Lao PDR

Corporate - Withholding taxes

Last reviewed - 06 February 2020

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), and guarantee fees

10

Profit from sale of shares

2

Prizes and lottery prizes in cash and kind

5

Royalty

5

Sale or transfer of real property

2

Commission and consultancy fees

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 (%)

Agricultural manufacturing and handicraft production

7

1.4

Industrial production and other processing industries

10

2

Commerce and services

15

3

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 13,000 (i.e. withholding PT of LAK 3,000 and withholding VAT of LAK 10,000).