There is no definition of residence or permanent establishment (PE) provided in the amended Lao Tax Law No. 70/NA, dated 15 December 2015 (effective 24 May 2016), as well as the latest VAT Law, dated 23 July 2014 (effective 3 July 2015).
According to the double tax treaties (DTTs) of Lao PDR, ‘permanent establishment’ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
It is understood that the reason for having no PE definition in the law is because there is foreign withholding tax (FWHT) levied on foreign entities conducting their business activities in Lao PDR. For more information about the FWHT, please see the Withholding taxes section.
Currently, the government is reassessing tax privileges and DTTs that they have offered to some businesses/signed with some countries in the past, and they have planned to cancel some; however, this is not yet final.