Lao PDR

Individual - Significant developments

Last reviewed - 06 February 2020

The Tax Law has been repealed and replaced by the following legislation:

  • Law on Tax Management (No. 66/NA, dated 17 June 2019)
  • Law on Income Tax (No. 67/NA, dated 18 June 2019)
  • Law on Excise Tax (No. 68/NA, dated 19 June 2019).

The following measures in the new legislation are effective from 1 January 2020:

  • The Profit Tax (PT) rates have been amended (see the Profit Tax section for more information).
  • The deductibility of business expenses with limits have been repealed, that is, these business expenses can be claimed as tax deductions without any limit.
  • The period for carrying forward losses has been increased from 3 years to 5 years.
  • The monthly tax-free threshold for Personal Income Tax (PIT) has been increased from LAK 1m to 1.3m.
  • The PIT rates have been amended and the maximum PIT rate has increased from 24% to 25% (see the PIT Rate section for more information).
  • All individuals who earn income in Lao PDR (including individuals only earning employment income) should apply for a Tax Identification Number (TIN).
  • PIT is recalculated again on an annual basis and annual PIT returns should be lodged by 31 March of the following year.
  • Annual personal deduction of a maximum of LAK 5m per dependent spouse, parent and/or children (limited to 3 persons or a maximum of LAK 15m per year) may be claimed.
  • Overtime pay of employees who have base salary below LAK 2m per month is exempt from PIT.
  • All foreigners should pay PIT if they stay for a period or periods aggregating more than 183 days within a one-year period in Lao PDR.  
  • Withholding tax returns should be lodged and the taxes paid within 15 working days after payment.

Measures in response to Covid-19

The Prime Minister's Office issued some policies and measures to reduce the adverse effects of the outbreak of Covid-19 to the Laos economy. Some of the policies are as follows:

  • For employees, the monthly tax-free threshold shall be increased to LAK 5m for a period of 3 months (i.e. April to June 2020).  The PIT shall be as follows:

Monthly salary base (LAK)

Tax Rate (%)

PIT of each threshold (LAK)

Total PIT (LAK)

From

To

0

5,000,000

0

0

0

5,000,001

15,000,000

10

1,000,000

1,000,000

15,000,001

25,000,000

15

1,500,000

2,500,000

25,000,001

65,000,000

20

8,000,000

10,500,000

65,000,001

and above

25

-

-

  • The due date for paying the road tax fees has been extended from 31 March 2020 to 30 June 2020.
  • The importation of goods used in the containment and prevention of Covid-19 (e.g. surgical masks, liquid soap, medical equipment, etc) shall be exempt from custom duties, taxes and other charges.
  • Tax payments for tourism business operators shall be deferred for a period of 3 months.
  • Payment of the compulsory social security contributions shall be deferred for a period of 3 months (April to June 2020) for affected businesses.
  • The Bank of Laos (BoL) would cut its base interest rates and reduce commercial banks' deposit reserve requirements as deemed appropriate from time to time.
  • The BOL will also require all commercial banks to provide credit relief to alleviate the effects of the Covid-19 outbreak to businesses.  The relief may come in the form of suspension of loan and interest payments, lower interest rates, providing new loans to businesses, debt restructuring, debt hierarchy management, etc.