Information about Asia and the Pacific Asia y el Pacífico

Appendix IV Structure of the Tax System, End-1994

Ichiro Otani, and Chi Pham
Published Date:
May 1996
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Information about Asia and the Pacific Asia y el Pacífico
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TaxExemptions and DeductionsRate Structure
1. Taxes on Income and Profits
Taxes on industrial and commercial profits (profit tax)
Annual levy on industrial and commercial profits derived by enterprises from domestic sales. Collected quarterly on profits forecast in Annual Plan; adjusted quarterly in light of actual outcome.New and rehabilitated domestic firms are exempt from profit taxes for two-four years from the time that profits begin. Foreign and jointly owned firms are eligible for exemption for one-five years, as discussed below. Profit taxes on enterprises with turnover of less than KN 7.2 million per year are established on a case-by-case basis by the provincial authorities (regime forfaitaire).All registered companies, including service, commercial, and industrial enterprises, are taxed at a rate of 45 percent. Commercial banks are taxed at a rate of 60 percent.
Minimum profit tax (impot minimum forfaitaire)
A 1.5 percent tax on turnover is applied in substitution of the profit tax wherever the tax revenue from declared profits is less than 1.5 percent of declared turnover.
Tax on personal incomes of employees
Levied on wages, salaries, bonuses, and other benefits derived from employment. Withheld at source by the employer on a monthly basis.All persons with monthly wages or salaries below KN 15,000 are exempt.Monthly Wage or Salary (In kip)Tax Rate (In percent)
5,000,001 and above45
Tax on personal incomes of persons in self-employment
Levied on self-declared monthly incomes of the self-employed.None.Annual Income of Self-Employed (In kip)Tax Rate (In percent)
5,000,001 and above50
Tax on dividends
Levied on incomes from dividends of shares.None.Taxed at 10 percent rate.
Tax on income from interest
Levied on income from interest other than from bank deposits.None.Taxed at 20 percent rate.
Rental income tax
Assessed on all rental income; paid by the lessor when rent is paid.None.Taxed at 30 percent rate.
Agricultural income and profits taxes
Tax on agricultural income collected in kind for paddy and in cash for all other products. Following Decree No. 50 of March 13, 1993, this tax was replaced by the land tax, which is applied to land extensions (see below).
II. Taxes on Land and Real Estate
Death, gift, and transfer taxes
Applied to the market value of land and real estate property transferred through inheritance, sale, or gift.None.Transfer ParticipantsTax Rate (In percent)
Direct descendants2
Second-degree relatives4
Third-degree relatives7
Nonrelated persons10
Land tax
Yearly tax levied on size of land area. Tax is collected from January to end-April. Land to be taxed is divided in three categories: occupied land (i.e., land occupied by buildings and factories); agricultural land; and other.Land occupied by temples, public welfare buildings, embassies, and housing for disabled persons (for extensions of less than 5,000 square meters) is exempt.For occupied land, rates vary from KN 0.5 to KN 10 per square meter per year in accordance with the use (housing, production factories, business or service, and unused open land) and location.
Agricultural land, not exceeding two hectares per family, occupied by disabled military personnel and civilians is exempt.For agricultural land, rates vary from KN 500 to KN 6,000 per hectare per year in accordance with (i) land use (rice land, garden land, and farm land); (ii) location (level field and mountainous areas); and (iii) type of production (for rice, number of crops per year; for gardens, type of trees).
Agricultural land situated in mountainous areas yielding less than 150 kilograms of rice per person per year is exempt.For other land, rates vary from KN 1,000 to KN 6,000 per hectare per year.
Agricultural land affected by natural disaster or other damages is exempt in accordance with the damage.
Newly cleared rice fields in mountainous (five years) and flat land (three years) are exempt.
Industrial orchards are exempt for two-three years.
III. Taxes on Goods and Services
Turnover taxes
Levied on turnover of registered enterprises. Collected monthly on turnover forecast in the Annual Plan; revised quarterly in light of actual outcome.None.CategoryTax Rate (In percent)
Food, clothes, medicine5
Electricity and fuels5
Consumer durables5
Capital equipment, raw materials and spare parts5
Jeeps and trucks5
Precious metals5
Postal and telecommunication services10
Alcoholic drinks and cigarettes10
Perfumes and cosmetics10
Consumer electronic goods10
Hotels and tourism10
Excise duties
Levied on petroleum products and selected consumer goods.None.CategoryTax Rate (Kip per liter)
Specific excise dutiesSuper gasoline53
Regular gasoline36
Diesel and aviation fuel18
Lubricants, grease, and brake fluids18
Strong alcoholic drinks400
Beer and wine180
Soft drinks50
(In percent)
Ad valorem excise duties
Business and professional licenses (registration tax)
Levied annually on registered enterprises, based on turnover. Payable during the first three months of the year on a current basis.None.Different rates apply to industrial, commercial, and import-export enterprises as follows:
Turnover (In millions of kip)Industrial Rates (In kip)Commercial Rates (In kip)
100 and above15,00020,000
Turnover (In millions of kip)Import-Export (In kip)
200 and above50,000
Land transportation fees
Levied annually on all motor vehicles (motorcycles, cars, trucks, etc.).Government cars and cars of the diplomatic corps, international organizations, and foreign experts are exempt. A 50 percent reduction is given to government staff, soldiers, policemen, students for one vehicle, and a 60 percent reduction is given to pensioners.Fees vary from KN 2,000 to KN 360,000 according to size of engine (for cars and motorcycles), weight (for trucks), and number of seats (for buses).
Air travel fees
Levied annually for (i) civil aviation registration and (ii) examination issuance and renewal of permits.None.Fees vary according to weight. Range is KN 7,000 to KN 70,000 for registration and KN 5,000 to KN 40,000 for examination issuance and permit renewal.
Airspace overflight fees
Levied on all aircraft, without regard to nationality, flying over the territory of the Lao P.D.R.VIP special aircraft and hospital aircraft carrying patients are exempt.Fees range from $ 160 to $250 per overflight.
River transport fees
Levied annually.None.Fees vary from KN 200 to KN 20,000 according to size of boats.
Border entry and exit fees (for persons and vehicles)Diplomatic personnel and relatives as well as foreign experts and relatives, are exempt.For nationals, KN 500; for foreigners, $5; and for land and water vehicles, KN 1,500–KN 11,000.
Fees for extended residence in the Lao P.D.R.Diplomatic corps, foreign experts, and their relatives, are exempt.Fees vary according to length of stay from KN 6,000 to KN 12,000.
Fee for temporary border passesNone.Fees range from KN 200 to KN 3,000.
Fees on delivery of passports, visas, and laissez-passer documentsNone.Fees vary according to nature of document and applicant. For foreigners, range is $ 10-$80; for Lao nationals, range is KN 300-KN 10,000.
Consular fees overseasNone.Fees vary in accordance with the location of the consular office and type of document from $2 to $32.
Fees on possession of personal arms
Levied every five years.None.Fees range fron KN 3,000 to KN 4,000.
Television and audio use fees
Levied annually.None.For television sets, fee is KN 500; for videocassette recorders, fee is KN 1,000.
IV. Taxes on International Trade
Import duties
Imposed on the invoice value of the import following the GATT valuation method (yet to be fully implemented).Goods imported as grants, inputs of foreignfinanced investment projects, sample goods, and several other goods expressly mentioned in the implementation decree of the Customs Law (No. 1/PM of January 2, 1995) are entirely exempted.Fees range from 5 percent to 40 percent in six bands (5,10,15,20,30, and 40). Higher rates are applied to three categories of goods: (i) cigarettes (60 percent); (ii) beer (80 percent); and (iii) vehicles (up to 150 percent).
Goods imported by foreign joint ventures are subject to a duty of 1 percent.
Export duties
Export duties were recently abolished with the exception of exports of electricity and some forestry products.A 20 percent rate is applied to electricity export receipts.
V. Tax on Foreign Investments
Foreign investment tax
Imposed on declared profits of new joint ventures and private enterprises with foreigninvested capital.Provisions are made for tax holidays. Foreign and jointly owned firms are exempt for one-five years.A 20 percent flat rate is applied.
Source: Ministry of Finance.
Source: Ministry of Finance.

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