Laos should increase its revenues by broadening the tax base, reducing exemptions, and strengthening tax administration, the International Monetary Fund (IMF) said in its Article IV Report for the country.
The IMF said the country’s authorities have taken some important measures recently, including improving the valuation of imported vehicles to calculate import taxes, eliminating exemptions for oil imports in public projects, revising excise taxes, and better administering value-added tax.
Recommending potential reforms, the IMF said “centralizing the administration and issuance of exemptions, and ensuring regular reporting, will lead to a more transparent regime. In addition to the exemption regime, unifying the VAT rate between the Special Economic Zones (SEZs) and the rest of the economy would simplify VAT administration and improve tax efficiency.”
It added that gradually increasing excise rates on automobiles and other luxury goods, and introducing a land tax or property tax on buildings, would support the revenue base.
On administration, the IMF said authorities should focus in the short-term on: improving compliance rates among large and medium taxpayers; restructuring the tax department to better reflect priority functions; establishing a full Large Taxpayer Office; and bringing district tax offices formally under the control of the Director General of the Tax Department.