Lesotho: African Development Fund grants $ 4.25 million loan to modernize tax collection and increase revenue
The Board of Directors of the African Development Bank Group (www.AfDB.org) approved a $ 4.25 million loan to the Lesotho Revenue Authority to provide digital tax services, including electronic taxation and payment, which will broaden the country’s tax base and increase government revenue.
The funds, which will come from the African Development Fund, the Group’s concessional lending window, will be used to support the Additional funding for Lesotho’s tax modernization project. The project follows on from the Lesotho Tax Modernization Project (LTMP) approved in November 2017, and for which the African Development Bank Group provided funding of $ 7.09 million.
Specifically, the funding will be used to purchase and install electronic taxation, electronic payment and electronic invoicing software and hardware and to integrate financial institutions and mobile money providers into electronic payment systems.
“The project will broaden the tax base by simplifying and streamlining the tax system and procedures for small businesses and the informal sector. said the director of governance and coordination of financial management of the Bank, Abdoulaye Coulibaly. “A strong revenue base is imperative for Lesotho to finance the necessary expenditures for utilities, social support and infrastructure, as outlined in National Strategic Development Plan II. “
Lesotho’s economy has been negatively affected over the past two years, by sluggish global growth, especially in South Africa, a major trading partner, as well as political instability and the Covid-19 pandemic. Southern African Customs Union revenue, which accounts for 50% of total revenue, has fallen below its historical average, threatening fiscal stability, development planning and investment.
The project, which will also update and consolidate the legal and institutional frameworks for tax collection, will benefit taxpayers as well as the Lesotho Revenue Authority. The Authority, which has successfully launched a reform and modernization program aimed at reducing the burden and cost of tax compliance, has introduced VAT and improving border management processes.
The Bank’s portfolio in Lesotho, equivalent to $ 79 million, includes 8 projects in the areas of water and sanitation, energy and TIC sectors, with almost a third of multisectoral projects.
Distributed by APO Group on behalf of the African Development Bank Group (AfDB).
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