In an effort to facilitate the growth of Lesotho’s private sector and enhance its participation in domestic consumer imports, the implementation committee on customs issues has resolved that, effective from 1 September 2024, all importers (including retailers and large contractors) in Lesotho will be required to ensure that their invoices from exporters (such as manufacturers, wholesalers, and distributors with supplier service agreements) include an Agent of a Foreign Firm Code. This requirement is in addition to the existing customs obligations and aims to ensure compliance with the new customs regulations.
Under the regulations, the following are some key concepts to note:
- An Agent Is defined as a representative acting on behalf of foreign companies involved in distributing or selling goods in Lesotho. This includes merchandisers representing foreign companies, as well as sales representatives who take orders in Lesotho on behalf of foreign companies.
- Agent of a Foreign Firm/ commission agent: a person who invites, solicits, canvasses, markets, promotes, merchandizes, and accepts sales orders for the supply of goods or services on behalf of, or as a representative, third-party agent, or employee of any manufacturing or trading establishment conducting business or registered outside Lesotho.
- Agent of a Foreign Firm Code: This refers to the taxpayer identification number (TIN) of the Lesotho-based agent representing a foreign firm, which is a unique 10-digit identifier. It must be displayed on business documents such as invoices, debit and credit notes, and other related documents. Additionally, this code must be shared with a customs clearing agent for compliance with customs regulations.
- Agent of a Foreign Firm Certificate: This certificate is issued by the Lesotho Revenue Services (RSL) and is used to declare all exports from manufacturers, wholesalers, and distributors who have supplier service agreements with their clients in Lesotho. The certificate must be shared with a customs clearing agent to ensure compliance with customs regulations.
Key Changes Introduced
All exports from manufacturers, wholesalers, and distributors who have supplier service agreements with their clients in Lesotho, whether on credit terms or cash on delivery terms, must be declared with an Agent of a Foreign Firm Code Certificate. Failure to comply with this requirement will result in delays in the clearance process, and penalties may be imposed or instituted.
Key Requirements in Getting Ready for Implementation of Above Requirements
- Ensure that a registered Mosotho third-party, independent sales, marketing, merchandising, and promotions agent is contracted.
- Ensure that the contracted third-party is registered with the Ministry of Trade, Industry, and Business Development of Lesotho and the Company Registry, with a reserved business activity code 8294 for Activities of Agent of a Foreign Firm.
- Ensure that the third-party agent obtains a valid Agent of a Foreign Firm Code Certificate.
- Ensure that systems are re-configured to include the code on all business documents used for Customs declarations regarding the importation of goods and services into Lesotho.
- Ensure accurate and complete declarations to avoid delays in the customs clearance process.
These requirements apply to companies doing direct imports/ exports. They do not essentially apply to indirect imports/ exports where there are no agents of foreign firms/ sales reps/ merchandizers involved.
Effects
Starting from 1 September 2024, work permits issued to non-indigenous Basotho individuals who work as agents of foreign firms, sales representatives, or merchandisers will be revoked or rendered invalid. This is because non-indigenous individuals holding Lesotho work permits do not qualify to act as agents of foreign firms, sales representatives, or merchandisers under the new regulations.
Other Non-Compliance Issues Affected
A Customs Clearing Agent TIN should not be used on invoices, as the clearing agent is only appointed as a customs representative, not a sales representative. Unless the customs clearing agent is registered as an agent of foreign firms, a sales representative, or a merchandiser, and is an indigenous Mosotho, their TIN cannot be used for these purposes.
An Agent of a Foreign Firm deals with the sales and distribution of goods or commodities on behalf of a foreign firm, company, or manufacturer. In contrast, a Customs Clearing Agent acts as a representative of a foreign or local company or manufacturer, specifically handling customs-related matters.
Non-Basotho Agents of Foreign Firms will not be permitted to perform these services in Lesotho after 1 September 2024.
All retailers, manufacturers, and distributors are strongly urged to comply with these laws to avoid any disruptions during importation into Lesotho, to ensure they remain in good standing with Lesotho’s legal requirements, and to protect and maintain positive relations with neighbouring countries, particularly Lesotho and South Africa.
Our team assists clients as Agents of Foreign Firms in Lesotho. Contact us to streamline your customs clearance procedures and ensure compliance with all regulations.
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