DT11906 - Double Taxation Relief Manual: Guidance by Country: Lesotho: Notes

The agreement that entered into force in 2018 replaced that which had been in effect since 1998. Apart from a general updating to reflect changes in the OECD Model Tax Convention and the domestic laws and treaty preferences of both states, notable changes include:

Permanent Establishment (Article 5)

There is an expanded definition of ‘permanent establishment’, including the circumstances in which the provision of services will create a permanent establishment. These changes broadly accommodate changes to other articles of the 1997 DTC.

Management & Technical Fees Article (Article 13 in the 1997 DTC)

Article 13 of the 1997 DTC, which permitted gross taxation of management and technical fees, is not replicated in the 2018 DTA.

Mutual Agreement Procedure (Article 24)

The 2018 DTA includes an arbitration provision based on the OECD Model Tax Convention. There was no such provision in the 1997 DTC.

Administrative issues

The Exchange of information article (Article 25) was updated to follow the latest OECD Model article. In addition, an article providing for Assistance in the Collection of Taxes (Article 26) is included in the 2018 DTA. There was no such provision in the 1997 DTC.