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HMRC internal manual

Double Taxation Relief Manual

Lesotho: Interest and royalties

Under the agreement, interest or royalties arising in Lesotho and paid to a resident of the United Kingdom who is the beneficial owner of the interest or royalties are taxable in Lesotho at a rate not exceeding 10 per cent (Articles 11(2) and 12(2)), except where the interest or royalty is effectively connected (see INTM153110) with a permanent establishment or fixed base which the United Kingdom resident recipient has in Lesotho. In the latter circumstances the provisions of the Business Profits Article (Article 7) or the Independent Personal Services Article (Article 14) will apply.

Where Lesotho source interest is paid to a United Kingdom resident who is the beneficial owner of the interest, in respect of a loan or other debt-claim or credit guaranteed by the United Kingdom Export Credits Guarantee Department, it is exempted from Lesotho tax (Article 11(11)).