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Low earners to be exempt from income tax
Employees with salaries of 1 million kip or less per m onth will be exempt from income tax, starting from the next fiscal year which begins on October 1.
According to a presidential decree approved by the National Assembly in March, Lao people earning monthly salaries of 1 million kip or less will be exempt from income tax. At present, only those earning 300,000 kip or less per month are exempt.
The decree was to be effected from January this year, but according to the Ministry of Finance, it will come into effect next fiscal year because the decree was only approved in March and not backdated.
According to the ministry, the new exemption ruling will impact the national budget by about 130 billion kip in lost revenue.
However, it will be offset by foreign employees having to pay tax under a multiple rate system from zero to 28 percent. Currently, only Lao employees are subject to the multiple rate system, while foreign employees pay a single rate of 10 percent, based on the investment law.
Under the new multiple rate system, people who earn 1 million kip or less will be exempt from income tax. Those whose salaries are above 1 million kip but less than 3 million kip will pay 5 percent income tax off a 2 million kip base. Those whose salaries are between 3 million kip and 6 million kip will pay 10 percent off a 3 million kip base. Employees who earn between 6 million kip and 12 million kip will pay tax of 15 percent off a 6 million kip base, while those with salaries higher than 12 million kip but less than 24 million kip will pay 20 percent off a 12 million kip base. Those earning between 24 million kip and 40 million kip per month will pay tax of 25 percent off a 16 million kip base, and those who earn upwards of 40 million kip will be required to pay 28 percent off the same base.
vientiane times
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