The Lesotho Revenue Authority (LRA) has missed its revenue collection target by M591, 85 million in the 2019/20 financial year which ended on 31 March 2020.
The LRA collected M6, 962 billion against a projected M7, 554 billion.
The funds remitted to the government reflect a 7, 8 percent revenue collection deficit and a continuation of a poor run for the authority in the last four financial years.
In the last four years, the LRA only met targets once in the 2018/19 financial year where it collected M6, 984 billion against a M6, 869 billion target.
The taxman said this year's performance was negatively influenced by the poor global economic developments as a result of the coronavirus outbreak.
"The 2019/20 financial year tax revenue operating environment was met with unpleasant challenges due to the decelerated global economic activity," the LRA said in a statement this week.
"Lesotho was not an exception, and the impact was evident in many industries. The economic meltdown was further exacerbated by the emergence of COVID-19, which is already resulting in devastating impact on productive capacity, affecting economic confidence, locking movement of both goods and people.
"Despite the challenges, the LRA was able to remit M6, 962 billion for the 2019/20 fiscal year, ended on 31 March 2020."
Despite failing to meet the revenue collection target, the LRA recorded a 2, 1 percent revenue collection growth compared to the previous financial year. The collections were however, reduced by refund payouts.
"By gross amounts, the LRA has collected M7, 864 billion, representing a M162 million (2.1%) improvement from the M7, 702 billion collected in 2018/19 financial year.
"The recorded net collections of M6, 962 billion in 2019/20 financial year were largely offset by an increase in refunds pay-outs amounting to M902 million, from M718 million paid to clients in 2018/19 Financial Year, reflecting a growth of M184 million (26 percent).
Mining companies accounted for the largest share of refunds paid in 2019/20 financial year despite a poor performance on the back of low demand from China amid US-China trade wars.
"Against the 2019/20 financial year target of M7, 554 billion, the net collections reflect a deficit of M591, 85 million (7, 8 percent)."
The LRA attributed the deficit to the non-implementation of the alcohol and tobacco levy which was expected during the 2019/20 fiscal year. Had the collections been made, the authority could have pocketed an extra M189, 51 million.
"While Income Tax has historically accounted for an average 60 percent of the total tax revenue, in the 2019/20 financial year VAT, at an estimated 51 percent, reflects a shift in relative contribution.
"Some of the factors that explain the realised shift include:
Corporate Income Tax collections were at their lowest due to economic slowdown, the pattern similar with that of Withholding Tax collections,
Employment stagnated and that affected personal income tax (PIT) collections, and
A policy consideration in relation to the tax credit was implemented in the second half of 2019/20 affecting PIT collections. Specifically, on the latter, acting as a relief to Clients, the tax credit was increased and that led to a decline from an average 18.1 percent to 15.6 percent suggesting low collections on taxable income," the LRA said.
Breakdown of overall performance:
Income Tax
â–ª Income Tax annual target was M4,289.6 billion;
â–ª Income Tax remittances stand at M4,055.6 billion;
â–ª Income Tax missed its annual target by M234 million.
Income Tax comprises Company Income Tax (CIT), Personal Income Tax (PIT) and other taxes.
Value Added Tax
â–ª Value Added Tax (VAT) annual target was M3,074.9 billion;
â–ª Value Added Tax (VAT) remittances stand at M2,906.6 billion;
â–ª Value Added Tax missed its annual target by M168 million;
VAT comprises Inland and Import VAT
Alcohol and Tobacco Levy
Alcohol and Tobacco Levy annual target was M189.5 million
Alcohol and Tobacco Levy remittances stand zero
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