Lesotho taxes resident companies on worldwide income and non-resident companies operating through a permanent establishment on the income attributable to that establishment, under the Income Tax Order 1993, administered by the Lesotho Revenue Authority. A concessional 10% rate applies to income from manufacturing and commercial farming, against the standard 25% corporate rate.
The tax year generally follows the company's own financial year-end. Foreign-source losses may only be offset against foreign-source income and domestic-source losses only against domestic-source income, with business, property, and manufacturing losses each separately ring-fenced within those categories.
25% standard rate.
Top marginal rate 30%.
15% standard rate.
Under Section 5 of the Income Tax Order 1993, an individual is a resident for the entire year of assessment if they have a normal place of abode in Lesotho and are present for any part of that year, or if they are present in Lesotho for more than 182 days in any rolling 12-month period that includes all or part of the year of assessment (days need not be consecutive, and partial days count as full days), or if they are a Lesotho government official posted overseas during the year. A company is resident if it is incorporated in Lesotho, if its management and control are exercised in Lesotho, or if the majority of its operations are undertaken in Lesotho; resident individuals and companies are taxed on worldwide income, while non-residents are taxed on Lesotho-source income only.
A non-resident company is subject to Lesotho corporate income tax on income attributable to a permanent establishment in Lesotho, at the same 25% standard rate (10% if manufacturing or commercial farming) that applies to resident companies. Under the 2016 Lesotho-South Africa treaty, a permanent establishment is also deemed to arise where an enterprise furnishes services through employees or engaged personnel for the same or a connected project for more than 90 days in any 12-month period, and a building site or construction, assembly, or installation project creates a PE only once it exceeds six months.
Lesotho does not have a classic Controlled Foreign Company regime of the kind that automatically attributes a controlled foreign entity's undistributed profits to a resident shareholder each year based on an ownership-percentage threshold. Instead, Section 106 of the Order ("Tax Havens") gives the Commissioner discretionary power to adjust a resident's income and foreign tax credit position where the resident has entered into a transaction that directly or indirectly results in foreign-source income being derived through a non-resident company connected to a tax haven. A foreign country may be treated as a tax haven under this section where it has effective tax rates significantly lower than Lesotho's, or laws providing for the secrecy of financial or corporate information that facilitate concealment of an asset's real owner - but the Commissioner will not treat a country as a tax haven under this section if Lesotho has a double taxation agreement with it. This is a transaction-specific, discretionary anti-avoidance mechanism, not an automatic, ownership-threshold-based attribution regime - a real, meaningful structural distinction from countries with conventional CFC rules (such as South Africa's Section 9D, reviewed separately on this site).
Where a resident company not principally engaged in a money-lending business has a debt-to-equity ratio in excess of 3 to 1, the Commissioner may disallow a deduction for the interest paid on the portion of the debt exceeding that 3:1 ratio. This is a specific, statutory, primary-sourced rule - not a general anti-avoidance provision applied at the Commissioner's broader discretion, but a defined numeric threshold set out directly in the governing tax statute.
Lesotho classifies entities under its own domestic Income Tax Order rather than offering an elective check-the-box system, and no ATAD2-style anti-hybrid mismatch regime addressing double-deduction or deduction-without-inclusion outcomes has been identified. As described elsewhere on this page, Lesotho instead uses a discretionary, transaction-specific tax haven provision (Section 106) rather than an automatic ownership-threshold CFC or anti-hybrid mechanism.
No domestic FBAR-equivalent regime requires Lesotho residents to separately disclose foreign financial accounts, and Lesotho is not currently a CRS participating jurisdiction, so it does not automatically exchange financial account information with foreign tax authorities under the OECD's Common Reporting Standard. US persons remain independently subject to FinCEN Form 114 (FBAR) and potentially Form 8938 regardless of Lesotho's own rules.
No general participation exemption regime for dividends or capital gains from a qualifying subsidiary was identified in Lesotho's Income Tax Order; capital gains are instead included in ordinary taxable income and taxed at the company's applicable corporate rate (25%, or 10% for manufacturing and commercial farming), with no distinct exemption for qualifying shareholdings.
Lesotho's double tax treaties (with Botswana, Eswatini, Mauritius, and South Africa) provide credit-based relief for tax paid in the other contracting state on income also taxed in Lesotho; where a treaty is genuinely in force, its terms prevail over the general provisions of the Income Tax Order where the two are inconsistent. A broader unilateral foreign tax credit outside the treaty network is not confirmed in available primary sources for Lesotho.
Lesotho has concluded double tax treaties with Botswana, Eswatini, Mauritius, and South Africa, per a 2025 practitioner guide. The UK-Lesotho Double Taxation Convention (signed January 29, 1997, entered into force December 23, 1997) is not currently in force: the UK Government's own official archived copy of the treaty is filed and titled explicitly as "terminated" (gov.uk/HMRC document repository). This directly overrides a 2025 secondary practitioner guide that lists the UK as a current treaty partner - that listing is incorrect and is not relied upon here. Where the terms of a treaty are inconsistent with the Order, the treaty terms prevail - meaning for any Lesotho treaty genuinely in force, the treaty text controls over the general Order provisions.