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Govt looks to lure companies into public ownership
The government has decided to lower the profit tax rate for companies listed on the Lao Securities Exchange (LSX) in a move aimed to encourage more corporations to become publicly listed, according to a policy maker.
LSX Commission Office Head Ms Vatthana Dalaloy spoke about the benefits of companies listing on the market at the opening of the Listing Promotion Seminar held last week in Vientiane.
The seminar was made possible through cooperation between the LSX and the Korean Exchange and aimed to inform major state and private enterprises about the stock market and stir interest in listing on the exchange.
According to Ms Vattana, any company listed on the stock market will receive a 5 percent reduction in corporate profit tax for a period of four years as an incentive to listing on the exchange, which opened for trading earlier this year.
At present, the profit tax rate for domestic firms is 35 percent while international firms are subject to a 20 percent tax rate. The government expects the National Assembly to approve its proposed single profit tax rate of 28 percent this month, creating more favourable conditions for both local and foreign firms to operate in Laos.
Ms Vattana said the government set up the stock market to enable companies in Laos to mobilise investment funding as commercial banks cannot provide long-term capital.
BCEL bank and EDL Generation together raised 1,087 billion kip in their IPOs at the end of 2010, she said.
Tax officials said the government would ultimately benefit from its decision to lower the profit tax rate for publicly listed companies, as listed companies would be required to operate transparently and give the government the full amount of taxes owed.
The lack of transparency in business is a major challenge for the government. Many companies provide inaccurate information on their earnings to avoid paying taxes in full.
Improved transparency would boost corporate growth by increasing the confidence of investors, eventually leading to more employment and income opportunities for Lao people.
According to LSX Chairman and CEO Dethphouvang Mounralat, there are 35 state and private companies with the potential to list on the exchange. ETL and the Indochina Group have expressed interest on listing on the market towards the end of this year.
vientiane times
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