LESOTHO AND MARKETS

LESOTHO AND MARKETS

WHY INVEST IN LESOTHO?

Lesotho occupies a unique geographical position reasonably centrally located within Southern Africa and with good access to some of the fastest growing industrial and economic areas in the region such as Johannesburg and Pretoria. It is also within reasonable proximity to the international ports such as Durban and Cape Town. This combined with the efforts of the Government of Lesotho to create a good enabling environment for business make the country an attractive destination for foreign investment.

ACCESS TO MARKETS

Lesotho is a member of two regional trade agreements, which are the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). There are also other agreements outside the region which include the agreements with the EU under the Cotonou agreements and with the US under the African Growth and Opportunity Act (AGOA). Almost all Lesotho’s exports receive better than most favored nations (MFN) treatment to these markets.
In respect to transport, Lesotho is connected to South Africa by Road, to the South African rail network, via Maseru to Bloemfontein and by air from Moshoeshoe 1 International Airport in Maseru to Oliver Tambo International Airport in Johannesburg

TAX, CERTIFICATES, AND LICENCING

THE TAX REGIME OF LESOTHO

This enabling investment environment for Business in Lesotho is enhanced by a very attractive tax regime that Government has put in place. This favorable fiscal and financial environment has been created to promote attractive investment climate in Lesotho this includes:

  • 0% tax on income generated from exporting manufactured goods outside of Southern African Customs Union (SACU)
  • A maximum manufacturing tax rate of 10% on profits derived from sales within SACU
  • No withholding tax on dividends distributed by manufacturing firms to local or foreign shareholders
  • No advanced corporation taxes are paid by companies on the distribution of manufacturing profits
  • Training costs are allowable at 125% for tax purposes
  • Payments made in respect of external management skills and royalties related to manufacturing operations are subject to withholding tax of 15
  • Easy reparation of manufacturing profits
  • VAT rate of 14% (ensuring harmonization with the RSA).Furthermore, the Lesotho Revenue Authority has introduced flexible VAT payment systems, to tax complaint firms, to ease cash flow constraints.

Thus, while tax incentives may not be such a useful form of incentives for most countries, Lesotho’s geographic situation and limited natural resources have necessitated the continued of this type of incentives to be in place. In addition, Lesotho experiences serious competition for investors with her neighbours in the Region which do not have similar constraints as she has in the region. Therefore, offering and sustaining such incentives has been found useful and effective.

ISSUANCE OF CERTIFICATE OF ORIGIN

Unlike in other countries, Lesotho has not yet authorized the Chamber to issue such certificates. Those are still issued by the Ministry of Trade and Industry, Cooperatives and Marketing-One-Stop-Trade Facilitation Centre.

TRADE AND INDUSTRY LICENSING

The One-Stop-Trade Facilitation Centre which is a relatively new centre has ushered in a very convenient and effective service for quick issuing of licenses. For new licenses, it now takes less than a month while for renewals it can easily an hour or less. This is a very big improvement compared to the three months it used to take to have a license for either trade an industrial venture to operate.
Under this very same Facility, arrangements are advanced to improve on the formation and registration of companies in Lesotho. The old Companies Act has undergone rigorous reformed/amendments into to further improve doing business in Lesotho.]

IMMIGRATION

VISITORS VISA

In order to visit Lesotho certain foreigners are required to obtain visitors’ visas prior to arrival in the country.

LEGISLATION

Aliens Control Act (1966)
Lesotho’s Citizens Act (1971)

PROCESSES

Citizens of the following countries do not need to obtain visitors visas prior to their arrival: All Commonwealth Countries with the exception of India, Malta, Pakistan, Mozambique, and Nigeria; Australia, Austria, Belgium Canada, France, Germany, Italy, Netherlands, New Zealand, Portugal, Spain, Switzerland, United States America, Hong Kong, Ireland, Israel, Japan, San Marino, South Korea etc. Visas can be obtained at the Lesotho boarder post.

Citizens of the following countries that require visas prior to arrival can obtain them at Lesotho’s Diplomatic Missions located in the following countries: Belgium, Canada, People’s Republic of China, Egypt, Ethiopia, Germany, Republic of Ireland, Italy, Japan, Libya, South Africa, Switzerland, United Kingdom, United States of America.

72 HOUR VISA

If one does not have a valid visa to visit Lesotho (and one is not from a country where they automatically get a visa to enter Lesotho) a “72-hour visa” can be arranged.

Documents Required: A letter of Motivation stating the nature of their business, the reason why as applicant cannot obtain a visa, and the nature of their intended business in Lesotho. A copy of the applicant’s passport should be attached.

STATUTORY COST

No cost.