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National Assembly considers dividend tax break for stock investors
The National Assembly is considering a government proposal to waive a 10 percent dividend tax for investors in Lao stocks, according to a senior Ministry of Finance official.
“The assembly has considered the tax exception proposal and will make an announcement on the issue after all relevant documents have been assessed,” said Taxation Department Deputy Director General Mr Khampai Vongsakhamphoui yesterday.
He spoke to Vientiane Times after meeting with standing members of the National Assembly to defend the government's proposal to exempt dividends from tax.
According to the taxation law, businesses must pay profit tax. However, the government wants to offer dividend tax breaks to people who have invested in Lao stocks to stimulate investment in the Lao equities market.
There are two basic ways of profiting through stock investment; one is by receiving dividends from a listed company when it makes a profit and the other is to sell the shares for a profit at a future date.
If the government decides to offer a dividend tax break, investors will still have to pay income tax of 0.30 percent of the total value of each sale. Traders also have to pay transaction fees to the stock market and brokers, which are about 3 percent, according to a broker.
Lao Securities Exchange (LSX) Commission Secretary General Ms Vatthana Dalaloy said that the government has no reason to apply a dividend tax as there is no tax on interest paid on capital by commercial banks.
She said exempting shareholders from dividend tax will encourage investment and help private and state enterprises raise funds to expand their business - creating jobs and income.
LSX Chairman and CEO Mr Dethphouvang Moularat told international press that Laos expects to mobilise investment funds totalling US$8 billion from the sale of equities and bonds to boost economic growth over the next five years.
At present, businesses can access funds from commercial banks, which provide only short-term investment funding.
The Lao government has stated it requires US$15 billion of investment funds to secure GDP growth of 8 percent over the next five years. About 50-60 percent is expected to come from the private sector, according to a draft of the 7th Five Year Socio-Economic Development Plan.
EDL Generation has raised more than US$100 million from selling 25 percent of its value to both domestic and international investors, while BCEL raised nearly US$20 million through the sale of shares accounting for 20 percent of its total value to domestic investors. The bank also plans to sell a further 10 percent to foreign strategic business development partners.
Shares in EDL Generation and BCEL were oversubscribed in initial public offerings last month, reflecting strong demand and confidence in the companies and the Lao economy.
BCEL shares closed at 8,800 kip on the LSX yesterday, while EDL Generation stocks closed at 4,700 kip.
A number of state and private enterprises including the Agriculture Promotion Bank, Beer Lao, Daoheuang Group, Lao Soft Drink Company and the Anousone Construction Company have the potential to mobilise funds from public share offerings. However, the companies have yet to confirm if or when they will list on the stock market.
vientiane times
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