Lesotho PAYE
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Lesotho's income tax is administered by the Lesotho Revenue Authority (LRA) and assessed on an annual basis, with monthly employer withholding. Like Eswatini, Lesotho has no 0% tax band — income tax starts at 20% from the first loti of taxable income. However, a tax credit of M11,640/year is applied directly against the computed tax liability, creating an effective tax-free threshold of approximately M58,200/year gross. Lesotho has no mandatory private sector pension scheme, so PAYE is computed on full gross salary.

Lesotho has no mandatory employee pension or social security contribution for private sector employees. This distinguishes Lesotho from most African countries where a pension or social security deduction reduces taxable income. PAYE is calculated directly on the full gross annual salary. Some employers offer voluntary occupational pension schemes, but these are not mandated by law and are not relevant to the standard PAYE calculation.

Lesotho has two progressive annual LRA bands: 20% on the first M74,040/year, and 30% above M74,040/year. The M11,640/year tax credit is applied after computing the raw tax liability. An employee earning M58,200/year would compute M11,640 tax (20% × 58,200) minus M11,640 credit = M0 net PAYE. Employers withhold PAYE during the year under the LRA payroll timetable.

Lesotho uses the LSL (Lesotho Loti), pegged 1:1 to the South African Rand (ZAR). Both are accepted in Lesotho. As a member of the Common Monetary Area (CMA), Lesotho's exchange rate is fixed. The LRA also administers VAT, withholding taxes, and customs duties. Verify current bands and tax credit amounts at lra.org.ls.