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Lao PDR Corporate - Withholding taxes

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WHT is applied to various types of payments made to domestic and foreign recipients.

Payment WHT rate (%)
Dividend (including distribution of partnership income) 10
Interest from lending activities (non-bank), commission, and guarantee fees 10
Profit from sale of shares 2 or 10
Income from business activities of the State Organizations, Lao Front for National Construction, Mass Organization, and Civil Society 10
Prizes and lottery prizes with the value of LAK 5 million and above  5
Royalty 5
Sale or transfer of real property 2 or 5

Lao PDR has DTTs with the following countries and WHT rates under the treaties are as follows:

Recipient WHT (%)
Dividends Interest Royalties
Brunei 5/10 (1) 10 10
China 5 5 5
Indonesia 10 10 10
Luxembourg 5/15 (2) 10 5
Malaysia 5/10 (1) 10 10
Myanmar 5 10 10
North Korea 10 10 5
Russia 10 10 0
Singapore 5/8 (3) 5 5
Thailand 15 10/15 (4) 15
Vietnam 10 10 10

Notes

  1. 5% if the company directly holds at least 10% of the capital of the company paying the dividend; 10% in all other cases.
  2. 5% if the company directly holds at least 10% of the capital of the company paying the dividend; 15% in all other cases.
  3. 5% if the company directly holds at least 10% of the capital of the company paying the dividend; 8% in all other cases.
  4. 10% if received by financial institutions (including insurance companies); 15% in all other cases.

Foreign withholding tax (FWHT)

A FWHT applies where a registered entity in Lao PDR contracts with a foreign supplier of goods and services not registered in Lao PDR regardless of whether the services are provided in Lao PDR or outside Lao PDR. The FWHT comprises both a PT and VAT (on services only) element and is the final tax on the foreign supplier. The FWHT withholding and filing obligation rests with the Lao PDR customer, and it is applied before payment to the foreign supplier.

For foreign suppliers, PT must be withheld at a deemed percentage of taxable turnover. The deemed rates are determined according to the nature of the contract or activity.

Activity Deemed profit margin (% of business revenue) Deemed PT rate (%)
Trading 5 1.2
Manufacturing/production 3 0.72
Services:
Transportation 5 1.2
Construction and repair 10 2.4
Extracting, buying and selling of wood, forest products and mineral 20 4.8
Extracting, buying and selling of trees 5 1.2
Extracting, buying and selling of soil, gravel and sand; land filling 15 3.6
Entertainment 25 6.0
Consultancy 10 2.4
Broker or agent 20 4.8
Land development 20 4.8
Other services 10 2.4

These PT rates are then added to the VAT at 10% (if applicable) to determine the total FWHT. For example, a professional fee of LAK 100,000 would result in a total FWHT of LAK 12,400 (i.e. withholding PT of LAK 2,400 and withholding VAT of LAK 10,000).


Last Reviewed - 06 February 2020

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