Anthony Ludovic Assassa of VDB Loi in Laos looks at the recently amended tax law

Amended Tax Law No. 70/NA adopted December 15 2015 was published in the Lao Official Gazette of May 9 2016 and will come into force on May 24 2016.

The new law was issued while Laos is facing a looming budgetary crisis. The new Government is trying to find ways to meet its financial priorities by increasing its profit tax, income tax and excise tax revenue.

From our reading of it, the new law will not impact any of the tax and financial incentives previously granted to investors under agreements executed between the government and investors. The main changes under this new law are:

  • Determination of non-taxable revenue
  • Clarification of and additions to list of deductible and non-deductible expenses
  • Additions to capped deductible expenses
  • New filing deadline for the last quarter’s profit tax return
  • New deemed profit rates for entities that do not fully comply with Lao accounting standards
  • Modification and introduction of new income tax rates on sales of shares and transfers of land- and building-use rights
  • New excise tax rates

We provide details of the changes below.

A. Profit tax

One of the most significant changes is in the filing requirement for the last quarter. Whereas previously, the last quarter’s profit tax filing deadline was by 10 March of the following year, the new law moves it two months earlier, to 10 January of the following year.

Other major changes concern the list of tax adjustments, the depreciation tax rates and the deemed profit rate mechanism for withholding or compulsory tax calculation for entities that have not fully complied with the Lao accounting standards.

Under the non-deductible expenses section, the non-taxable revenue list and non-deductible expense list have been clarified and reorganised. Notable changes are that dividend income (from a subsidiary) is no longer subject to profit tax (as it has already been taxed); and a donation made as part of an investment agreement/memorandum of understanding executed with the Government can no longer be taken as a deductible expense.

Under the capped deductible expenses section, advertising costs are now deductible up to 0.5% of total annual business turnover.

Changes in the depreciation tax rates are mostly corrections of mistakes in the 2011 Tax Law:

Changes under the Amended Tax Law Useful life Amortization rate
Intangible assets: software used for business purposes 2 years 0.5
Industrial buildings with useful life greater than 20 years - 0.02
Materials and office supplies 5 years 0.2
Passenger and cargo planes - Flight hour basis

Businesses that have not fully maintained a complete accounting system in accordance with the accounting law, for example, non-resident service providers in Laos, are still subject to 24% profit tax by using the deemed profit rate mechanism for withholding. The new law introduces new deemed profit rates for each activity as follows:

Changes under the Amended Tax Law Gross profit rates Profit tax deemed rates
Production activity (agriculture and industrial products) 3% 0.72%
Commercial activity 5% 1.20%
1.       Goods and passenger transportation 5% 1.20%
2.       Construction and repairs 10% 2.40%
3.       Exploitation and trading of trees, wood, minerals and other forest products 20% 4.80%
4.       Tree plantation and exploitation 5% 1.20%
5.       Black and red soil, sand and rock extraction, land filling activities 15% 3.60%
6.       Entertainment activities 25% 6%
7.       Legal, engineering, architecture and other consultancy activities 10% 2.40%
8.       Brokers and agents 20% 4.80%
9.       Development of land and buildings for sale 20% 4.80%
Other services 10% 2.40%

B. Income tax

Changes have been made to certain taxable transactions as follows:

  • Sales of shares are now taxed at the following specific rates:

- 10% of the difference between the purchase and selling prices if relevant supporting evidence can be provided.
- 2% of the sales value if no relevant supporting evidence can be provided.

  • Prizes and lottery gains are now subject to 5% income tax only if they exceed LAK5 million.
  • Income from transfers of land- and building-use rights are now subject to the following particular rates:

- 5% of the difference between the purchase and selling prices if relevant supporting evidence can be provided.

- 2% of the sales value if no relevant supporting evidence can be provided. 

C. Excise tax

The Amended Tax Law modifies the excise tax regime with a particular emphasis on the importation and domestic production of vehicles and their spare parts.

The new excise tax rate structure is as follows: 

Types of goods Rates for 2016-017 Rates for 2018-2019 Rates for 2020 and after
- Gasoline (super) 35% 39%
- Gasoline (normal) 30% 34%
- Diesel 20% 24%
- Jet fuel 10% 14%
- Lubricants, hydraulic oil, grease and brake oil 5% 9%
Compressed natural gas for vehicles 10% (no change)
Liqueur or alcoholic drinks:
- Liquor or drinks with an alcoholic content of 20 degrees or more 30% 50% 70%
- Liquor, wine and other drinks with an alcoholic content of under 20 degrees 25% 45% 60%
Beer 50% (no change)
Ready-made drinks:
- Soft drinks, sodas, mineral water, fruit juices and other similar drinks 5% (no change)
- Stimulant drinks 10% (no change)
- Cigars 30% 45% 60%
- Cigarettes in packages 30% 45% 60%
- Tobacco 15% 25% 35%
- Others 30% 45% 60%
Crystal items or crystal adornments 20% (no change)
Carpets with a value of LAK1 million or more 15% (no change)
Furniture sets (sofas) with a value of LAK10 million or more 15% (no change)
Perfume and cosmetics 20% (no change)
Playing cards and gambling materials if authorized by relevant sectors 90% (no change)
Traditional rockets, fireworks, firecrackers if authorized by the relevant sectors 80% (no change)
1. Motorcycles:
- With engine volume of 110 cc and lower 20%
- With engine volume of 111-150 cc 30%
- With engine volume of 151-250 cc 40%
- With engine volume of 251-500 cc 60%
- With engine volume of 501 cc or more 80%
- That use clean energy 5%
- Motorbike spare parts 5%
2. Transport vehicles:
2.1. Vehicles using fuel:
- With engine volume of 1,000 cc and lower 25%
- With engine volume of 1,001-1,600 cc 30%
- With engine volume of 1,601-2,000 cc 35%
- With engine volume of 2,001-2,500 cc 40%
- With engine volume of 2,501-3,000 cc 45%
- With engine volume of 3,001-4,000 cc 70%
- With engine volume of 4,001-5,000 cc 80%
- With engine volume of 5,001 cc or more 90%
2.2. Vehicles using clean energy 10%
2.3. Small transport vehicles (2-door pick-ups, trucks):
- using fuel 10%
- using clean energy 5%
2.4. Medium transport vehicles:
- using fuel 8%
- using clean energy 5%
2.5. Large transport vehicles:
- using fuel 5%
- using clean energy 3%
3. Vehicle spare parts 5%
Accessories for vehicles 20%
Speedboats, yachts, motorboats, including their spare parts and accessories 20%
Satellite television signal receivers, audio-video players, cameras, telephones, audio-video recorders, musical instruments, including their components and accessories 20%
Electrical appliances, including air conditioners, washing machines, vacuum cleaners 20%
Billiard tables, snooker tables, bowling equipment, football playing tables 30%
All kinds of game players 35%


Types of services Rates for 2016-2017 Rates for 2018-2019 Rates for 2020 and after
Entertainment: nightclubs, discotheques, karaoke 10% 20% 35%
Bowling services 10% (no change)
Beauty services 10% (no change)
Use of services for mobile phones, digital television, cable television, internet 10% (no change)
Golfing services 10% (no change)
Lottery services 25% (no change)
Casino services, poker machines 35%



Anthony Ludovic Assassa