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Tax Dept begins paying VAT refunds
Businesses in Laos can now obtain Value Added Tax (VAT) refunds after the Ministry of Finance created a budget to make the payments.
The ministry has given the Tax Department a budget of 60 billion kip to pay VAT refunds, so eligible businesses can now submit applications to the tax authorities.
The department has already disbursed about 9 billion kip in VAT refunds to export companies since last April. The department provided the information to Japanese companies attending the 5th meeting of the Lao-Japan Public and Private Sector Joint Dialogue held in Vientiane last month.
VAT has been in effect since January 2010 but the government was unable to pay refunds until last April due to technical problems, meaning companies had to shoulder higher production costs.
Several Japanese companies operating in Laos have been pushing for the government to address the problem over the past year.
The Tax Department says it has set up many service units including VAT auditing units and VAT refund units to help businesses obtain refunds in line with the VAT Law.
Five steps are involved in obtaining VAT refunds. A form must be filled out, the transaction must be audited, a memorandum must be prepared, and letters of approval must be sent to the company and the Treasury Department.
Under the law, VAT shall be refunded no later than three months after completion of auditing.
The government promulgated the VAT Law in 2010 in an attempt to obtain a new source of revenue after substantially cutting import tariffs, which Laos was obliged to do prior to participating in the Asean Free Trade Area (AFTA) in 2015.
The government has to cut import tariffs to zero for other Asean member countries by 2015 or not later than 2018, in accordance with the AFTA agreement, which aims to establish Asean as a single market and production base.
Under the VAT Law, consumers pay a 10 percent VAT when purchasing goods in Laos. Businesses that use goods for production purposes must also pay VAT but they can get a refund so that they avoid a double tax payment.
Companies that have annual revenue of 400 million kip must pay VAT, while SMEs pay a turnover tax. Companies that pay turnover tax cannot apply for VAT refunds.
vientiane times
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