◆Tax system and main tax rates

Laos currently implements a unified national tax system, and foreign companies and individuals pay taxes on the same basis as Lao companies and individuals. There are 6 types of taxes in Laos, including 2 indirect taxes including business tax and consumption tax, and 4 direct taxes including profit tax, minimum tax, income tax, procedures and service fees. Passed by the Lao Parliament, the value-added tax system reform will be implemented on January 1, 2009.

Main taxes and tax rates:

Business tax refers to the business tax that individuals, legal persons or institutions must pay in proportion when they sell goods and services in Laos (except for some tax-free goods). The payment ratio Generally 5 and 10, but exported goods are exempt from business tax.

Income tax The Lao government stipulates that income tax must be paid on salaries, labor fees, income from movable and real estate, intellectual property, patents, trademark income, etc. The specific tax rate is 300,000 kip as the starting point, ranging from 300,000 to 1.5 million kip. It is 5 kip for 1.5 million to 4 million kip, 10 for 4 million to 8 million kip, 20 for 8 million to 15 million kip, and 25 for 15 million kip and above. Foreigners are taxed at 10% of their total income.

Profit tax is calculated at 35% of taxable profits (above 60 million kip).

Dividend tax: Company shareholders must pay dividend tax at a tax rate of 10 when they distribute dividends at the end of the year.

Minimum tax production units are required to pay a minimum tax every year, which is calculated as 0.25 of the annual income.

VAT Consumers need to pay an additional VAT of 10% on the input price of the product when purchasing the product.

◆Tariff Policy

The Lao government promulgated and implemented the "Unified System and Import Tariff Commodity Catalog Ordinance" in December 1994, promulgated and implemented the "Tariff Law" in May 2005 and the 2001 In October, the "Commodity Import and Export Administration Act" and other laws were promulgated and implemented, and a series of regulations on customs management were made. Among them, the "Tariff Law" makes relevant provisions on import and export commodity restrictions, prohibited categories, customs declaration, tax payment, warehousing, pickup, customs clearance, tariff document management and customs declaration review.

Laos tariffs are divided into five different tax rates: independent tariffs, agreement tariffs, preferential tariffs, concessional tariffs and zero tariffs.

◆Preferential investment tax policies

Laos provides preferential policies for foreign investment in terms of taxation, systems, measures, provision of information services and convenience.

Tax preferential policies:

① Raw materials, semi-finished products and finished products imported for sale in Laos can enjoy reduced or exempted import duties, consumption taxes and business taxes. That is: the import of raw materials certified and approved by relevant departments is exempt from import duties and business taxes; the import of semi-finished products that are available in Laos but in insufficient quantity can be levied with half the highest normal tax rate for five years; the imports are certified and approved by relevant departments. Accessories that are available in Laos but are insufficient in quantity or of substandard quality may be subject to accessory duties and consumption tax according to the rates in the ASEAN Unified Tariff Catalog.

② Imported raw materials, semi-finished products and finished products that are processed and sold abroad can enjoy exemption from import and export duties, consumption tax and business tax.

③ Equipment and machine parts imported with the approval of the Lao Ministry of Planning and Investment are exempt from import duties, consumption tax and business tax.

④ Fixed assets imported into Laos that do not exist or exist but do not meet the standards approved by the Lao Ministry of Planning and Investment or relevant departments are exempt from the first import tariff, consumption tax and business tax.

⑤ Vehicles imported with approval from the Lao Ministry of Planning and Investment or relevant departments (such as trucks, bulldozers, trucks, passenger cars with more than 35 seats and certain professional vehicles, etc.) are exempt from import duties, consumption taxes and Sales tax.

Regional preferential policies: The Lao government provides preferential investment policies based on the actual conditions of different regions: According to the "Lao Investment Law" (Draft), Laos' preferential policies for foreign investment mainly include the following aspects:

Profit tax preferential treatment: Investments in Category I areas (referring to remote areas without auxiliary facilities) can be exempted from profit tax for 4 to 10 years depending on the project type; investments in Category II areas (referring to areas with certain auxiliary facilities) ), investment within the area can be exempted from profit tax for 2 to 8 years depending on the project type; investment within Category III areas (referring to areas with better auxiliary facilities) can be exempted from profit tax for 1 to 6 years depending on the type of project.

Other tax incentives: If profits are used for expansion and reinvestment, the profit tax for the next year can be reduced or exempted; equipment, raw materials and vehicles required for imported projects can be exempted from import tariffs in accordance with relevant regulations; export products processed with supplied materials can be exempted Exemption from export duties, etc.

Investment project preferential policies: The Lao government adopts preferential investment project policies for some priority development industries. For example, investments in hospitals, schools and other projects can enjoy site rental discounts and an additional five-year profit tax exemption policy based on circumstances.

In addition, enterprises can also obtain the following 4 preferential benefits:

(1) During the period of exemption or reduction of profit tax, enterprises can also obtain the preferential exemption of minimum tax;

(2) Those whose profits are used to expand approved businesses will be exempted from annual profit tax;

(3) For those directly used in the production of vehicle parts and equipment, there are no or Imports of insufficient raw materials, semi-finished products for processing and export, etc. are exempt from import duties and taxes;

(4) Export products are exempt from tariffs.

Imported raw materials and semi-finished products used for import substitution processing or assembly can receive preferential tariff and tax reductions; special economic zones, industrial zones, border trade zones and certain special economic zones are subject to the regulations of each zone. Specialized enforcement of laws and regulations.