President promulgates revised VAT law
President promulgates revised VAT law
President Choummaly Sayasone has promulgated the revised Law on Value Added Tax, which policy makers believe will give a major boost to the processing industry in the country.
The Presidential Palace announced the presidential decree on the promulgation of the revised law earlier this week after President Choummaly signed the legal document in the middle of last month and the National Assembly approved the revised law in December.
According to policy makers who submitted the proposed revision to the National Assembly in December for consideration and approval, the revised law will provide a major boost to the processing industry in the country, particularly for firms which import raw materials for assembly.
The revised law offers value added tax exceptions for business people who import raw materials and machinery to produce goods for domestic consumption and export.
The Lao government hopes that the move will enable it to turn the landlocked country into one of the production bases in the region after gaining WTO membership recently.
Many foreign businesses, in particular firms from Japan, have expressed interest in moving their production bases from China and Thailand to Laos after noticing the improved business and investment climate in the country.
The government introduced a value added tax law in 2010 as part of efforts to maintain its revenue base after abolishing the turnover tax.
The old value added tax law offered a wide range of value added tax exemptions including waivers for agricultural produce and education services but not imports of raw materials or machinery.
The value added tax rate is 10 percent of the value of the goods. In fact, the old value added tax law allowed businesspeople to receive refunds from the government if they imported raw materials to produce goods for domestic consumption and export.
However, one of the main challenges was that the government faced difficulties enforcing the law due to a lack of capacity building and mechanisms to refund businesspeople.
A number of businesses urged the government to add raw materials and machinery to the list of tax exemptions so as they will not have to seek refunds from the government.
The policy makers said that the legal amendment was designed to ensure that officials can enforce the law effectively while businesspeople will find it easier to run manufacturing businesses.
The law also aims to create a more favourable business climate in the country so as it can welcome the establishment of the Asean Economic Community in 2015.
vientiane times
