Taxes in Laos may be amongst the lowest in the territory: a low corporate income tax rate, a small increasing income tax, and VAT make the nation appealing for trade. The taxation system was made easy and basic to incite investors looking to invest in the country, thus developing its promising economy. According to the tax law, all income made in Lao will be levied for taxes, regardless of where an individual or entity resides. Note that all foreign establishments with registered offices in the country are regarded as residents, thus, they have to pay tax on all revenue made within the state. This is a comprehensive guide proving you with detailed information on the taxation system in Laos and special taxes to note.
Types of Taxes
The main taxes charged by the Lao government are the Corporate Income Tax, the Personal Income Tax, and the Value Added Tax. There are other types of taxes that apply to certain goods and services such as excise tax, import duties, et cetera.
Corporate Income Tax
All businesses legally registered within the territory including foreign establishments pay a fixed corporate tax rate of 24 percent, provided they are listed under the VAT system and irrespective of any residency status that is not in use for tax reasons. Small and medium enterprises (SMEs) with a yearly return lesser than LAK 12 million are not listed in the VAT system, thus they pay an increasing surcharge, between 3 percent and 7 percent, which depends on the form of business and sum of revenues.
Specific corporate tax
Establishments in the Lao Stock Exchange receive a 5 percent decrease in the income tax rate for four years beginning from the day of registration in the Stock Exchange. Companies in the tobacco industry; manufacturers, importers, or sellers of tobacco products pay taxes at a 26 percent rate, with 2 percent of their surcharges going to the Cigarette Control Fund.
Personal Income Tax
Personal income is charged at a rate from 0 percent to 24 percent. It applies to all income gotten in the state, from salary, wages, and rewards in kind and other recompenses, belonging to native citizens and ex-pats being paid incomes locally or abroad, despite the length of their employment and duration of stay. Employed ex-pats with a legal work contract beginning before 1st March 2011 may enjoy a flat personal income tax rate of 10 percent except if they are working in general investment activities.
The yearly income in LAK and their respective personal income tax rates are as follows:
| Yearly income | Tax rates |
| LAK 0 to 100,000 | 0% |
| LAK 1,000,001 to 3,000,000 | 5% |
| LAK 3,000,001 to 6,000,000 | 10% |
| LAK 6,000,001 to 12,000,000 | 12% |
| LAK 12,000,001 to 24,000,000 | 15% |
| LAK 24,000,001 to 40,000,000 | 20% |
| Above LAK 40,000,001 | 24% |
Value Added Tax (VAT)
The VAT is an indirect tax, which applies to products sold within the country at a rate of 10 percent, except they are tax-exempted goods as stated by the Lao government.
Excise Tax
This type of tax is charged on certain kinds of goods, such as fuel, alcohol, carbonated and refreshing drinks, tobacco products, and cosmetics.
Import Duties
The imports of means of production such as equipment, spare parts, etc. for projects carried out by foreign investors are levied at a flat rate of 1 percent of the imported value. However, companies who buy materials and intermediate constituents imported to be processed here and later exported are exempted from paying import duties, as long as they obtain authorization from the appropriate ministries.
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