All sole traders and independent contractors are subject to profit tax on their business income derived in Lao PDR.
Both Lao and foreign individuals earning income in Lao PDR in the form of salaries, benefits in kind, and other remuneration are subject to personal income tax (PIT).
Expatriates who work in Lao PDR and obtain remuneration in Lao PDR or in a foreign country are obligated to pay PIT, regardless of the period of their employment and stay in Lao PDR.
Personal tax rates
Profit tax (PT)
The PT rates are as follows:
|Annual profit base (LAK)||Basis of computation (LAK)||Tax Rate (%)||PT of each threshold (LAK)||Total PT (LAK)|
Sole traders that produce, import and sell tobacco products shall pay an additional PT of 2% to be contributed to the Tobacco Control Fund.
The PIT rates for both Lao and foreign individuals are as follows:
|Monthly income threshold (LAK)||Basis of computation (LAK)||Tax Rate (%)||PIT of each threshold (LAK)||Total PIT (LAK)|
If an expatriate employee signed an employment contract before issuance of the Presidential Ordinance No.001 (1 March 2011) and the employment contract is an indefinite-term employment contract, the expatriate is entitled to enjoy a PIT flat rate of 10% until the concession agreement expires. If the employment contract is a fixed-term employment contract, the expatriate is entitled to enjoy the 10% rate only during the employment term. If the employment contract expires and is renewed on or after 1 March 2011, one shall have to pay PIT at the progressive rate (0% to 24%).
Dividend withholding tax
Dividends (including share in partnership income) received are subject to dividend withholding tax at the rate of 10%.
Interest withholding tax
Interest on bank deposits are exempt from income tax.
Local income taxes
There are no provincial or local income taxes in Lao PDR.