New tax rates set to come into force
New tax rates set to come into force
The government expects to enforce a newly revised law on tax in October, which will help create competitiveness and stimulate growth of domestic firms.
According to a source from the Ministry of Finance, the government will enforce the amended law on tax at the beginning of the 2012/2013 fiscal year, after delaying the law's enforcement since early this year due technical difficulties.
DFDL Mekong, one of the leading legal and tax advisory firms in the region, also confirmed that the Lao government would no longer delay the tax law enforcement, and it plans to host consultations with enterprises on the revised tax law.
The Lao National Assembly approved the amended Law on Tax at the end of 2012, allowing the government to lower profit tax for domestic firms from 35 percent to 24 percent so as they will be able to complete with foreign rivals.
Foreign companies, which plan to invest in Laos, will now have to pay 24 percent profit tax, increasing from 20 percent in the past.
Companies which are already listed on the Lao Securities Exchange will pay only 19 percent profit tax for a period of four years, as the government has a policy to encourage domestic firms to list on the stock markets and run their businesses more transparently.
Laos opened the stock market at the end of 2010, aiming not only to create opportunities for companies to mobilise investment but make them run their business more transparently and pay the requisite amounts of tax.
According to tax experts, tobacco manufacturers will now have to pay 26 percent profit tax, as the government wants to use the additional 2 percent profit tax to fund an anti-smoking campaign in the country.
One of the notable changes after the new tax law comes into force is that the government will offer income tax exemptions for people earning less than 1 million kip per month, but will introduce progressive rates of tax for all those earning more than 1 million kip per month.
Locals and foreigners working in Laos with monthly incomes of between 1 million kip and 3 million kip will have to pay 5 percent income tax. People with salaries between 3 million kip and 6 million kip will have to pay 10 percent income tax, while those who earn between 6 million kip and 12 million kip will pay 12 percent income tax.
People with incomes from 12 million kip to 24 million kip will have to pay 15 percent income tax while those earning 24 million kip to 40 million kip will have to pay 20 percent income tax. High income earners who make more than 40 million kip will have to pay 24 percent income tax.
vientiane times
