients. The largest parts of this M1 billion went to mining, finance and insurance sectors,” Khasipe said. Despite this good performance Khasipe indicated that there are still challenges like the cost of collection and inadequate automatic compliance. He said to address these challenges the LRA has embarked on the Rea aha (We are building) strategy, which calls for greater collaboration between the revenue collection agency and its stakeholders and clients, with more focus on automatic compliance. “In the first part of our strategy we focused mostly on improving our services and we can proudly say in that aspect we have done well. We have managed to minimize traffic by moving other services online,” he said. The Chairman of the LRA Board, Robert Likhang, said with the SACU revenue declining steeply the revenue authority will need to intensify efforts to improve domestic collections to enable Lesotho to finance its goals. “We are grateful for the support afforded to the LRA that enables it to carry out its mandate and will continue to strive towards decreased cost of collections,” Likhang said. “As it is our cost of collection is higher than that of our counterparts and it is something we need to work on,” he said. The Minister of Finance, Thabo Sophonea, said the 2020/2021 financial year was the most difficult year any Minister of Finance could face. “At the very onset, we started on the wrong foot. Economic activities were significantly constrained due to Covid-19, while on one hand, the need for funds to fight this pandemic was at an all-time high,” Sophonea said. “This required an intricate balancing act of maximizing revenue collection while also supporting both our businesses and citizens during these trying times,” he said. Sophonea said in April last year the government introduced many relief measures to mitigate the impact of Covid-19. A few tax relief measures were also introduced. These relief measures were largely underpinned by deferment – meaning that payments of Company Income Tax, Individual Income Tax, Pay As You Earn, Value Added Tax and the Simplified Business Tax (SBT) were only payable in instalments from July to the end of the year. “I am happy to learn that most taxpayers demonstrated good compliance behaviour by paying their instalments on time and in full,” Sophonea said. He said the LRA also introduced administrative relief measures comprising speedy payment of refund claims, waiver of additional taxes, penalty fees, storage fees etc. “These measures were made to ease cash flow problems faced by businesses during those trying times,” he said. Sophonea pleaded with Basotho to file their income tax returns as the filing season opened on the 1st and will close on June the 30th. Lemohang Rakotsoane