Please direct all inquiries regarding Laos to Huong Vu of the Hanoi, Vietnam, office of EY.
Vientiane GMT +7
EY
Kolao Tower I, 6th Floor 23 Singha Road
Vientiane Laos
Executive and immigration contact
Huong Vu +84 (24) 3831-5100 (resident in Hanoi, Fax: +84 (24) 3831-5090 Vietnam) Email: huong.vu@vn.ey.com
Quoc Bao Luu +856 21-455-077 Email: quoc.b.luu@la.ey.com
A. Income tax
Who is liable. Under Income Tax Law No. 67/NA, dated 18 June 2019, income tax is imposed on the income of individuals and organizations that generate income in Laos. The following persons, among others, must pay income tax in Laos:
• Persons who generate income in Laos
• Individuals resident in Laos who work and generate income in a foreign country, unless an applicable double tax treaty pro vides otherwise
• Lao employees who work in embassies, consular offices or international organizations in foreign countries and earn income in Laos
• Foreigners who work in Laos and receive salary in Laos
• Foreigners who work in Laos and receive salary in foreign countries, if they live in Laos for 183 consecutive days, or nonconsecutive days but over 183 days within the year, unless an applicable double tax treaty provides otherwise
Income subject to tax
Employment income. Employment income includes salaries, wages, bonuses, overtime payments, salary advances, honoraria, allowances for members of boards of management and other benefits in cash or in kind.
Business income. Under Income Tax Law No. 67/NA, dated 18 June 2019, profit tax is a direct tax imposed on the profits of enterprises, including individuals who engage in business activi ties. For the rates of profit tax, see Rates
Other income. The following types of income are also subject to tax:
• Dividends and profits or other benefits paid to shareholders or partners and profits from the sale of shares
• Interest income from loans, commissions from brokerage or agency, and earnings from secured transactions or other binding obligations
• Income from lotteries in cash or in kind
• Income from prizes (gifts) in cash or in kind over LAK1,300,000
• Income from leases such as leases of land, houses, vehicles, constructions, machines or other property
• Income from intellectual property such as patents, copyrights, trademarks or other rights
• Income from the sale or transfer of land, constructed items or land with construction
Exempt income. The following are significant types of exempt income:
• Salary of up to LAK1,300,000
• Profit from the sale of shares on the Lao Securities Exchange
• Allowance for spouse or child of up to 18 years old, maternity, sickness, occupational accident, one-time allowances, pen sions, per diems for students, and additional work and overtime work of people earning basic income not more than LAK2 mil lion
• Dividends paid to partners or shareholders of companies listed on the Lao Securities Exchange
• Income from the provision of public services, such as artistic activities, sports and other activities approved by relevant agen cies
• Interest on deposits and on government bonds or debentures
• Individual or corporate life and property insurance payments
Personal deductions and allowances. Amounts withheld for pen sion funds and certain other welfare funds are deductible.
Rates
Employment income. The following progressive tax rates are imposed on employment income.
Taxable income Tax rate Tax due Cumulative tax due LAK % LAK LAK
First 1,300,000 0 0 0
Next 3,700,000 5 185,000 185,000
Next 10,000,000 10 1,000,000 1,185,000
Next 10,000,000 15 1,500,000 2,685,000
Next 40,000,000 20 8,000,000 10,685,000
Above 65,000,000 25
Business income. The following are the progressive rates of profit tax, imposed on micro enterprises, including freelancers who engage in business activities.
Annual turnover Tax rate LAK %
Up to 50,000,000 Exemption
Above 50,000,000 to 400,000,000
Agriculture and industries 1 Trade businesses 2 Service businesses 3
Other income. The following are the flat tax rates applicable to other types of income.
Type of income Rate (%)
Income from the purchase or sale of agricultural land and the transfer of a land-use use right for an agricultural purpose 1
Dividends or other benefits received by shareholders or partners 10 Profits from the sale of shares (tax rate applied to gross sales price) 2
Interest and income from guarantees according to contracts or other binding obligations 10 Broker fees, consulting fees and fees for other services 5
Income from winnings from lotteries in cash or in kind 5 Income from prizes or gifts in cash or in kind over LAK1,300,000 5
Income from the leasing of land, houses, vehicles, machines or other properties 10 Income from intellectual property such as patents, copyrights, trademarks and other rights 5
Income from the sale or transfer of land-use rights, constructions or land with construction (tax rate applied to gross sales price) 2
Foreign investment enterprises entitled to a 10% income tax rate for their employed foreigners under the provisions of the Law on Promotion of Foreign Investment in Laos No. 11/NA, dated 22 October 2004, may continue to apply the preferential 10% income tax rate on the income paid under labor contracts and/or agreements signed and/or extended before 1 March 2011 until expiration of such labor contracts/agreements.
B. Social security
Contributions. Under the Law on Social Security System No. 54/ NA, dated 27 June 2018, the rates for social security contribu tions in Laos are 5.5% for employees and 6% for employers. These rates are applied to salaries up to LAK4,500,000, effective from 1 January 2017. Consequently, the maximum monthly con tributions are LAK247,500 for employees and LAK270,000 for employers.
Coverage. Social security applies to the following:
• State organizations
• Public and social organizations
• Enterprises and other business entities that employ labor and pay salary
• Individual freelancers and volunteers
Foreign employees who work for a labor unit in Laos and have salary or wages are subject to Lao social security contributions.
C. Tax filing and payment procedures
Payroll taxes are deducted at source and payable by the 20th day of the following month to the tax authorities. The employer is responsible for the filing of the return and payment of the taxes with the authorities.
Tax on rental income must be declared within 15 working days after receipt of the income. The income payer or recipient of the income can file a tax declaration with the authorities.
Entities or individuals who make certain payments must withhold tax and file a declaration within 15 working days after making such payments. The following are the payments:
Dividends
• Interest on loans
Payments for intellectual property
Payments for the transfer of shares
Payments for the transfer of land and constructions
Payments for lottery wins
D. Tax treaties
Laos has entered into double tax treaties with several jurisdic tions, including Belarus, Brunei Darussalam, China Mainland, Indonesia, Korea (North), Korea (South), Luxembourg, Malaysia, Myanmar, Singapore, Thailand and Vietnam.
E. Entry visas
Types of visas. The various categories of visas for foreign nationals entering Laos are described below.
Diplomatic and Official (D-A1 and S-A2). Diplomatic (D-A1) visas are issued to diplomats from United Nations’ agencies and other international organizations and their dependents (spouse and children) holding diplomatic passports. Official (S-A2) visas are issued to staff members of diplomatic missions, consulates, United Nations’ agencies, and other international agencies and their dependents (spouse and children) holding official passports.
Courtesy (C-B1). Courtesy (C-B1) visas are issued to foreign experts holding diplomatic, official and ordinary passports and performing assignments under bilateral cooperation or grant assistance projects for the government of Laos. They are also issued to the dependents of such persons.
Business (NI-B2 or I-B2). Business (NI-B2 or I-B2) visas are issued to foreign businesspersons and their family members who invest in or collect information about business in Laos.
Expert (E-B2). Expert (E-B2) visas are issued to the following:
• Experts and staffs of nongovernmental organizations (NGOs) who are authorized to operate in Laos
• Experts and scholars, including their family members, who enter into hire contracts or business contracts with the govern ment, private companies or other international organizations
Student (ST-B2). Student (ST-B2) visas are issued to students who come to Laos to study, research, collect information or technically train.
Media (M-B2). Media (M-B2) visas are issued to foreign journal ists and media operators who convey news in Laos.
Labor (LA-B2). Labor (LA-B2) visas are issued to foreigners who become employees in Laos, including their family members.
Spouse (SP-B3). Spouse (SP-B3) visas are issued to foreigners who marry Lao citizens in accordance with the government’s regulations and procedures.
Tourist (T-B3). Tourist (T-B3) visas are issued to foreign visitors for the purpose of holiday and tourism in Laos.
Short-term (NI-B3). Short-term (NI-B3) visas are issued to the following:
• Foreigners who are authorized to join a meeting, training or temporary study tour in Laos
• Foreigners who want to visit parents, cousins and friends or collect information for investment, trading and other purposes that are legal and follow the regulations of Laos
Long-term (I-B3). Long-term (I-B3) visas are issued to the follow ing:
• Foreigners having a mission to protect and build the nation, including people who are beneficial to Laos and intend to have long stay in Laos
• Foreigners who intend to have long stay in Laos and deposit at least USD20,000 in a bank account of a bank in Laos if they intend to stay in Laos for six months or at least USD40,000 if they intend to stay in Laos for a year
Permanent (P-B3). Permanent (P-B3) visas are issued to foreign ers who are authorized to have permanent stay in Laos.
Transit (TR-B3). Transit (TR-B3) visas are issued to foreign visi tors who travel through Laos to a third country.
Visa application procedures. Embassies or general consulates of Laos in foreign countries can approve tourist visas, short-term visas and transit visas for foreigners who want to enter and leave Laos not more than two times. Other types of visas must be first approved by the Ministry of Foreign Affairs.
The immigration authority at the International Checkpoint Unit in the country can approve tourist visas, short-term visas and transit visas for foreigners who want to enter and leave Laos only one time. Other types of visas must be first approved by Ministry of Foreign and Affairs.
Documentary requirements. An applicant must submit the fol lowing documents to obtain a visa:
• An application form completed and signed by the applicant
• Two recent 4 cm x 6 cm photographs
In addition, the individual must have a passport with a remaining validity of at least six months.
F. Work permits
To work in Laos, a foreign national must obtain a labor visa and apply for a work permit and foreign identity card.
Labor units that receive authorization to import foreign labor must register and apply for a work permit within one month from the date of receiving authorization.
A work permit is issued at the same time as a labor visa and expires in accordance with the employment contract.
The duration of temporary work permits may not exceed three months for labor imported for a probationary period, for monitoring and evaluation of projects or for the installation and reparation of machinery in accordance with an equipment sales contract.
Work permits are issued for a period of not more than 12 months and an extension may be requested for a period of not more than 12 months. The total working period may not exceed five years.
The employer must submit an application dossier to the Labor and Social Welfare Department. The application dossier must contain the following items:
• Letter requesting the issuance of a work permit for the employee
• Application form for an identification card
• Invitation letter to the foreign employee
• Copy of passport
• Copy of labor visa
Any document certified in a foreign country must be translated into Lao and legally notarized.
G. Family and personal considerations
Family members. The spouse of a multiple-entry visa and work permit holder does not automatically receive the same type of authorization. A separate application must be filed jointly with the expatriate’s application.
Driver’s permits. A foreign national with a home country driver’s license can apply for an equivalent driver’s license in Laos.