About the Client 

The Revenue Services Lesotho (RSL) is the principal authority responsible for the assessment and collection of tax revenue on behalf of the Government of Lesotho. RSL’s mandate extends to the administration and enforcement of laws related to tax revenue, ensuring compliance and effective revenue collection. Established to enhance the efficiency and effectiveness of tax collection, RSL operates outside the framework of the Civil Service but remains fully accountable to the Parliament of Lesotho (Minister of Finance and Development Planning). The agency provides an improved service to the public, driving economic growth, and contributing to national development. 

Challenges 

In pursuit of its vision to “Positively impact Basotho’s livelihoods,” the RSL aims to facilitate government funding through excellence in tax revenue collection, fostering a fair tax environment, and becoming the best employer in the country. However, achieving these ambitious goals necessitates the development of new capabilities within the RSL to address the challenges posed by a modern, digital economy. The rapid shift towards real-time operations and the growing volume of data, coupled with the increasing adoption of digital solutions by taxpayers, have created a pressing need for RSL to enhance its value added tax (VAT) collection processes. 

Specifically, RSL required a secure and efficient platform to facilitate the exchange of e-Invoice data between different systems, involving sellers, buyers, and RSL itself. This platform needed to support RSL’s digitalization efforts by enabling decision support and task automation, providing insights into taxable transactions, and offering benefits to taxpayers such as simplified VAT return filing. The platform is expected to improve reporting quality, reduce compliance burdens, and ensure a level playing field for all taxpayer groups. 

Solution 

To address these challenges, the e-Invoicing platform based on NRD Companies’ Virtual Fiscal Device Management System (VFDMS©) platform and locally named “Lekuka” was developed for the Revenue Services Lesotho. This platform establishes a comprehensive framework for the reporting of invoices and other taxable transactions to RSL. It provides the necessary tools for RSL officers, taxpayers (vendors), buyers, and fiscal/invoicing solution providers to comply with the new e-Invoicing requirements while benefiting from the system’s advanced capabilities. 

The e-Invoicing platform comprises several key components: 

• Central Platform: Facilitates the registration of taxpayers’ invoicing and Point of Sales (POS) solutions, and manages the information collected through e-Invoicing. This platform is essential for RSL officers in their daily operations. 

• E-Invoicing API Gateway: Enables the integration of taxpayers’ systems for the submission of invoices, credit/debit notes, and other relevant data. It ensures the validation and consistency of the submitted information. 

• Data Warehouse: Stores the collected information and provides data for RSL’s risk and audit tools, enabling comprehensive analysis and oversight. 

• Verification Portal: Allows buyers and auditors to verify the registration, validity, and consistency of invoices, and to submit complaints to RSL if discrepancies are found. 

• Self-Service Portal: Empowers vendors and suppliers of fiscal solutions to manage their invoicing information, review submitted invoices, and address errors identified by the system. 

• E-Tax Solution Integration: Prefills VAT returns and refund requests based on the data collected by the system, streamlining the filing process for taxpayers. 

NRD Companies’ Solutions and Services  

NRD Companies played a crucial role in deploying and adapting its Virtual Fiscal Device Management System (VFDMS©) platform for RSL, ensuring that the system met the specific needs of Lesotho’s legislative and regulatory environment. The comprehensive solution includes all the necessary components of the e-Invoicing platform, as well as additional functionalities such as invoice reconciliation and seamless integration with the e-Tax system, (Public Sector Revenue Management) PSRM system – RSL’s Integrated Tax Management System and Automated System for Customs Data (ASYCUDA) system. These integrations are designed to provide taxpayers with a smooth and user-friendly experience when accessing the e-Invoicing self-service portal. 

Beyond the technical deployment, NRD Companies provided extensive consulting and advisory services to support the introduction and adoption of the e-Invoicing system in Lesotho. The key advisory services included: 

• Legal Review: Conducting a thorough review of existing legal frameworks and drafting the necessary operational and technical regulations for e-Invoicing. 

• Business Process Reengineering: Addressing the required changes in internal processes to support e-Invoicing, including accreditation of solution manufacturers, providers, and fiscal solutions, as well as registration of taxpayers’ physical locations and handling of e-Invoicing requests and complaints. 

• Change Management Support: Assisting RSL with internal change management by ensuring staff readiness to operate the system and respond to taxpayer inquiries. Additionally, supporting external change management efforts by enhancing public awareness and communication regarding the system’s benefits, and aiding early adopters in the transition to e-Invoicing. 

Expected Results 

The implementation of the e-Invoicing platform is expected to deliver significant benefits for both RSL and the taxpayers in Lesotho: 

• Establishment of a national e-Invoicing ecosystem through the deployment of technology components, enabling legal frameworks, and clearly defined operating procedures. 

• Enhanced VAT collection capabilities that will help the Government of Lesotho achieve its fiscal objectives and support essential public spending. 

• Simplified and accelerated VAT return filing and refund processing for businesses through the e-filing component. 

• Cost savings for vendors with digital receipts and invoices, reducing the need for printed materials, and providing buyers with digital records of their transactions. 

• A level playing field for all taxpayers, supported by the wide adoption of the e-Invoicing solution. 

• Improved engagement between RSL and various user categories, facilitated by the invoicing verification application, which assures buyers that their Input VAT will be recognized, thus encouraging the adoption of e-Invoicing. 

Replicability 

The Lesotho E-Invoicing platform, based on the VFDMS© platform – a solution continuously developed and enhanced to meet the evolving needs of Revenue Authorities – is highly replicable. Its associated processes offer a model that can be adapted for use in other countries seeking to enhance their tax collection and compliance frameworks. 

SDGs Addressed  

SDG 8: Decent Work and Economic Growth 

The Lesotho e-Invoicing platform reduces administrative burdens and streamlines tax processes, promoting business efficiency and growth. This fosters a more conducive environment for economic activities, supporting the creation of jobs and enhancing economic development in Lesotho. 

SDG 9: Industry, Innovation, and Infrastructure 

Leveraging modern technology, the e-Invoicing platform enhances Lesotho’s tax infrastructure, improving the capabilities of the Revenue Services Lesotho (RSL) and facilitating better service delivery. By modernizing VAT collection processes, the platform transitions tax administration to a more sustainable and technologically advanced framework. 

SDG 12: Responsible Consumption and Production  

By transitioning from paper-based receipts to digital records, the e-Invoicing platform promotes more sustainable consumption and production patterns. This initiative helps reduce waste and conserve natural resources, contributing to environmentally friendly practices in tax administration and business operations across Lesotho. 

SDG 16: Peace, Justice, and Strong Institutions 

The Lesotho e-Invoicing platform enhances transparency and accountability in tax administration, reducing opportunities for tax evasion and corruption. By increasing the efficiency and transparency of the tax system, the platform ensures more inclusive and equitable participation, strengthening institutional integrity. 

SDG 17: Partnerships for the Goals 

The development and implementation of the e-Invoicing platform involves collaboration between government entities, taxpayers, and technology providers. This project exemplifies a successful public-private partnership model, driving progress toward achieving broader development goals in Lesotho.