Lesotho released an updated version of the country's VAT Law, which includes provisions for a mandatory electronic invoicing (e-invoicing) system. The introduction of a mandatory e-invoicing system is part of the country's efforts to strengthen VAT compliance, provide the Tax Authority with greater visibility over business transactions, and automate VAT reporting.

The enactment of the latest updates to the VAT Law marks the end of a four-year cycle that started in 2022, when the government published the Tax Modernization Project. The project stated that implementing a nationwide e-invoicing system is one of the priorities to modernize the country's tax system.

Mandatory E-invoicing Framework

The so-called e-invoicing Regulation, which amends the VAT Law, came into force on April 1, 2026. The regulation establishes the Invoice Data Management System (IDMS), operated by Revenue Services Lesotho (RSL). Under this system, businesses subject to the rules must electronically transmit invoice information to RSL through the Lekuka platform, allowing the Tax Authority to receive transaction data in real time or near real time. The mandatory e-invoicing system covers B2B, B2G, and B2C transactions. 

In-scope businesses must use RSL-accredited Electronic Billing Systems (EBS) or compliant point-of-sale systems, with digital certificates and signatures used to authenticate invoices and protect their integrity. The framework also establishes accreditation requirements for EBS providers and sets responsibilities for businesses, technology providers, and RSL. 

The regulation also defines penalties for non-compliance with national e-invoicing requirements, ranging from LSL 50,000 (around USD 3,100) to LSL 500,000 (around USD 31,000) in fines, with violators facing up to six months' imprisonment. 

Conclusion

The implementation of the mandatory e-invoicing system marks a significant shift in Lesotho's tax administration. By prioritizing real-time transaction data and digital authentication, the government is taking decisive steps to modernize compliance and enhance fiscal transparency. Businesses should move quickly on adoption and system alignment to avoid stringent penalties and ensure smooth operations within this new regulatory landscape.