Tax compliance attributed for LRA’s collections success

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Tax compliance attributed for LRA’s collections success
Tax compliance attributed for LRA’s collections success

Africa-Press – Lesotho. Amid tough economic climate induced by the outbreak of the Covid-19 pandemic, the Lesotho Revenue Authority (LRA) has exceeded the stipulated collection

target by 13.3 percent. These developments were revealed on Wednesday last week. Reporting on LRA’s revenue performance for the 2020 financial year, the Commissioner

General Thabo Khasipe said the authority had surpassed the target collection by M745 million. LRA was given the target to collect M5. 605 billion which was revised down from the

initial target of M7.5 billion which is about 35 percent reduction owing to the Covid-19 posed economic difficulties which were necessitated by the lockdowns.

Khasipe presented a cheque of M6.350 billion of the total revenue collections made in 2020/2021 financial year to the Minister of Finance Hon. Thabo Sophonea.

The overall target for 2020/2021 while relatively lower than targets in previous

[years]

, it was however exceeded by 13 percent, the largest gain not recorded in the past 10 years,” he said. The

LRA’s Commissioner General says they have achieved this success through the compliance of the tax clients. He further applauded the taxpayers for their

reliance. Khasipe said they had employed the deferment strategy which saw the delay of taxes until July due to hard lockdowns which were imposed by the government in April

and May in order to curb the spread of the Coronavirus. “While several tax relief measures were implemented permitting for delayed [first quarter] payments, clients continued to meet their obligations.

The effects of delayed payments were observed from mid [first quarter], resulting in revenue deficit for May and June, followed by a quick rebound in July, driven by

significant revenue [Pay As You Earn] PAYE from Government of Lesotho. “VAT [Value Added Tax] collections contracted in 2020/2021 financial year due to

Covid-19 restrictions affecting global supply chains, negatively affecting domestic VAT collections. Monthly domestic collections averaged M200 million in

2020/2021 financial year, below M230 million average for 2019/2020 financial

year. “VAT missed target in the first quarter of 2020/2021 financial year largely explained by introduction of lockdown resulting in businesses in essential

services remaining in operation, thereby significantly contracting the economy. The impact was mostly experienced in May missing the set target by 77 percent,”

he added. For his part Hon. Sophonea said the Ministry of Finance is able to execute its mandate through the support of LRA. He described the previous financial year as

the “most difficult year any Minister of Finance could face” on account of the Covid-19 pandemic. Echoing the sentiments of the Commissioner General when heaping praises to tax clients,

Sophonea said he is “happy to learn that most tax payers” demonstrated compliance”. Reacting to the LRA’s collections which exceeded the set targets, he expressed happiness saying it is a “tremendous effort against tough economic

conditions”. “The government cherishes the ideal of tax payers who voluntarily comply with tax obligations without LRA having to chase them,” he remarked.

The Minister went on to appeal to prospective tax clients to be complaint, saying that it is for the benefit of Basotho and the country to pay taxes. The

Chairperson of the LRA board Robert Likhang said there is a need for “cost efficiency. He added that there is a need to improve revenue collection as much

as possible”. He further implored the Minister to extend the authority’s mandate to collect non-tax revenues going forward. The Chairperson also challenged the cabinet and parliament to approve the change of

the name of the taxman from being an authority to being the service adding that “we think in that we will have demonstrated our ability to work with the

stakeholders”. Likhang said they will endeavour to “learn how to better serve tax clients”. The authority has been able to remit M3. 743 billion for 2020/2021 financial year

exceeding the set target of M3. 274 billion by 14 percent. Similarly, LRA has fared well in the VAT collections beating the target by 12 percent margin from the set M2. 608 remitting M2. 331.

It has paid in excess M1. 05 billion in refunds which is 16 percent more than that of the previous financial year, 2019/2020. The mining, finance and insurance

sector are reported to have received the lion share in refunds pay out. In its 2018-2023 strategy termed REA AHA translated as ‘We are Building’, LRA aspires to enhance its tax collections while also

becoming the less expensive tax collector. Through this strategy, the authority is “going to build automatic compliance through harnessing strategic partnerships”.

The strategy is aimed to: improve revenue, improve quality of services, ensure automatic compliance and reduce the collection costs. Currently Khasipe mentioned that LRA takes about 4 to 5 cents in every Loti that it

collects and gives the rest to the government, a move which he said makes them costly taxman, adding that they want to take only a cent and remit the 99 cents

to the government. At the same event, the Minister of Finance officiated the launch of the tax filling season which span from April 1 to June 30 annually.

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