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Research firms get tax break
Businesses that invest in research will enjoy longer tax breaks as the government enforces the newly amended Law on Investment Promotion.
Under the law, research businesses are given an additional five years in the profit tax exemption period compared to other businesses, which have received a tax break for a period of one to 10 years depending on business type and location.
The law states that the profit tax exemption for research businesses starts from the first profits made in the year, while the exemption for other businesses begins from commercial operation of the investment project.
Research businesses are also entitled to an exemption from land lease taxes, depending on location, for a period of three to 15 years, according to Article 54 of the Investment Promotion Law, which Prime Minister Thongsing Thammavong implemented through a decree earlier this year.
According to the decree, research firms must conduct business and science research, aiming to produce new brands of goods or invest in new products for local and foreign markets.
The Investment Promotion Law also offers the same tax incentives to businesses that invest in kindergartens, schools, vocational schools, colleges, universities and hospitals to promote investment in these sectors amid limited public investment and increasing demand for skilled, healthy workers.
The government has ext ended the tax break period for research firms in order to diversify Laos' economic base, according to policymakers.
Investment policymakers believe an upswing in research and the creation of new products will help Laos to expand its economic base, which still relies heavily on the exploitation of natural resources, such as mining, which will eventually be exhausted.
International development organisations in Laos have been pushing the government to expand the country's economic base from a natural resource based economy to a more diversified economy to ensure development is sustainable.
The government has acknowledged the need to expand economic base and has decided to invest public funds in education to produce enough skilled workers to meet socio-economic development targets.
Industry and investment officials said Laos has plenty of natural resources, which can be used to boost investment in the processing industry, which the government wants to develop to add value to Laos' natural resources before exporting them.
They said that to achieve business development goals, Laos needs business and market research and the invention of special products for local and international markets, so that they face no serious marketing competition.
vientiane times
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