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Laos – indirect tax guide

Laos – indirect tax guide

Explore the requirements and rules that apply to indirect taxes in Laos.

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General

Type of indirect tax:

VAT.

Standard rate:

10%.

What supplies are liable to the standard rate?

Goods and services produced and consumed domestically or being imported into Laos; services provided by overseas or non-resident entities in Laos; services performed in Laos to overseas entities, supplies of services outside the special economic zones in Lao People's Democratic Republic (”Lao PDR”) by businesses established in special economic zones, and online sales of goods and services.

Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?

Exports of goods are zero-rated.

As of 1 January 2019, VAT exemption applies to certain imported goods. Exempt imported goods include crop seed, animals, vaccines, organic fertilizers, agricultural equipment, chemical substances, certain medicines and medical equipment, certain imports related to air transport, certain vehicles for specific purposes and government purchases.

Similarly, VAT exemption applies to domestic supplies of goods and services from 1 January 2019. Exempt supplies of domestic goods and services include agricultural products, certain medicines and medical equipment, certain educational operations, specified financial services and specified medical services.

VAT/GST registration

Who is required to register and what is the threshold?

An individual, legal entity or organization, who registered a business in Laos and possesses an investment permit from the relevant sector(s), is required to register under the Value Added Tax system, except for micro-enterprises. A Taxpayer Identification Number (TIN) must be obtained.

Is voluntary registration possible?

Yes.

Is voluntary registration available for an overseas company or a fiscal representative?

Based on the current VAT instruction, No. 077/MoF, dated 11 January 2017, individuals, legal persons and organizations who are non-residents of Lao PDR but provide goods and services in Lao PDR for 90 days or more, either directly or through their main or subsidiary suppliers, are obliged to be registered regardless of their annual turnover.

Under the proposed new rules, businesses with a place of business in Laos would generally be able to register for VAT.

VAT/GST compliance

What is the typical frequency of returns?

VAT returns are submitted monthly and the submission shall not be later than the 15th of the following month.

Importers of goods and services must declare and pay VAT on every importation at the same time as the declaration of customs duties.

VAT/GST recovery

Are there any items that a registered business cannot recover VAT on?

Yes, examples include:

  • VAT paid on matters not related to the main business or incorrect or incomplete receipts of payment
  • VAT input on natural resources, fertilizer and wood that are not finished products for exporting
  • where VAT input has been deducted or refunded. 

Can an overseas company recover VAT if it is not registered?

No.

How long does it typically take to obtain a VAT refund following a return filing?

VAT refunds can typically be expected within 3 months from the date of request.

Furthermore, any excess input VAT amount cannot be carried forward more than 3 months.

Invoices

Are there specific requirements for the content of invoices to be considered valid for VAT purposes?

Yes, invoices should contain the name and business address; bank name and bank account number (if any); telephone number and tax identification number of the supplier and purchaser; the description of services; sale price excluding VAT; the sale price including VAT; any fee received; the VAT amount; and the date of selling the goods or services. The invoice should contain a signature and stamp of the supplier and purchaser.

Special indirect tax rules

Does a reverse charge or indirect tax withholding mechanism apply?

No.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

No, however, Laos’s VAT and other legal enactments are being updated. Therefore, informal or formal rulings may be available in the future.

Practically, some companies can request advance rulings from the tax authority on a case-by-case basis.

Other indirect taxes

Are there any other indirect taxes that apply in the jurisdiction?

Other indirect taxes include the following:

  • excise tax
  • customs duty
  • stamp duty.

Contacts

Ganesan Kolandevelu
KPMG in Laos
T: +856 21 900 344
E: ganesan@kpmg.com

Disclaimer

All information within this guide is provided by KPMG professionals in Laos and based on information available as of September 2019.

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