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On 29 July 2013, an instructive notice was issued by Bank of Lao PDR ("BOL") to commercial banks nationwide to strictly provide their banking services in line with the Governmental Decree on Anti-Money Laundering and Terrorist Financing.
As part of its effort against money laundering and terrorist financing transactions, BOL issued its Notice, number 498/CBM, to emphasize service restriction towards individuals and organizations whose names are recorded under the Specially Designated Nationals and Blocked Persons List of the US government and the List established and maintained by the 1267 Committee with respect to individuals, groups, undertakings and other entities associated with Al-Qaida.
On 18 September 2013, the Ministry of Finance announced that the Lao government is planning to start using an electronic system for tax collection early next year, with a test of the system on motor vehicle tax to begin next month.
Revenue collection has not reached government-forecasted levels because of various violations of the regulations and loopholes in procedures. These, in turn, have resulted in an increase of the government debt. Despite the large number of motor vehicles imported into the country each year, the government only receives a small amount of tax revenue from the trade. Importers and dealers have either reported lower buying prices than the actual price paid or used various means to avoid the payment of any duty.
Finance Minister, Mr. Phouphet Khamphounvong, said the new method of taxation will calculate tax based on a vehicle's engine capacity (both the size and number of cylinders), its brand and model, but not its sale or purchase price.
The ministry had first announced the plan for electronic tax collection several years ago but had not been able to implement it until now, as a lot of preparation was needed to select the best technology. The organisation and training of operating personnel also took time. The new system will be able to report whether tax has been paid, thereby making the collection of tax more efficient. It is anticipated that the government would be able to collect more revenue through the use of this system. A full trial will begin next year and will gradually be applied to other sectors of business.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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