Lao businesses brush up on new tax law
Lao businesses brush up on new tax law
Tax and legal consulting firm VDB L oi teamed up with the Ministry of Finance's Tax Department yesterday to hold a seminar informing businesses of changes to the tax law.
The seminar, titled Lao Tax Reform Implemented in Practice, aimed to update managers on the latest changes to tax policy and rates, which will be imposed in the near future.
The government enacted the revised tax law at the end of last year, but it is still unclear when the new rates will come into effect. The government is currently reviewing a prime ministerial decree on the tax law which, when signed, will mean the law will be put into practice.
Speaking at the seminar, chief of the Tax Department's Legislative Division, Mr Bounnam Chounlaboudy, said the revised tax law would replace the existing law, which was enacted in 2005. One of the main purposes of the amendment is to bring into effect the new Value Added Tax of 10 percent, as opposed to the previous Business Turnover Tax of 5 percent.
The change is required for Laos to become a member of the WTO early next year. Member countries must charge the same consumption tax on both local and imported goods.
The amendment also sets a single profit tax rate of 24 percent. In the past, foreign companies paid 20 percent in profit tax, while domestic businesses paid 35 percent, making it difficult for Lao firms to compete.
The government charged foreign firms a lower rate because it wanted to attract foreign investment, with a view to creating job opportunities. But this put local companies at a disadvantage so the government decided to change the law.
Another significant change to the law is the rate of income tax. The new law states that both Lao and foreigners are subject to income tax rates ranging from 0 to 24 percent. Those whose income is less than one million kip a month are exempt from tax.
The new law also taxes the income earned from the transfer of land use rights and buildings. This tax has been added in view of the growing number of transactions involving the sale of land. The government considers that a tax of 5 percent on the transfer of land use rights is necessary because many other countries also tax the sale of property.
Under the revised tax law, the government will strengthen its power to adjust the excise tax on vehicles. Up until now, the excise tax was set by the tax law, but the government will now impose differing rates of excise tax on vehicles.
vientiane times
