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Govt to retain presumptive tax system for SMEs
The government will continue to use the presumptive tax collection system despite calls from National Assembly members to abolish it.The lawmakers made the calls while debating the amended Law on Tax last week, saying this informal method of tax collection opens up loopholes with officials commonly taking bribes from small businesses to charge less tax.
Assembly members noted that SMEs typically ask tax officials to understate their income, so they pay less tax to the government. Business owners give the officials bribes in return for their cooperation.
This commonplace corruption eats into state revenue and tarnishes the image of the government and Party, so National Assembly members want the government to abolish the system.
Lawmakers urged the government to use an accounting-based system of tax collection, which would prevent tax officials taking bribes and ensure more taxes went into government coffers.
But one member of the committee drafting an amendment to the law, Dr Souvanpheng Bouphanouvong, defended the government's decision to keep the pres umptive tax system. She said it was impossible for the government to abolish the system since SMEs did not have proper accounting systems.
Dr Souvanpheng, who is President of the National Assembly's Economic Commission, cited the example of noodle shops which do not use a formal accounting system, making it impossible for officials to collect tax based on such records.
Under the tax law, a business with income of less than 400 million kip does not need to use standard accounting methods, and is taxed under the presumptive tax collection system.
The amended tax law waives the presumptive tax on businesses that earn less than 12 million kip a year, to help them survive amid growing competition. The government also waives income tax for people who earn less than one million kip a month or 12 million kip a year.
Businesses that earn 12 million to 50 million kip will pay a presumptive tax, which should not amount to more than 600,000 kip a year.
The law also taxes individuals and enterprises earning 50 million to 120 million kip a year at a rate of 3 percent of income for manufacturers, 4 percent for traders, and 5 percent for service providers.
Individuals and businesses that earn 120 million to 240 million kip are taxed at a rate of 4 percent of income for manufacturers, 5 percent for traders, and 6 percent for service providers.
Individuals and businesses with income of 240 million to 400 million kip are taxed at a rate of 5 percent for manufacturers, 6 percent for traders, and 7 percent for service providers.
vientiane times
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