Profit tax (PT)
All companies (including all forms of legal entities, like partnerships) that are registered under Lao PDR law are subject to PT on their worldwide income. Companies formed under foreign law, operating a business in Lao PDR, and conducting business in Lao PDR are subject to tax on their income derived in Lao PDR.
The standard rate of PT for companies in Lao PDR is as follows, calculated on net profit after adjustments for non-taxable income, non-deductible expenses, and others in accordance with the Lao Income Tax Law:
|Types of companies||PT rate (%)|
|Companies listed in the Lao Securities Exchange (LSX): For the first four years from registration||13 (previously 19)|
|Companies that produce, import, and distribute tobacco products (2% to be contributed to the Tobacco Control Fund)||22 (previously 26)|
|Companies in the mineral industry with concession agreement||35|
|Training and research centres||5|
|Companies using green technology||7|
|All other companies, both domestic and foreign||20 (previously 24)|
Tax holidays and reduced PT rates are applicable to companies whose investment activities qualify as promoted investment activities (see the Tax credits and incentives section for more information) or who have large investments in mining and hydro power project (tax incentive is dependent on negotiations).
The lump-sum tax is imposed on companies with small and medium businesses (LAK 400 million or less) that do not maintain Lao accounting books and derive income that is not subject to income tax pursuant to the Lao Tax Law. The lump-sum tax is paid in lieu of the PT, based on an agreement with the tax office; consequently, the lump-sum tax is regarded as a tax within the PT category. The lump-sum tax rates are as follows:
|Annual turnover (LAK)||Lump-sum tax rate (%)|
|Manufacturing, agriculture, and other processing industries||Commerce||Services|
|50 million or less (previously less than 12 million)||0||0||0|
|More than 50 million to 400 million||1 (previously 3 to 5)||2 (previously 4 to 6)||3 (previously 5 to 7)|
Local income taxes
There are no provincial or local income taxes in Lao PDR.