Every business in Laos must deal with its tax system. Below is an overview of three major taxes applicable to business entities in Laos:

• Personal Income Tax;
• Corporate Income Tax; and
• Value-added Tax.

Personal Income Tax

The following table outlines the monthly Personal Income Tax rates for Lao and foreign individuals:

Employers are required to calculate and withhold personal income tax from salary each month before making payment, and then must submit a tax declaration to the tax authority by the 20th day of the following month, in order to pay the tax. Individuals are not required to file an annual tax return in Lao PDR; the calculation, withholding and declaration of income tax by an employer on a monthly basis is considered final.

Corporate Income Tax

The standard rate of corporate income tax for companies in Lao PDR is 20%.

The corporate income tax calculation is based on a company's profit, calculated in accordance with the Lao Accounting Manual. Generally, business expenses are deductible.

Corporate income tax is payable twice a year in advance. The first two payments must be paid by 20 July of the current tax year and 20 January of the subsequent year.

Value-added Tax

Lao PDR Law provides for a flat rate of VAT at 10%, while the export of goods and services is zero-rated. The supplier of goods and services registered under the VAT regime must add VAT to the value of goods and services supplied to customers, and collect VAT for payment to the Tax Department. The amount of VAT payable to the Tax Department is calculated as follows: output VAT minus input VAT equals VAT payable.

How we can help you

Our legal team can assist with:

• Advising on tax laws and regulations, and double taxation agreements;
• Tax and investment structuring;
• Preparation of profit tax, VAT and personal income tax returns;
• Preparation and submission of annual financial report to the tax department;
• Taxation due diligence; and
• Advising on customs duties and import/export procedures.