Lesotho

Research notes

Lesotho — family-office tax dossier

Last reviewed: 2026-10-15 Tax year: 2026/27 Reviewer: research agent (Claude), unreviewed by a tax adviser

Summary

Lesotho taxes residents on worldwide income at 20% and 30%. Gains on investment assets, including foreign securities, are taxed as ordinary income at up to 30%, and foreign dividends are taxable at up to 30% with a foreign tax credit; dividends from Lesotho companies are excluded from residents' income. There is no wealth, estate, inheritance or gift tax. The exemption for foreign investment income in the Income Tax Act applies only to expatriates working under technical services contracts, not to a passive investor family.

US citizens: US citizens remain fully US-taxed. Lesotho's 30% on foreign dividends and gains is above US long-term rates, so the Lesotho tax would usually be the binding layer. No US-Lesotho income tax treaty.

Residence and eligibility

Income Tax Act s. 5(1): an individual is resident if (a) they have a normal place of abode in Lesotho and are present for part of the year, (b) present more than 182 days in any consecutive 12 months, (c) a Lesotho government official abroad, or (d) otherwise resident under ordinary tests (presence, ties, home). Tax year 1 April to 31 March.

• Residence permit (EU, US, OTHER): Non-citizens need a residence permit from the Department of Immigration; no residence-by-investment programme was identified (not researched).

Capital gains

Standard regime

Gains on the disposal of investment assets (shares, securities, investment property) are property income, included in chargeable income and taxed at the normal rates (20% / 30%). Residents are taxed on worldwide income, so gains on foreign securities are taxable, with a foreign tax credit for foreign tax. Gains on personal-use assets are excluded.

• Exemptions and thresholds: 2026/27 rates: 20% on chargeable income up to M 6,480 a month (M 77,760 a year), 30% above; non-refundable credit M 1,020 a month.
• Important exceptions, statute references and announced changes: Income Tax Act 1993 s. 20 (property income includes gains on the disposal of investment assets) and s. 62 (losses on investment assets only against such gains). Section 24 exempts foreign-source property income and gains on assets generating foreign-source income only for an 'expatriate taxpayer', defined as a non-citizen resident employed or engaged under a technical services contract; a passive investor family does not qualify. EY's summary states the expatriate exemption without that condition.
• Tax year / confidence / verification: 2026/27 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 30% (0.3); listed domestic 30% (0.3); listed foreign 30% (0.3); private business sale 30% (0.3); local real estate 30% (0.3); foreign real estate 30% (0.3).
• How derived: 30% top marginal rate applied to the full gain on any investment asset, domestic or foreign; no holding period relief. Cost-base indexation was not checked.
• Holding period: None found.
• Trader recharacterisation: Trading gains are business income at the same 30% top rate.
• Foreign assets: Worldwide basis for residents (s. 103 per RSL practice note); foreign tax credit for foreign tax on foreign-source income.

Dividends

Standard regime

Dividends paid by a Lesotho resident company are not included in a resident shareholder's gross income (Income Tax Act s. 87(6)); the company has already paid tax. Foreign dividends are property income of a resident and are taxed at up to 30%, with a foreign tax credit.

• Exemptions and thresholds: Domestic dividends: excluded from residents' gross income. 25% WHT applies only to Lesotho-source dividends paid to non-residents (s. 107).
• Important exceptions, statute references and announced changes: EY states that resident individuals are not subject to tax on dividends without distinguishing domestic and foreign dividends; the Act's exclusion in s. 87(6) covers dividends paid by resident companies only, so foreign dividends are scored as taxable. The s. 24 exemption for foreign property income applies only to expatriate taxpayers under technical services contracts.
• Tax year / confidence / verification: 2026/27 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 30% (0.3); domestic 0% (0.0); foreign gross 30% (0.3); foreign tax relief: credit.
• How derived: Domestic 0 (s. 87(6)). Foreign: 30% top rate on the gross dividend, before credit for foreign tax borne.
• Outbound withholding: 25% on dividends paid to non-residents (exempt if paid out of concessionally taxed manufacturing income), reducible by treaty.
• Treaty network: Very small: Botswana, Eswatini, Mauritius, South Africa, United Kingdom; TIEAs with Guernsey and Isle of Man (EY 2026). No US treaty.
• Holding companies: Companies pay 25% CIT (10% manufacturing). Not modelled.

Inheritance and gifts to children

Standard regime

No estate, inheritance or gift tax (EY 2026).

• Exemptions and thresholds: No tax of any amount.
• Important exceptions, statute references and announced changes: Transfer (stamp/registration) costs on Lesotho land and whether a transfer by gift is a disposal at market value for income tax were not checked.
• Tax year / confidence / verification: 2026/27 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: basis none, children fully_exempt, scope worldwide, exemption 0 LSL, brackets (marginal): none; other transfer costs 0% (0.0).
• Gifts: None. (same as inheritance: True; tax-free after years: None)
• Foreign assets: No tax.
• Residence/domicile rules: Not applicable.
• Business relief covers listed shares: False

Wealth tax

Standard regime

No net worth tax.

• Tax year / confidence / verification: 2026/27 / medium / partially_verified (checked 2026-10-15)
• JSON type: none
• Property tax (not a wealth tax): Not researched (municipal rates).

Special regimes

None modelled; see Residence and eligibility.

Company taxation (kept separate from personal tax)

Headline CIT rate: 25% (0.25). 25% CIT; 10% for manufacturing income (and exports outside SACU); capital gains taxed as ordinary income. Dividends paid to resident shareholders are excluded from their income; 25% WHT on dividends to non-residents. Special zones/regimes: Concessional 10% rate for manufacturing.

Cost of living notes

Not researched in this pass: no cost item could be sourced quickly from an agency report, school fee page or comparable source, so cost_of_living is omitted.

Open questions

• The consolidated Income Tax Act on the RSL site runs only to 1 April 2012; later amendments (other than the 2026/27 rates in the RSL employment guide) were not checked.
• Whether the cost base of investment assets is indexed for inflation was not checked.
• Foreign dividends of resident individuals scored as taxable at 30% based on the Act's worldwide scope; EY's wording ('not subject to tax on dividends') could suggest otherwise. Confirm with RSL.
• Whether a gift or a transfer on death is treated as a disposal at market value for income tax on investment-asset gains was not checked.

Sources

• Income Tax Act 1993 (consolidated to 1 April 2012) (Revenue Services Lesotho, legislation): https://www.rsl.org.ls/sites/default/files/2026-09/Income%20Tax%20Act%201993%20%20Updated%20up%20to%201%20April%202012.pdf
• EY Worldwide Personal Tax and Immigration Guide 2025-26 (March 2026 edition) (EY, professional): https://www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/technical/tax-guides/documents/ey-gl-worldwide-personal-immigration-tax-guide-03-2026.pdf
• Guide on Taxation of Employment Income 2026-27 (Revenue Services Lesotho, tax_authority): https://www.rsl.org.ls/sites/default/files/2026-09/Guide%20on%20Taxation%20of%20Employment%20Income%2026-27.pdf
• Practice note: Taxation of Foreign Nationals (Revenue Services Lesotho, tax_authority): https://www.rsl.org.ls/sites/default/files/2026-09/Taxation%20of%20Foreign%20Nationals.pdf
• EY Worldwide Corporate Tax Guide 2025 (October 2025 edition) (EY, professional): https://www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/technical/tax-guides/documents/ey-worldwide-corporate-tax-guide-10-2025.pdf

Change log

• 2026-10-15: initial research.