On 26 March 2024, the Ordinance on the Amendment of the Value Added Tax Rates No.003/PSD ("Ordinance"), which was issued on 19 March 2024, was published in the Official Gazette of Lao PDR ("e-Gazette"). The Ordinance states that it will take effect fifteen days after its publication in the e-Gazette. The Ordinance has restored the value-added tax ("VAT") rate from 7% to 10% to support the country’s budget revenue and contribute to its socio-economic development. With the expected increase in VAT, local residents are currently concerned about the potential rise in the prices of goods and services.
Under the revised plan, the VAT rate of 10% applies to a range of transactions and persons, including those relating to imports, goods, general services, mineral imports and minerals in the country, as well as electricity supply and usage, and electricity producers and providers.
The adjustment would restore the VAT rate to its original rate, which was in place from 2010 to 2021. The reduction in VAT rate, initiated on 1 January 2022, was part of the Lao government’s efforts to stimulate economic recovery following the COVID-19 pandemic.
The Ordinance does not provide specific details regarding the implementation date of the proposed increase, which is pending approval from various sectors of the Lao government.
