The Lesotho Revenue Authority (LRA) and the South African Revenue Service (SARS) have signed a deal that will soon see an improvement in the processing of cross-border value added tax (VAT) refunds.
The memorandum of understanding (MOU) on processing and administering the VAT refund system was signed by LRA Commissioner-General Thabo Khasipe and SARS Commissioner Edward Kieswetter in Kampala, Uganda, during the 4th African Tax Administration Forum (ATAF) earlier this month.
LRA public relations manager, Pheello Mphana, told the Lesotho Times that the main purpose of the MOU was to set up procedural aspects relating to refunds of VAT on imported or exported goods between Lesotho and South Africa.
He said the issues covered by the agreement included the refund procedures, lists of ports designated either as commercial or noncommercial, detailed description of 'tax invoices', obligations of the two revenue administrations and requirements for structured meetings.
"The operationalisation of the MOU will allow the LRA and SARS to set up strategies that deal with non-compliance and VAT fraud schemes and set up mechanisms for VAT refunds in relation to services and e-commerce... ," said Mr Mphana.
He said the MOU formed part of a bilateral requirement under a pact between Lesotho and South Africa signed on 9 March 2014 called the Agreement on Mutual Assistance and Cooperation and the Prevention of Fiscal Evasion (the VAT Agreement).
The MOU is a result of negotiations necessitated by what Mr Mphana described as practical challenges being experienced by the two revenue administrations in relation to the VAT refund system.