TITLE:
Are Tax Treaties for the Benefits of Taxpayers or Maximisation of State Revenue? A Review of VAT Treaty between Lesotho and South Africa
AUTHORS:
Malefetsane Nketekete
KEYWORDS:
DTA, Tax Evasion, Tax Avoidance, VAT
JOURNAL NAME:
Open Journal of Business and Management,
Vol.9 No.3,
May
31,
2021
ABSTRACT: The
Governments of the Kingdom of Lesotho and the Republic of South Africa have
entered into double taxation treaty (DTA), as a cross border strategy to
prevent fiscal evasion with respect to value-added tax. DTAs, worldwide do not
only address prevention of fiscal evasion of tax, but they benefit businesses
and individuals against double taxation. It has however been observed that
certain services between the Republic of South Africa and Lesotho are taxed
twice when being imported into Lesotho. The study analysed the DTA to determine
whether this was in line with the agreement. Such an analyis was based on
literature review, document analysis in the form of Acts and the DTA itself.
From the analysis, it was
found out that recharging tax for the identified services was contrary to the
DTA and Value Added Tax governing the DTA. The general conclusion is that the
treatment of VAT on services is for tax revenue maximisation not in the
interest of the tax payers.