Laos Implements New Income Tax Rates

Source: aseanbriefing

• Laos’ new Income Tax Law will come into effect on February 17, 2020, and sets out the latest tax rates for businesses and employees.
• The new tax rates apply to salary and income earned from 1 January 2020.
• The new law provides better progressive rates for personal income tax and has lowered profit tax rates.
• The law also provides clear penalties for companies that are not compliant.

On February 17, 2020, Laos’ new Income TaxLaw (Tax Law No. 67/NA) will come into effect. The new tax rates apply to salary and income earned from 1 January 2020.

The law replaces Tax Law No. 70/NA, which was issued in 2015 and sets out the latest tax rates for businesses and employees.

The new Income Tax Law has lowered the profit tax (PT) rate for small, medium, and large enterprises for most activities and there will be two annual filing periods compared to four previously. Additionally, the law provides better progressive rates and a larger deduction base for personal income tax (PIT).

The law was approved by the National Assembly (parliament) in June 2019 and was issued simultaneously with the Law on Tax Management, Law on Value-Added Tax, and the Law on Excise Tax.

These laws determine the regulations, measures, management, and inspection of taxation activities in Laos. The government hopes this will improve tax compliance as well as boost productivity.

Investors are advised to use the service of registered tax professionals to better understand these latest tax amendments.

Personal income tax

PIT is collected on a monthly basis with the new progressive rates as:

Profit tax

PT is collected from all domestic and foreign businesses and is imposed on profits. The progressive rates range from 0-20 percent.

Other types of income taxes

These are the new income tax rates for selected business activities.

Penalties for non-compliance

There are now clearer guidelines and penalties for non-compliance.

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