Why Invest In Lesotho?

Lesotho offers investors a dynamic and business environment complemented by a healthy Government administered incentive regime which includes:

Stability

• A stable social and political environment which is investor friendly.
• A free enterprise and free market economic system, which forms the basis for sustained development and growth.

Labour

Young, abundant, predominantly English speaking, literate, well motivated labour force with a tradition of manual dexterity at competitive wage rates.

Market access

• Lesotho is part of the Southern African Customs Union (SACU) comprising Botswana, Lesotho, Namibia, Swaziland and South Africa. There are about 55 million consumers in the region.

• Duty free and quota free access provided by the regional trade and investment block of the Southern African Development Community (SADC) – (14 countries comprising 260 million consumers).

• Preferential market access of Lesotho originating products into the Australian market (22 million consumers), affording them duty free access or reduced rates of duty.

• Duty free access for a large list of products except for dairy, poultry and egg products granted by Canada (34 million consumers) under the GSP system.

• A preferential treatment agreement between SACU and MERCOSUR (comprising Argentina, Brazil, Paraguay, and Uruguay (385 million consumers) grants trade preferences on specific products originating from Lesotho as member of SACU.

• The SACU EFTA gives SACU originating industrial and fish products duty free and quota free access to Switzerland, Norway, Iceland and Liechtenstein.

• Lesotho can also export all products to the European Union (500 million consumers) duty free provided under SACU EPA Agreement.

• 99% of Lesotho’s industrial products, including textiles and clothing can be exported duty and quota free to Japan (127 million consumers).

• Lesotho’s products are eligible for duty free access to New Zealand, under a GSP scheme introduced in 1972.

• Turkey provides Lesotho’s industrial products duty free access under a GSP scheme.

• Lesotho benefits from the lucrative American market (310 million consumers) provided by the African Growth Opportunity Growth (AGOA).

Tax incentives

• 0% corporate tax on manufacturing profit generated from exporting manufactured goods outside of the Southern African Customs Union (SACU).

• A maximum manufacturing corporate tax rate of 10% on profits for intra-SACU trade.

• 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 10%.

• Easy repatriation of manufacturing profits.

• A VAT rate of 14% (ensuring harmonization with the RSA). Furthermore, the Lesotho Revenue Authority has introduced flexible VAT payment systems, to tax compliant firms, to ease cash flows.