The Amended Law on VAT Comes into Operation

The Amended Law on Value Added Tax (No. 48/NA, 20 June 2018) ("Amended Law on VAT"), which was published on the Lao Official Gazette on 4 December 2018, came into operation on 18 December 2018.

The Amended Law on VAT applies to individuals, legal entities or organizations who operate business activities under the Value Added Tax ("VAT") system, customs authorities and purchases of goods and services from non-residents or residents that are not registered in according to the laws of the Lao PDR.

Taxable supplies for VAT purposes

The following are deemed taxable supplies for VAT purposes:

1. Importation of goods;
2. Supplies of goods and services in the Lao PDR by individuals, legal entities or organizations who are registered under the VAT system in the Lao PDR;
3. Supplies of service by non-residents who are not registered in the Lao PDR;
4. Supplies of services outside of special economic zones;
5. Supplies of goods and services by electronic means.

Supplies exempt from VAT

The Amended Law on VAT provides a list of items that are deemed exempt from VAT. This includes health and life insurance, equipment and machinery used in agriculture, materials and equipment that could not be produced in the Lao PDR, and machinery that is to be used as fixed assets in production.

Rates of VAT

The VAT rates are as follows:

1. 10% for imports and the supply of goods and services within Lao PDR; and
2. 0% for the exporting of goods to other countries

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New Economic Dispute Resolution Law Takes Effect

The Amended Law on the Resolution of Economic Disputes (Nº 51/NA, 22 June 2018) ("Amended Law") came into effect on 6 December 2018. It repealed the Law on Economic Dispute Resolution (Nº 06/NA, 17 December 2010) ("2010 Law").  The Amended Law provides more detailed procedures relating to arbitration and mediation, and the commencement, suspension, postponement and withdrawal of dispute resolution proceedings.

Scope of non-arbitrable matters

The Amended Law has now broadened the scope of matters that are not capable of arbitration. Under the 2010 Law, non-arbitrable matters were limited to those in violation of laws on national security, social stability, or environmental protection. This has been amended under the Amended Law in that any matter that relates to national security, social stability, or environmental protection may not be arbitrable, regardless of whether a law is contravened or not.

Enforcement of foreign arbitral awards

The 2010 Law set out the conditions for recognizing and enforcing a foreign or international arbitral award in the Lao PDR. Under the Amended Law, it is now stipulated that such recognition and enforcement of foreign arbitral awards must be in accordance with the Law on Civil Procedure.

Appointment of mediators

The Amended Law has shortened the time lines within which the Center or Office for the Resolution of Economic Disputes ("CRED" and "ORED", respectively) may appoint mediators. For example, if the parties to a mediation fail to appoint a mediator or a mediation panel, the CRED or ORED will have 5 business days, instead of 10 days, to select one or more mediators.

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MOF Issues Notification on the Issuance of Tax Identification Number for Enterprise Registration Certificate

On 5 March 2019, the Ministry of Finance ("MOF") issued Notification No. 0489/PSO.MOF ("Notification") on the Issuance of the Taxpayer Identification Number ("TIN"). This is aimed at improving the procedure for the issuance of TIN.

Pursuant to the Notification, the registrar will insert the taxpayer’s data into the issuance of enterprise registration certificate system. The taxpayer data will then be submitted to the Tax Revenue Information System ("TaxRIS"). The TaxRIS will automatically generate the TIN, which will be channeled back to the enterprise registration certificate system. The enterprise registration certificate with TIN (i.e. new version of the enterprise registration certificate) will then be issued to the taxpayer-enterprise. This enterprise registration certificate with TIN can be used in official documents. It replaces the TIN certificate and tax registration certificate previously used by the enterprises.

An enterprise that has been issued with the new version of the enterprise registration certificate is required to participate in a seminar on tax obligations at the relevant Tax Administration Office within 30 working days from the date its issuance.

An enterprise holding on to the old version of enterprise registration certificate with no TIN (i.e. with 12 digits) shall submit an application for TIN to the relevant Tax Office. If the Tax Unit has no TaxRIS, the application must be submitted to the relevant Tax Office at the Capital or Provinces for issuing TIN.

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