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Tax Considerations in Laos

The Tax Department of the Ministry of Finance is the main tax administrator in Laos, while the country is ranked 156th in a ranking of 190 economies in the World Bank’s 2018 Doing Business report on the ease of paying taxes. The principal taxation law of Laos is the Tax Law (2005, amended in 2016).

An overview of the major types of taxes levied in Laos is provided in the table below. Other taxes may also be applicable, such as stamp duty and property tax. Laos and Hong Kong do not have a double tax agreement in place.

Tax

Scope

Rate

Profit Tax

There is no definition of residence for tax purposes in Laos. All companies that are registered under Laotian law or incorporated under foreign law and carrying on business in Laos are subject to profit tax.

24% to 26%

Profit Tax for Small and Medium Enterprises (SMEs)

SMEs not registered under the Value Added Tax (VAT) system are subject to a lower tax rate. This applies to companies with annual revenue of less than LAK12 million (about US$1,500).

3% to 7%

Withholding Tax

This applies to incomes payable to non-residents, such as dividends, interests and royalties. Withholding taxes may be reduced in the event of an applicable tax treaty between Laos and another country.

5% or 10%

Personal Income Tax (PIT)

Lao nationals in any employed capacity are liable to PIT. Foreigners working in Laos and earning salaries locally or abroad shall pay PIT, except where there is a double taxation agreement.

0% to 25%

VAT

Applicable on all goods and services produced and consumed locally or imported into Laos, services provided by overseas or non-resident entities in Laos, and services performed in Laos to overseas entities. Exempt supplies include crop seeds and animals for breeding, certain imports related to air transport and special financial and medical service.

All companies with a minimum annual turnover of LAK 400 million (about US$48,200) must be registered for VAT.

10%

Excise Duty

Excise tax is collected on certain types of goods, which include the following:

– Fuel: 5% to 35%
– Alcohol: 25% to 70%
– Carbonated drinks and invigorating drinks: 5% to 10%
– Tobacco products: currently 15% to 30%, but will be increased to 35% to 60% from 2020
– Cosmetics: 20%

 

A Practical Guide to Doing Business in Laos

  1. Regulatory Environment
  2. Establishing a Presence
  3. Intellectual Property Protection
  4. Staff Recruitment
  5. Tax Considerations
  6. Import/Export Procedures
  7. Further Information


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