Lesotho: LRA Digitises Vat Clearance

8 December 2020

THE Lesotho Revenue Authority (LRA) this week introduced a digital platform for value added tax (VAT) registration to enhance efficiency.

The online platform is expected to significantly reduce the turnaround time for obtaining VAT clearance certificates, while also facilitating speedy transfer of goods from one person to another or importing goods.

A VAT clearance certificate is commonly applied for when importing a used vehicle and when changing ownership from one person to another. Now instead of having to visit the LRA offices to get a VAT clearance before selling vehicles, traders can now remotely log on to the LRA website to apply for the certificate.

LRA commissioner general, Thabo Khasipe said they have targeted improving issuance of VAT and tax clearance certificates through digital systems as the services often cause inconveniences like long queues and crowding at service centres.

He said the digital systems will allow clients to access the two services remotely negating the need to visit LRA offices.

"We observed that long queues at our service centres were mainly caused by the people seeking tax clearance and VAT clearance certificates," Mr Khasipe said.

"So, we gave ourselves a target of reducing the traffic of people seeking the two services in our service centres, and started by introducing an online tax clearance so that one no longer needs to visit our service centres to obtain the certificate.

"Today, we are digitising VAT 11, and it is further going to reduce the amount of traffic at our service centres."

Other benefits of digitising VAT include facilitating easier change of ownership of vehicles.

"These efforts emanate from our five-year 2018-2013 strategic plan to improve our efficiency as we believe that it is through excellent service to our clients that the public will find it easier to be tax compliant."

Going digital on VAT will eventually help reduce the costs that LRA incurs in collecting revenue. He said they used to spend millions of maloti annually on printing VAT 11 forms but that will no longer be necessary.

Mr Khasipe said the LRA spends over six cents to collect one loti, which is high compared to the industry standard they aspire for of spending one cent in collecting one loti.

"Digitising VAT 11 will eventually reduce the costs of revenue collection for the LRA. It does not help remit revenue to the government and then come back to request a huge chunk of it for collecting more revenue. We used to budget millions towards printing of VAT forms, but now we will no longer incur that cost."

For his part, commissioner client services, Norman Mapetla said the digitising VAT supports the Coronavirus (Covid-19) protocol of social distancing by reducing the need for people to physically walk to the LRA service centres for services in large numbers.

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