LaosTax Obligations Detailed

In Laos, employers face several tax obligations related to employment income, social security contributions, and corporate income tax.

Employer Obligations

• Payroll Tax (Withholding): Employers withhold income tax from employee salaries and remit it to the tax authorities by the 20th of the following month. The tax rates are progressive, ranging from 0% to 25%. Income tax is calculated monthly based on gross revenue and recalculated annually.
• Social Security Contributions: Employers contribute 6% of each employee's monthly salary, capped at LAK 4.5 million. The maximum employer contribution is LAK 270,000 per employee per month.
• Skills Development Fund (SDF): Employers contribute 1% of the employee's monthly salary to the SDF.
• Annual Tax Return: Employers are required to file an annual tax return by January 20th of the following year. Financial statements are due by March 31st.
• Tax Registration Certificate Renewal: The Tax Registration Certificate must be renewed annually by March 31st.

Employee Obligations

• Social Security Contributions: Employees contribute 5.5% of their monthly salary to social security. The salary considered for contributions is capped at LAK 4.5 million.
• Annual Income Tax Filing: Employees must file their individual income tax returns by March 31st of the following year.

Corporate Income Tax

Companies operating in Laos are subject to corporate income tax on income derived in Laos. Tax rates, filing requirements, and deadlines may vary, so consulting updated resources or a tax professional is essential for compliance.

Other Taxes

• Real Property Tax: A tax on land is levied at rates that depend on location and size. It applies to both individuals and corporations.
• Stamp Duty: Stamp duty applies to various documents, with rates ranging from LAK 2,000 to LAK 20,000.

Information is current as of February 4, 2025, and may be subject to change.

In Laos, employee tax deductions encompass income tax, social security contributions, and allowable deductions for dependents.

Income Tax

• Taxable Income: Employment income, including salaries, benefits, and other remuneration, is subject to income tax. Foreigners are taxed only on income earned in Laos.

• Tax Rates: A progressive tax system applies, ranging from 0% to 25%. Monthly income below LAK 1.3 million is exempt. The specific rates are as follows:

  • LAK 1,300,001 to LAK 5,000,000: 5%
  • LAK 5,000,001 to LAK 15,000,000: 10%
  • LAK 15,000,001 to LAK 25,000,000: 15%
  • Over LAK 25,000,000: Rates continue to progress up to a maximum of 25%

• Deductions for Dependents: Employees can deduct up to LAK 5 million per dependent annually for a maximum of three dependents (spouse, parents, or children under 18 who are unable to work and have no income).

Social Security Contributions

• Employee Contribution: Employees contribute 5.5% of their gross salary up to a maximum monthly salary of LAK 4,500,000.
• Employer Contribution: Employers contribute 6% of the employee's gross salary up to the same monthly salary cap of LAK 4,500,000.
• Payment: Contributions are typically deducted directly from the employee's salary and paid by the employer to the National Social Security Fund (NSSF).

General Tax Information

• Tax Year: The fiscal year in Laos runs from October 1st to September 30th.
• Filing and Payment: Income tax is typically filed and paid monthly by the 20th of the following month.

Note: This information is based on publicly available sources and is believed to be current as of February 4, 2025. However, tax laws and regulations can change. It is always recommended to consult with a tax advisor for the most up-to-date information and personalized guidance.

Further information on other taxes:

• Capital gains tax: levied on gains from selling shares (2% of the selling price) or real estate (2% of the selling price); shares listed on the Lao Securities Exchange are tax-exempt.
• Gift tax: gifts above LAK 1.3 million are taxed at 5%.
• Land tax: based on location and size, levied annually.
• Stamp duty: varies depending on the instrument type.
• Excise tax: consumer tax on imported, domestic goods, and services; rates range from 3% to 100%.
• Environmental tax: applies to certain companies, including those involved in petroleum product importation or manufacturing.

In Laos, a 10% Value Added Tax (VAT) applies to most goods and services. Businesses with annual revenue exceeding LAK 400 million must register for VAT.

VAT Registration

• Threshold: Businesses exceeding LAK 400 million (approximately USD 24,000 as of 04 February 2025) in annual revenue must register for VAT.
• Process: Registration is done via the DTax system. Non-resident businesses are required to appoint a local fiscal representative.

VAT Filing and Payment

• Rate: The standard VAT rate is 10% (as of 04 February 2025).
• Frequency: VAT returns are filed quarterly.
• Deadlines: Returns are due by the end of the second month following the reporting quarter (e.g. Q1 return is due by 31 May).
• Method: VAT is calculated using the credit method (output VAT less input VAT). Input VAT can be claimed within three months of the incurred date. Input VAT on goods for export may be refundable. However, no similar refund mechanism exists for exported services. Non-resident service providers' VAT is withheld by Lao domestic service users and remitted to the tax authority.

VAT Invoices

B2C invoices are not mandated. B2B invoices should include:

• Supplier's name, address, and VAT registration number
• Invoice date and number
• Customer's name, address, and VAT registration number (if applicable)
• VAT amount and rate per item
• Total amount including VAT
• Currency used

Exempt Goods and Services

Certain goods and services are VAT-exempt:

• Unprocessed agricultural products
• Seeds and fertilizers
• Agricultural equipment
• International transportation services
• Educational goods and services
• Certain medical goods and services
• Certain banking and financial services
• Electricity imports and exports
• Mineral exports

VAT on Digital Services

Digital services provided by non-residents are subject to VAT. The same registration threshold and quarterly filing requirements apply.

Additional Information

It's important to stay updated on potential legislative changes to VAT regulations in Laos, as tax laws can be subject to amendments. Consulting a tax advisor with expertise in Laotian tax law is recommended for specific business circumstances. This information is current as of 04 February 2025.

Laos offers various tax incentives to attract investment and stimulate economic growth. These incentives target specific sectors and zones, aiming to promote sustainable development and reduce reliance on imports.

Tax Incentives in Laos for 2025

As of February 4, 2025, the tax incentives available in Laos include the following:

• Profit Tax:

  • Exemptions from profit tax for periods ranging from 6 to 17 years, depending on the sector. A continuous exemption is available for investments in the education sector.
  • A reduced corporate income tax rate of 20% for foreign companies and between 24% and 28% for domestic companies.

• Value Added Tax (VAT):

  • Zero-rated VAT on exports for export-oriented factories.
  • A 50% reduction in VAT for infrastructure construction, electricity, and water supplies.
  • Exemption from VAT and customs duties on imported materials and equipment used for production.
  • Microenterprises registered for VAT are subject to a CIT of 0.1%

• Customs Duties:

  • Exemptions from customs duties on the importation of raw materials, equipment, and components for producing import substitutes.
  • Exemptions from customs duties on the export of local agricultural products, processed industrial goods, and handicrafts (with some exceptions).
  • Duty-free and VAT-free import of materials and equipment that will become part of fixed assets.
  • Duty-free import of machinery and vehicles directly used in production.

• Personal Income Tax:

  • A reduced personal income tax rate of 5% for experts working in promoted sectors.
  • Progressive personal income tax rates from 0% to 25%.

• Other Tax Incentives:

  • Exemption from the 4% stamp duty tax for Borey housing valued at USD 70,000 or less (until the end of 2025).
  • Postponement of the 20% capital gains tax for individuals (until 2025).
  • 0.1% immovable property tax exemptions for agricultural land used for cultivation (penalties waived until 2024, and gaps in declarations forgiven until June 2025).
  • Unused land tax exemptions for land exceeding 5 hectares under certain conditions (active cultivation, registered economic activities, leased land, government ownership, state lease for economic use, land in SEZs, or land registered for education).

• Non-Tax Incentives:

  • Long-term land leases of up to 50 years.
  • Renewable 10-year multiple-entry visas for foreigners (and their families) purchasing real estate worth over USD 100,000 in a Special Economic Zone (SEZ).

Promoted Sectors and Zones

Incentives are often linked to investments in specific sectors and zones designated by the government. Promoted sectors generally include:

• Eco-friendly and sustainable farming
• Eco-friendly agro-processing
• Handicraft industries
• Manufacturing of export products and import substitutes
• Hospitals, pharmaceutical and medical equipment factories, and traditional medicine development
• Education, physical sports, and human resource development

Three investment zones exist to encourage development in less developed areas. Details on these zones and specific eligible activities can be found in the Law on Investment Promotion No. 14/NA (2016) and the updated Investment Promotion Law of 2024. Information regarding the application procedures for these incentives can also be found in these legal documents.

General Tax Information

Standard tax rates and regulations also apply in Laos. Regular import duties range from 3% to 40%. Indirect taxes include a business turnover tax (5%-10%) and excise tax (5%-90%). There is no inheritance tax, transfer tax, or net wealth tax in Laos, however a 2% tax is levied on inherited assets from individuals other than direct family members. Document registration fees also apply at varying rates.

Please be aware that tax laws and regulations are subject to change. Consulting with a tax professional is recommended for the most current information and personalized advice. This information is current as of February 4, 2025.