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Laos: New taxes delayed until next year
The government will not impose a single profit tax of 26 percent in October despite the National Assembly having approved the move in June.
Workers at a Japanese garment factory in Vientiane. Foreign companies will continue to enjoy low profit tax of 20 percent as the government is not ready to impose the amended Law on Tax in October.
Tax Department Deputy Director General Mr Khamphay Vongsakhamphui said yesterday that the government will not be able to enforce the new tax rates of the amended Law on Tax as expected at the beginning of the 2011/2012 fiscal year, which takes place in October.
Officials are now correcting the wording of the amended law to ensure effective enforcement of the legal documents before submitting it to the President of Laos to endorse it, he said.
According to Article 60 of the Lao Constitution, any law that the National Assembly has approved must be promulgated by the president within 30 days. However, the president has the right to request the assembly to reconsider the law. If the assembly affirms its previous decision, the president must promulgate the law within 50 days.
Mr Kha mphay said the Ministry of Finance would also have to develop a prime ministerial decree as a guideline for tax officials to impose the law and new tax rates properly, hoping that it will complete the legal documents and be able to enforce the law in early next year.
The National Assembly approved the amended Law on Tax in June, establishing a single profit tax rate of 26 percent to replace the current tax rates, aiming to ensure fair competition for local and foreign investors in the country.
Local companies want the government to enforce the new law at the beginning of 2011/2012 fiscal year as they want to gain the benefits of the lower tax rate. But the government is not ready to enforce the amended law.
The delayed enforcement of the amended Law on Tax has generated mixed feelings as the new tax rate has both positive and negative impacts for tax payers.
According to the amended law, the government will increase excise taxes for cars but lower them for motorbikes. The government made the decision to raise the tax on cars due to the rapid increase in the number of vehicles in the country over the past few years.
The number of vehicles in Laos has reached about 1 million, which equates to about one unit for every seven people.
The government will also waive income tax for people who have a monthly salary of less than 1 million kip, while increasing taxes for higher income earners. People who enjoy lottery winnings of higher than 1 million kip or earn income from the sale of land and real estate will also have to pay tax of about 10 percent.
The beer and non-alcoholic drink industries have benefited from the amended law as the National Assembly decided to keep the excise tax on beer unchanged and lower the excise taxes on soft drinks, mineral water and soda.
vientiane times
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