The Lao Ministry of Finance is considering raising the value-added tax (VAT) rate from 7 to 10 percent in an effort to boost government revenue and support the Lao economy.
According to Laophattana Daily News report on Friday, the ministry has pointed to several factors in favor of raising the VAT rate, including the fact that the current value has not been as effective in stimulating the economy as predicted.
The number of businesses registered under the Value Added Tax Law is currently lower than expected, and the government needs to increase revenue to reduce the budget deficit and stabilize the Lao currency kip, according to the report.
A new draft legislation to increase the VAT rate is expected to be completed this year and be effective in early 2024.
In addition to raising the VAT rate, the Ministry of Finance is also considering other measures to improve the tax system. These measures include speeding up the development of a mechanism to refund businesses the taxes they have paid, in place of tax exemptions. This would help to reduce the amount of government financial loss through tax exemptions while providing support to local businesses.