Business in Lesotho

Lesotho has a formal business system, but many micro, small and medium-sized enterprises (MSMEs) still operate informally. The formal pathway normally starts with choosing a sole proprietorship or company, applying through the One-Stop Business Facilitation Centre (OBFC), obtaining a Business ID or business identification card, and applying for a business licence or permit where the activity requires one. An occupancy certificate and sector-specific documents may also be required. Revenue Services Lesotho (RSL) handles business taxpayer registration, tax status and related filings. A sole proprietor is not a separate legal person, so the owner remains personally liable for business obligations. A sole proprietor may register up to five activities, with a business name or licence potentially required for each activity. A company is a separate legal person. A private company can have one to 50 shareholders, needs at least one director, has no stated minimum share capital and must maintain a physical registered office in Lesotho. Its name uses the suffix (Pty) Ltd. Other available forms include public companies, non-profit companies and external companies. Published company-registration charges are M530 for a local company and M1,030 for a foreign or external company, with processing stated at about three working days. Published sole-proprietor charges include no registration fee for a resident, M500 for a non-resident or foreign applicant, and M1,500 where stated turnover exceeds M5 million. Fees and portal requirements can change, so the current OBFC schedule should be checked before filing. Licensing depends on the activity. A Licensing Officer should process a complete application within at least five working days, with a possible five-working-day extension. The law provides for deemed approval after the relevant period in certain cases, but the required fee must have been paid and the specific activity must qualify. A licence normally remains valid until suspension, revocation or cancellation; some activities require annual renewal, while used vehicles, betting and gambling licences are renewed every six months. Published licence charges include M500 for MSMEs and M3,000 for other holders. Applications from 1 September receive a half-price first year under the published rule. Fees are non-refundable, and special registration charges for used vehicles, betting and gambling can be much higher. Foreign businesses must satisfy additional conditions before licensing. A foreign business includes a non-citizen, a partnership with a majority of non-Basotho partners or a company with at least 30% non-citizen shares. The pathway can require a business permit before the licence, a business plan, at least M2,000,000 in capital, at least six resident or citizen employees, a local representative, corporate social responsibility, skills and technology transfer, and citizen-business advancement. Some activities are reserved exclusively for Lesotho citizens under Regulation 34 and Schedule 16, so the current OBFC list and amendments need checking. RSL registration applies to sole traders, partnerships, limited companies, branches, non-governmental organisations and other business taxpayers. An employer must account for PAYE when it has employees. The current RSL 2025 form states a VAT registration threshold of M2,000,000 and allows voluntary registration, while older RSL 2024 guidance states M850,000; the applicable threshold should therefore be confirmed directly with RSL or its current portal. Published filing dates include the 15th for PAYE and withholding tax, the 20th for VAT, company income-tax instalments on 30 September, 31 December and 31 March, and the annual company income-tax return on 30 June. Businesses should keep records and accounts in Lesotho, prepare annual accounts and a profit-and-loss statement, and meet sectoral health, environmental and occupational requirements. Companies must submit an annual report to the Registrar within three months after the incorporation anniversary. Failure can lead to penalties or removal from the register, which is not the same as voluntary closure. A company must also keep a beneficial-owner register at its registered office. A beneficial owner can be a natural person with more than 10% of shares or votes, the power to appoint or remove most directors, significant influence or ultimate control. New beneficial-owner information and changes must be filed within seven days, and ownership, business or activity changes must also be reported to the responsible Licensing Officer within 14 days where required. Business support is available through BEDCO, CAFI and LEAP, which may provide mentoring, incubation, acceleration, grants, finance access, resilience support, market links, exhibitions and supplier development. The Partial Credit Guarantee Fund can support access to loans through guarantees, while the Lesotho National Development Corporation (LNDC) supports investment, industrial premises, incentives and export or market guidance. Programmes have focused strongly on women-led and youth-led businesses, but support is programme-specific and no funding is automatic. Public procurement can create market opportunities. Under the Public Procurement Act 2023, some tenders below specified thresholds are reserved for 100% indigenous Basotho, women, youth or persons with disabilities who qualify as MSMEs. A 15% preference can apply to a Basotho business with at least 51% local shareholding, with other preference rules also possible. Current schedules and thresholds should be checked for each tender. A business licence is generally not transferable, except in situations such as a merger or acquisition. An asset buyer may need to submit a transfer application, and company shares, directors, articles and beneficial ownership require separate filings. Published transfer fees include M500 for an MSME and M3,000 for another holder; merger or acquisition fees are published as M600 and M4,000 for the respective categories. Closure requires more than stopping activity: the business or licence must be cancelled through the OBFC service or the relevant cessation forms, and tax returns and settlement must be handled separately with RSL. A solvent company can use voluntary dissolution or de-registration under the Companies Act. Insolvency can lead to court liquidation involving the Registrar, Master, liquidator and creditor claims, with liquidation records retained for at least ten years.