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Lao PDR: Tax developments in response to COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 17 June 2020

Business Income Tax

  • Business Income Tax for Microenterprises is exempted within a 3 months period, from April to June 2020, as per Decision No.31/PM.

Personal Income Tax

  • Exemption on Personal Income Tax (PIT) for all staffs and government officers (civil servants) which have income below 5,000,000 Kip within a 3 months period (April to June 2020), as per Decision No.31/PM.

Extension Deadline of Filing/Payment Taxes

  • Postpone tax payments of the tourism sector within a 3 months period, from April 2020 onwards, as per Decision No.31/PM.
  • Declare and submit taxes of each month according to the time frame determined by law or shall be accomplished no later than the periods given below, as per Notice No.1061/MoF:
    • PIT of April and May 2020 shall be submitted no later than the end of June 2020;
    • PIT of June 2020 shall be submitted no later than the end of July 2020;
    • PIT of July 2020 shall be submitted on the usual deadline in accordance with the law and regulations.
  • Extend the payment due date of road tax fees from 31 March 2020 to 30 April 2020, as per Decision No.31/PM.

Other Incentives

  • Grant penalty exemptions on late submission (filing) of taxes for business units which have not declared and submitted their tax obligations to Tax authority, from April to June 2020.
  • In case, an individual, legal entity and organization which have not completed tax declaration and submission since January 2020, will be granted penalty exemptions on late submission (filing) of taxes under the condition that such individual, legal entity and organization must carry out tax declaration and submission no later than the end of May 2020.

The Ministry of Finance agreed to further extend/postpone the submission date of financial statements (financial and accounting reports) for the year 2019 to 29 May 2020.

The Prime Minister has issued a new Decision on Policy and Measure Determination to Minimize the Negative Impacts of COVID-19 Pandemic on Lao Economy No. 31, dated 2 April 2020. Some important details of policy-related are extracted as below:

  1. Implement the exemption of Personal Income Tax (PIT) for all staffs and government officers (civil servants) which have income below 5,000,000 Kip within a 3-month period (April to June 2020);
  2. Implement the exemption of Profit Tax (PT) for Micro Enterprises as stipulated in article 29, clause 2 of the Law on Income Tax No. 67/NA, dated 18 June 2019 within a 3-month period (April to June 2020);
  3. Exempt tariffs and relevant fees of the imported goods that will be used in the operations of containment, prevention and full response to the COVID-19 Pandemic;
  4. Postpone tax payments of the tourism sector within a 3-month period, from April 2020 onwards;
  5. Extend the submission date of financial and accounting report for the year 2019 of enterprises from 31 March 2020 to 30 April 2020;
  6. Prolong the payment of road tax fees from 31 March 2020 to 30 April 2020;
  7. Seek to reduce prices and lengthen the due date of payments of electricity bill and water supply for the household and business conduct;
  8. Agree with the Bank of Lao PDR (BOL) to decrease the base interest rate (base rate) of BOL and also reduce the rate of capital requirement/preservation of commercial bank in a proper manner periodically;
  9. Agree with the Bank of Lao PDR (BOL) to encourage commercial bank to implement the credit policy to address the negative effects of COVID-19 pandemic in accordance with the Decision No. 238/BOL, dated 26 March 2020;
  10. Allow to postpone the submission or payments of mandatory contribution of Social Security (SSO) for businesses which are  affected from COVID-19 outbreak within the 3-month period (April, May and June 2020).

Ministry of Finance has issued a new Notice (No. 1027/MoF, dated 10 April 2020) on Tax Implementation in accordance with the Decision on Policy and Measure Determination to Minimize the Negative Impacts of COVID-19 Pandemic.

  • Implement the PIT exemptions for employees both public and private sectors who receive a monthly salary below 5,000,000 LAK within the period of 3 months (April-June 2020). For employees who earn a monthly salary above 5,000,000 LAK are to be calculated by exempting first 5,000,000 LAK of the earned salary and deducting the remaining amounts according to the tax rates determined in article 39 of Law on Income Tax.
  • PIT of April 2020 shall be submitted no later than 20 May 2020;
  • PIT of May 2020 shall be submitted no later than 20 June 2020;
  • PIT of June 2020 shall be submitted no later than 20 July 2020.
  • Implement profit tax exemptions for Micro-Medium Enterprises as stipulated in article 29, clause 2 of Law on Income Tax.

The Ministry of Finance, Tax Department, has published a further notice on the Calculation of Personal Income (Payroll) Tax – PIT No. 1128/TD, dated 24 April 2020.

Implement the exemptions of PIT for employees both public and private sectors who receive a monthly salary below 5,000,000 LAK within a 3-month period (April to June 2020) in accordance with the Decision of the Prime Minister No. 31/NA, dated 2 April 2020, the method of calculation is displayed as follows:

  • In case of employees who receive a monthly salary below 5,000,000 LAK:
  • This refer to who earns income in the first 2 levels of tax deductions shown in the table below, will be computed as the following:
  • Below 1,300,000 LAK is categorized in level 1 of tax deductions, with the rate of 0% (Exempted according to the law);
  • From 1,300,000 LAK to 5,000,000 LAK is categorized in level 2 of tax deductions, with the rate of 5% (Exempted according to the Decision No. 31/NA).
  • For employees who earn a monthly salary above 5,000,000 LAK are to be calculated by exempting the first 5,000,000 LAK of the earned salary and deducting the remaining amounts with the rate of 10% and above, respectively.