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  • if services are supplied wholly or partly in Lesotho, but not near the border between Lesotho and another country, the Commissioner may determine that the services are supplied in Lesotho if the supplier is registered in or operates in Lesotho;

  • in the case of the supply of radio, television, telephone or other communication services, if the signal or service originates outside Lesotho, where the recipient receives the signal or service, provided a consideration is payable for receiving the service or signal.

Time of supply

The time of supply of the goods or services determines when the liability for VAT arises. In terms of the general rule, the time of the supply is the earliest of when:

  • goods are delivered or made available;

  • performance of services is completed;

  • an invoice for the supply is issued; or

  • payment for the supply is received.

A vendor is considered to have received cash on the date that he receives the money and a cheque on the date that he receives the cheque. In the case of credit cards, payment is received on the date that a vendor makes out the sales voucher. Where a vendor takes a deposit for a supply, he must account for VAT when the deposit is received.

The specific rules can be summarised as follows:

  • auctions – time is the time of the auction;

  • goods taken for own use – time is the date on which the goods or services are applied for own use;



gifts – time is the date on which ownership passes or the services are completed;

  • hire purchase agreement or financial lease – time is the date of commencement of the agreement or lease;

  • other periodic payments and rent – the successive supplies occur when each payment is due; and

  • services – supplier of services may apply in writing to the Commissioner to defer payment of VAT until payment for the services is received.

A vendor is deemed to have made a payment on the date that he receives a VAT invoice. In relation to cheques, a vendor is deemed to have made a payment on the date that he sends the cheque or the date on the cheque, whichever is the later. In the case of credit cards, the credit card payment date is the date when the supplier makes out the sales voucher. Where a vendor makes a deposit payment that serves as an advance payment, he can claim a credit for the input tax for the payment made.

Value of supply

The general rule is that the taxable value of a taxable supply is the consideration received for the supply. ‘Consideration’ normally means money, but it can also mean any payment made directly or indirectly to a person. This includes credits or payment in kind, or any other indirect form.

Where monetary consideration for a supply is not sufficient, or where there is no monetary consideration, a fair market value is adopted, such as in the following circumstances:

  • hire purchase agreements and finance leases;

  • application of goods for own use; and

  • supply for a reduced consideration.

VAT compliance

Accounting basis and tax periods

Where a vendor has adopted the cash VAT accounting system, he accounts for VAT in the VAT return for the month in which payment for a supply is received, and input tax credit is claimed after payment has been made.

Where an invoice VAT accounting system is adopted, input tax credit may be claimed on the basis of a tax invoice showing a time of supply date that falls before the end of the return period during which the claim is lodged.

Registered businesses may apply to use the cash method if 90% or more of the taxable value relates to services, such as accountants, lawyers and hotels, and certain other requirements are met.

Tax periods are periods of one calendar month.

Returns and payment of VAT

A VAT return form must be completed for every tax period and sent to the Department of VAT accompanied by the tax remittance, within 20 days after the end of the month.

Interest and penalties

Where a return is filed late, the vendor is liable for additional tax calculated at 3% of the outstanding VAT per month or part thereof.


Where a vendor has overpaid VAT for any tax period, he has the option to either:

  • set off the excess against any outstanding liability relating to an earlier period; or

  • carry forward the excess, and apply for a refund in respect of each calendar quarter, ending on 31 March, 30 June, 30 September and 31 December.

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