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Tax officials to target new sources of revenue
The Ministry of Finance will continue to look for new sources of income to boost government revenue, according to a senior official.
The ministry's Office Head, Mr Sila Viengkeo, said on Thursday a joint meeting of finance and planning officials had acknowledged that tax officials were still unable to collect revenue in line with the country's true potential.
The meeting aimed to provide guidance for planning and finance officials in implementing the 2010/11 socio-economic development plan.
Mr Sila said the World Bank has noted that the government is losing out on 40 percent of potential total revenue. Many tax officials have admitted that they are unable to collect the full amount of taxes due to the government.
The ministry will focus on more efficient tax collection, he said. In particular, officials are eyeing local and foreign construction contractors and consultants who work for foreign-aided and government prioritised development projects as a new source of tax.
Tax officials have entered into discussions with foreign aid project managers, notifying them that all entities operating in Laos must pay taxes even though they are providing services to development projects funded by foreign aid.
The government has waived import duty on imported construction materials and vehicles used for foreign aid projects but many officials mistakenly believe that companies and consultants fall into the same category, Mr Sila said.
According to the Taxation Law, local and foreign construction companies and consultants in Laos are obliged to pay taxes even if they work for foreign aid projects because they are profiting from such projects.
In the past, Mr Sila said, the government lost a large amount of income from these sources as those working in this sector expected the government to waive taxes.
A Vientiane tax official said foreign workers, especially construction workers, were obliged to pay income tax but officials found it difficult to enforce this law.
There are many foreign workers in Laos and they make a lot of money from providing construction services for Lao nationals. The bill for building a house is about 100 million kip, he said.
Tax officials should work with the sectors concerned to document foreign workers so they could be identified as ta xpayers. After paying their taxes, workers should be given a card. Any worker found without a card should be fined and banned from working in Laos, he said. If the government was able to collect taxes from this group, state revenue would continue to increase and enable the government to finance its growing expenditure.
The government plans to collect 13,021 billion kip (about US$1.6 billion) next fiscal year, an increase of about 15 percent over this fiscal year. Expenditure is estimated at 15,160 billion kip (US$1.8 billion).
Next fiscal year the budget deficit is expected to reach 3.49 percent of GDP.
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