A Guide to Taxation in Laos

All companies that are incorporated under Lao law will be subject to Lao taxes, such as corporate income tax, value-added tax, withholding tax, and personal income tax.

Corporate income tax

Corporate income tax, also known as profit tax, is collected from all domestic and foreign businesses and is imposed on profits. The progressive rates range from 0 to 20 percent, as illustrated in the following table.

Value-added tax

The value-added tax was reduced from 10 to 7 percent in January 2022. The reduction is part of the government’s support of the post-COVID-19 economy. VAT applies to:

• Import of goods and services;
• Supply of goods and services in Lao DPR; and
• Export of services.

Activities exempted from VAT

Activities that are exempted from VAT will now include:

1. The import of electricity to supply Laos;
2. Minerals exported overseas or to special economic zones (SEZs);
3. The export of electricity to SEZs or overseas; and
4. The supply of electricity to any electricity enterprises within Laos.

The electricity and mineral-related activities that are subject to VAT have a separate and specific basis for VAT calculation:

1. For the supply, sale, purchase, trade, self-use, exchange, export, or gifting of minerals, the VAT basis for VAT calculation is the actual purchase price, the price specified by the government, or the international market price;
2. For the import of minerals, the basis for VAT calculation is the actual purchase price specified by the government or the price at the border. This is before any additional applicable import duties;
3. For electricity generated by a business or consumer, the VAT basis is the tariff rates prescribed by the government or the rates based on the power purchase agreement; and
4. For electricity producers, the VAT basis is the contractual price agreed upon in the power purchase agreement.

New activity now subject to VAT

The supply of goods outside of SEZs by a business registered to operate in the SEZ is now subject to VAT. Previously, only services supplied outside of SEZs by SEZ-registered companies were subject to VAT.

Additional conditions for deductible input VAT

Input VAT deductions can only be made if the payment for the relevant purchase and sale of goods and services was made through a bank in Laos.

Withholding tax

The withholding tax rates have also been amended under the new tax law. The withholding tax rate on dividends is at 10 percent as well as interest paid to resident companies. The withholding tax rate for payment on royalties to resident companies is set at five percent.

Personal income tax

Personal income tax is collected monthly through progressive rates. Individuals who reside in Laos for at least 183 days are subject to tax on all income earned in Laos.

Contact us for your Lao tax requirements.

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