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Banks may be used for payment of vehicle tax
The Ministry of Finance may give banks the task of accepting vehicle tax payments when the government makes the change from the present lump sum payment of vehicle excise tax to annual instalments.
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| A BCEL service in unit in Vientiane. The banking sector expects to get a major boost from the government's plan to modernise vehicle tax collection. |
The National Assembly approved the revised Law on Tax in December, giving the government the go ahead to collect vehicle excise tax on an annual basis instead of as a lump sum. It hopes the new scheme will encourage individuals and enterprises to pay the tax, on the grounds that incremental payments will be more affordable.
The government expects to promulgate the law early this year.
But a number of business operators have expressed concern over whether the government will be successful in persuading people to go along with the scheme, saying that many people don't even pay the annual road tax.
There is little incentive to do so, they point out, as very often the traffic police take no action against those who have neglected to pay the tax.
According to a high profile source from the Ministry of Finance, the ministry may seek cooperation from commercial banks and financial institutions, especially those that issue loans, in collecting the planned annual tax payments.
The source said it was possible for the bank to include the tax in the monthly instalments to be paid by vehicle purchasers in repayment of their loan. The bank would then deposit the tax portion of the monthly payment in the Treasury account.
This system would make it difficult for vehicle owners to avoid paying the tax because the bank would have regular contact with them. Vehicle owners would also not be able to get permanent vehicle registration until they had finalised the payment of the loan, interest and tax.
Many banks and financial institutions provide financing to enable people to buy a vehicle. For example, the Indochina Bank is a major provider of loans for those wishing to purchase a Korean-made vehicle.
The banking sector expects to become involved in more schemes of this kind as the government modernises the tax collection system.
The Ministry of Finance has set up the Finance Information and Technology Centre to develop legislation and IT systems that will help the government to collect taxes from individuals and businesses more efficiently and transparently.
According to a senior official at the ministry, under the modernised tax collection system, individuals and businesses will be required to pay taxes through selected commercial banks instead of to tax officials.
In the future, the tax officials' role will be only to issue tax estimates and invoices, which will then be paid into the Treasury account at a bank. Those who delay paying their taxes will be investigated and possibly warned or fined.
At present, most major businesses in Laos already pay their taxes through banks and the government will next try to encourage SMEs to follow suit. Vendors at the Talat Sao shopping mall in Vientiane recently became the first SME owners to pay their taxes this way.
The government plans to draw on lessons learnt from the Talat Sao pilot project before applying the model to other categories of SME.
vientiane times
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