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Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Lesotho 2016

Phase 2: Implementation of the Standard in Practice

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Published on November 04, 2016

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This report contains the 2014 “Phase 2: Implementation of the Standards in Practice” Global Forum review of Lesotho.

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 130 jurisdictions which participate in the work of the Global Forum on an equal footing.

The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.

The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.

All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.

Key Findings

The Phase 2 review rates Lesotho as overall Largely Compliant with the international standard.  Lesotho’s legal and regulatory framework overall requires availability, access and exchange of all tax relevant information in accordance with the international standard. Nevertheless, information of all holders of share warrants and accounting records for trusts, mainly those that are not carrying business or subject to tax in Lesotho, might not always be available in Lesotho. In addition, the Phase 2 report identifies room for improvement concerning the enforcement of the legal obligations to ensure the availability of ownership and identity information, accounting records and underlying documentation and banking information for all account holders. Since exchange of information remains relatively new in Lesotho, Lesotho should continue to monitor the practical implementation of the organisational processes of its exchange of information unit. For further information on the exchange of information practice of Lesotho and to read the full report click here.