Identifier
Created
Classification
Origin
09MASERU2
2009-01-05 15:11:00
UNCLASSIFIED
Embassy Maseru
Cable title:  

LESOTHO REVENUE AUTHORITY REQUESTS TECHNICAL ASSISTANCE FROM

Tags:  ECON TRSY PGOV LT 
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R 051511Z JAN 09
FM AMEMBASSY MASERU
TO SECSTATE WASHDC 3968
SADC COLLECTIVE
INFO AMEMBASSY MASERU
UNCLAS MASERU 000002 


E.O. 12958: N/A
TAGS: ECON TRSY PGOV LT
SUBJECT: LESOTHO REVENUE AUTHORITY REQUESTS TECHNICAL ASSISTANCE FROM
THE U. S. DEPARTMENT OF TREASURY

UNCLAS MASERU 000002


E.O. 12958: N/A
TAGS: ECON TRSY PGOV LT
SUBJECT: LESOTHO REVENUE AUTHORITY REQUESTS TECHNICAL ASSISTANCE FROM
THE U. S. DEPARTMENT OF TREASURY


1. Summary: On November 17 - 21 a mission headed by William
Remington from the Department of Treasury' Office of Technical
Assistance (OTA),visited the Lesotho Revenue Authority (LRA) at
the request of the LRA's Commissioner General (CG),Dr. Charles
Jenkins. The CG had requested technical assistance and support
for the LRA in the areas of debt management, audit, and
investigations. The OTA mission took stock of LRA operations and
reviewed its current capacity. It also met with the business
community to assess the relationship between the LRA and the
private sector. End Summary.


2. The mission met with many sections of the LRA, including the
Chief Information Officer, Internal Audit, and Human Resources.
However, the main focus was on Revenue Compliance. The mission
found that since the LRA's inception 5 years ago, tax compliance
has significantly improved and tax evasion has been reduced.
While those areas will require sustained efforts for
improvement, the OTA mission focused on three areas where their
particular expertise can be of immediate help. Those areas are:
debt management, tax audit, and human resource management.


3. At the completion of their mission, the OTA sent a letter to
the CG indicating their willingness to deliver technical
assistance in 2009. Their assistance in the above-mentioned
focus areas should increase the ability of the LRA to maximize
government tax revenue while ensuring an efficient, fair and
simple tax administration system. The CG assured the mission
that the LRA would welcome a technical assistance team based at
the authority early next year.


4. During the consultations, the LRA's tax divisions identified
capacity-building in regards to tax law and procedures;
processes in audit and debt collection; and upgraded database
systems for both income tax and VAT as their top priorities.
They stressed that tax laws sometimes conflict with the
constitution, making it difficult to interpret the law, and
leading to inconsistencies in application. In addition, the
automated systems used to capture VAT and income tax data are
neither adequate nor reliable to address LRA needs for audit and
debt collection purposes. The Commissioner of Tax Compliance
explained that LRA personnel lack adequate knowledge in
interpretation and application of tax law. There is an urgent
need to overcome these human and institutional capacity
shortfalls.


5. The Mission also met with the Lesotho Chamber of Commerce,
the Mohloli Association of Business, and the Lesotho Institute
of Accountants. These representatives of Lesotho's business
community expressed their concern with the LRA's approach. They
highlighted several issues, such as problems when their business
transactions do not interface with LRA processes, complicating
the tax filing system. They also expressed their frustration
with different interpretations and applications of tax law which
results in inconsistencies. In addition, tax law, especially
income tax law, is seen as too simple to accommodate complicated
situations such as capital gains. The business representatives
said that officials need to provide more tax law and technical
training to make the processes more clear and to make it easier
to comply with tax policy.


6. The OTA mission was impressed with the LRA's energy and
commitment to improvement, revealed in frank and open
discussions of current status and areas needing improvement. The
aim of the OTA's technical assistance partnership with the LRA
is to make processes more efficient and to ease the tax
compliance burden. The mission noted the management team's
demonstrated readiness and its capability to manage proposed
improvements. In early 2009, the OTA will place technical
experts with the LRA to work on the proposed areas for
improvement while also mentoring its staff. Training in
different areas of audit will include development of operations
and procedure manuals to be used during the audit process with a
goal toward building internal capacity, to ensure sustainability
and remove the need to rely on external expertise in the future.

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