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.
On 26 March 2024, the Instructions on the Implementation of Value Added Tax Obligations for Suppliers of Digital Goods and Digital Platform Services or Electronic Commerce Activities from abroad to users in the Lao PDR No.0558/MOF ("Instruction"), which was issued on 14 February 2024, was published in the Official Gazette of Lao PDR ("e-Gazette"). Under the Instruction, suppliers of digital goods and digital platform services or electronic commerce activities from abroad to users in Lao PDR that derive income from such provision of services and activities must register on the Digital Tax Service System ("DTax System") and notify the relevant agency of the value-added tax ("VAT") collected from the transaction.
VAT Notification Payment
Under the Instruction, the payment of VAT must be made every quarter, which the Instruction states as comprising four months. The notification of payment will be as follows:
- First quarter (period covering January to April): taxpayer to be notified that payment must be made within May;
- Second quarter (period covering May to August): taxpayer to be notified that payment must be made within September; and
- Third quarter (period covering September to December): taxpayer to be notified that payment must be made within January of the following year.
Payment Channels
Payment must be made into the National Treasury account in US Dollars (USD), Euros (EUR), Chinese Yuan (CNY) or other currencies as may be notified by the Department of Taxation from time to time through the following channels:
- Payment gateway that accepts debit cards and credit cards of the Visa network: Mastercard, JCB, Amex and Union Pay; and
- Wire transfer.
Late VAT payment will attract penalties including warnings and payment of fines.
The Instructions will apply to transactions starting from 1 August 2024, while registration on the DTax System has started on 1 March 2024.
On 10 January 2024, the National Internet Centre ("LANIC") of the Ministry of Technology and Communications of Lao PDR and the National Internet Centre ("VNNIC") of the Ministry of Information and Communications of the Republic of Vietnam signed a memorandum of understanding ("MOU") on cooperation in the development of internet resources. The purpose of the MOU is to enhance bilateral cooperation between Lao PDR and Vietnam in the fields of (i) management and development of national internet resources and improvement of the important infrastructure of the internet, and (ii) cooperation, counselling and human resource development to encourage and promote the work of digital transformation in Lao PDR.
At the signing ceremony, LANIC and VNNIC agreed to collaborate whereby VNNIC would share its expertise with LANIC on country code Top-Level Domain (ccTLD), Domain Name System (DNS) and Internet security, Internet Protocol v6 (IPv6) transition activity, statistics collection and monitoring. VNNIC would also conduct training and seminars to encourage LANIC to create a Lao Internet Exchange Network Operation Group (LIXNOG).
LANIC and VNNIC have been collaborating on internet resource development since 2011. In 2012, LANIC sent delegates to VNNIC for six months to learn internet name coding. In 2013, LANIC and VNNIC also signed the Minutes of the Meeting on the direction and cooperation plan for 2013 to 2015 in relation to the drafting of legislation and regulations on internet code in Lao PDR, as well as training and technical support.
In 2016, LANIC and VNNIC continued to cooperate and support each other. VNNIC sent employees and experts to conduct training on internet name code work for LANIC, covering topics such as policy and legislation of internet name code, third level internet name code in Domain Name System Security Extensions (DNSSEC) and local language internet name code.
In addition to internet name code work, VNNIC also provides support to LANIC in the field of resource management and the use of Internet Protocol (IP). It has also sent employees and experts to LANIC to provide training for this purpose.
On 3 January 2024, the Ministry of Industry and Commerce ("MOIC") issued Decision No.0008/MOIC on the Management of International Code Numbers (Barcode) ("Decision"). The Decision defines the principles, regulations and measures regarding the management, monitoring, and inspection of the use of international code numbers (Barcode) ("ICNs") in Lao PDR. This aims to promote the quality of production and services, accurate representations of the actual situation, and contribution to the development of the national economy and society.
According to the Decision, there are seven types of international codes that have been approved by the international code organisation GS1:
- European Article Numbering/Universal Product Code (EAN/UPC) - the international code of the European Union or the international code with 13 digits used for the international code of retail products;
- Interleaved 2 of 5-14 (ITF-14) - an international code with 14 digits used for paper boxes and cargo containers;
- GS1-128 - an international code used for transportation and warehouse systems. It can store product information both in numbers and letters;
- GS1 Data Matrix - a two-dimensional international code used for medical devices or metal containers;
- GS1 Data Bar - an international code used for short-lived, perishable products such as plants, vegetables, fruits, meat, etc.;
- Quick-Response Code (QR Code) - an international two-dimensional code used for public relations, advertising media, entering various websites, etc.; and
- Radio Frequency Identification (RFID) - an electronic panel that contains information that can track the movement of goods with radio frequency waves.
Application for Permission to Use International Code Numbers
An individual, legal entity or organisation that conducts business relating to the production, distribution, circulation and service of products in Lao PDR and intends to use ICNs in the course of its business must apply for permission to use such ICNs by submitting the following documents to the Department of Standards and Measurements ("DSM") or the Department of Industry and Trade of the relevant province or capital:
- An application in a form prescribed by DSM;
- A copy of its enterprise registration certificate;
- A copy of its annual tax payment certificate;
- A copy of its business operating licence issued by the relevant sector;
- A copy of its previous certificate of use of ICNs (in case of modification, change of content, or increase in number of ICNs);
- A copy of its ID card, census or passport; and
- Product images.
Verification of ICNs
An individual, legal entity or organisation that wants to verify the validity of an ICNs should submit an application to DSM in writing and attach the information relating to the ICN and the products that need to be checked.
On 4 January 2024, Bank of Lao PDR ("BOL") issued Notice No.05/BOL titled "Notice on the Use of Unauthorised Foreign Payment Instruments and Payment Channels" ("Notice") informing hotels, guesthouses, restaurants, shops, operators of service facilities, tourists, citizens, traders, employees, soldiers and police throughout the country that there is currently a group of people bringing in foreign payment instruments and channels in Lao PDR via quick response (QR) codes and payment data readers (Point of Sale/ Electronic Data Capture machine) without the permission of relevant authorities. These people provide services to foreigners or tourists in the country and receive payment for such services (e.g. through Alipay and WeChat Pay) without going through the financial system of Lao PDR.
To address this, BOL has given directives as follows:
Service Providers
Service providers who are individuals or legal entities such as hotels, guesthouses, restaurants, shops, service operators and tourists who use unauthorised payment instruments and channels violate the following laws and decision:
- Law on Payment System No. 32/SPC, dated 7 November 2017;
- Law on Foreign Exchange Management (amended) No. 15/NA, dated 7 July 2022; and
- Decision on the Payment Service Provision No. 288/BOL, dated 17 March 2020.
Those who are still receiving payments with tools or payment channels that do not go through banks or legal entities authorised by BOL (especially Alipay and WeChat Pay) should cease utilising such payment tools or channels. They are directed to receive payments through banks or authorised legal entities within three months from the date of issuance of the Notice.
Individual Service Users
Individual service users such as parents, traders, employees, soldiers and police, foreigners or tourists who need to pay for goods and services through electronic tools should use the services of payment service providers authorised by BOL.
