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RSL digitalizes VAT collection    

by Lesotho Times
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Staff Reporter 

REVENUE Services Lesotho has embarked on a journey to develop and implement digital tax compliance solutions which will simplify and accelerate value added tax (VAT) collections and refunds to help achieve the country’s revenue and fiscal goals. 

The project seeks to provide modern tools for VAT return filings, automating and speeding up the process of submission of VAT returns, assessing them, and processing VAT refunds. 

The project, which is in line with the RSL’s digitalization strategic pillar, is expected to be completed by July 2025. 

It is being funded by the African Development Bank (ADB) and led by experts from Norway-based NRD Companies which have already begun gathering information from internal and external stakeholders as part of the project initiation stream. 

NRD Companies is a global information technology and consulting group of companies, specializing in governance and economic digital infrastructure development. It has previously implemented similar solutions in Zimbabwe, Zanzibar, and Lithuania, using Virtual Fiscal Device Management System (VFDMS) – a fiscal sales data collection solution that allows tax authorities to simplify the collection of taxes. 

According to a statement released by NRD Companies on Friday, the RSL has kicked off the project to develop and implement an e-invoicing and e-filing solution aimed at improving VAT collection in Lesotho and boosting VAT-related data collection and assessment by RSL. The solution will provide modern tools for VAT return filings, automating and thus speeding up the process of submission of VAT returns, assessing them, and processing VAT refunds. 

“Notwithstanding the fact that VAT represents a substantial 7.7 percent of Lesotho’s GDP, reduced VAT rates in certain segments of the economy and a substantial informal economy with significant cash-based transactions, lead to a VAT environment that still has untapped potential,” part of the statement reads. 

“Furthermore, much of the VAT reporting is still paper-based, audit and control by RSL is still manual, and the country is in need of amendments and consolidation of its legal framework, and the strengthening of its institutional framework. 

“Several positive changes are expected with the completion of the project. Enhanced VAT collection will help the government of Lesotho to achieve its fiscal goals and thus meet required public spending. The VAT e-filing component will provide businesses with simpler and expedited VAT return filings and faster VAT refunds. The introduction of e-Invoicing will facilitate the use of digital receipts and invoices, thus allowing vendors to save on costs, and the buyers to have purchase evidence documents stored digitally. 

“In addition to addressing some of the challenges facing Lesotho, NRD Companies will implement a comprehensive set of advisory services. As a prerequisite to the implementation of VFDMS, the advisory component includes reviewing existing legal frameworks and legal acts, submitting recommendations for changes to the VAT Act and regulations that may be required for the implementation and enforcement of the system, business-process reengineering support, as well as guidance with the implementation of internal and external change management. The revision of current business processes and identification and definition of new processes will allow RSL to ensure fast adoption of the system and a smooth learning curve for its employees.” 

Speaking about the projected achievements, NRD Companies chief executive officer, Mindaugas Glodas, said: “We are excited and honoured to have been chosen by the government of Lesotho and Revenue Services Lesotho to address their digitalization goals and pave the way to a modernized tax landscape as part of the Lesotho Tax Modernization Project. 

“Our highly experienced team will be involved in customizing VFDMS to RSL’s specific needs, building required system integrations, and ultimately, developing e-filing capabilities for VAT returns and refunds. 

“NRD Companies’ global experience, and specifically in Africa, has proven that the implementation of digital innovations has brought with it increased government revenue. It has also led to the enhancement of government services while making compliance with tax laws less time-consuming and more cost-efficient.” 

For her part, RSL Commissioner General, Mathabo Mokoko, said the initiative was in line with the RSL’s digitalization strategy. 

“We have begun a journey with our partners towards implementing a Value Added Tax (VAT) e-Invoicing and e-Payment System in Lesotho. The aspiration is for the RSL to function as a passionate, efficient and customer-centric tax administration entity, aiming to positively impact the lives of Basotho. 

“Our goal is to engage all stakeholders, fostering a collective sense of pride and purpose to elevate the socio-economic status of our beloved nation, Lesotho. It is paramount that we recognize that vigilantly safeguarding our tax regime is crucial for achieving our national aspirations, whether on a local or international scale,” Advocate Mokoko said.  

 

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