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Tax Guide Laos

Tax Guide Laos

Personal Income Taxation in Laos

In terms of Personal Income Tax, all sole traders, as well as independent contractors are subject to Personal Income Tax on the business income that has been earned within Laos. For both, residents, as well as foreigners, income earned in Laos in the form of salaries, as well as any other kind of remuneration is subject to Personal Income Tax.

For expatriates that work in Laos and obtain remuneration from within Lao are also subject to Personal Income Tax. This is regardless of their employment, as well as their stay in Laos. This also holds for foreigners who stay in Laos for a period of more than 183 days.

Personal Income Tax Rates

Personal Income Tax in Laos is calculated at the following rates:
• A rate of 1% Personal Income Tax is levied for manufacturing towards agriculture, industry as well as other production industries.
• A rate of 2% on the gross income is levied on commerce.
• A rate of 3% is levied on the gross revenue of services.
Additionally, the following monthly Personal Income Tax rates also hold in Laos:
• For a monthly income threshold equivalent to 0 LAK (Lao Kip) to 1,300,000 LAK (Lao Kip): The basis of computation for PIT is 1,300,000 LAK. Personal Income tax is levied at a rate of 0%, and therefore, the total tax liability also stands at 0 LAK.
• For a monthly income threshold equivalent to 1,300,000 LAK (Lao Kip) to 5,000,000 LAK (Lao Kip): The basis of computation for PIT is 3,700,000 LAK. Personal Income tax is levied at a rate of 5%, and therefore, the total tax liability also stands at 185,000 LAK.
• For a monthly income threshold equivalent to 5,000,001 LAK (Lao Kip) to 15,000,000 LAK (Lao Kip): The basis of computation for PIT is 10,000,000 LAK. Personal Income tax is levied at a rate of 10%, and therefore, the total tax liability also stands at 1,185,000 LAK. The tax for this respective threshold is 1,000,000 LAK.
• For a monthly income threshold equivalent to 15,000,001 LAK (Lao Kip) to 25,000,000 LAK (Lao Kip): The basis of computation for PIT is 10,000,000 LAK. Personal Income tax is levied at a rate of 15%, and therefore, the total tax liability also stands at 1,500,000 LAK. The tax for this respective threshold is 2,685,000 LAK.
• For a monthly income threshold equivalent to 25,000,001 LAK (Lao Kip) to 65,000,000 LAK (Lao Kip): The basis of computation for PIT is 40,000,000 LAK. Personal Income tax is levied at a rate of 20%, and therefore, the total tax liability also stands at 8,000,000 LAK. The tax for this respective threshold is 10,685,000 LAK.
• For a monthly income threshold equivalent to 65,000,001 LAK (Lao Kip) and higher: The applicable tax rate is 25%.
Similarly, given below are annual Personal Income Tax Rates in Laos:
• For an annual income threshold equivalent to 0 LAK (Lao Kip) to 15,600,000 LAK (Lao Kip): The basis of computation for PIT is 15,600,000 LAK. Personal Income tax is levied at a rate of 0%, and therefore, the total tax liability also stands at 0 LAK.
• For an annual income threshold equivalent to 15,600,001 LAK (Lao Kip) to 60,000,000 LAK (Lao Kip): The basis of computation for PIT is 44,400,000 LAK. Personal Income tax is levied at a rate of 5%, and therefore, the total tax liability also stands at 2,220,000 LAK.
• For an annual income threshold equivalent to 60,000,001 LAK (Lao Kip) to 180,000,000 LAK (Lao Kip): The basis of computation for PIT is 120,000,000 LAK. Personal Income tax is levied at a rate of 10%, and therefore, the total tax liability also stands at 14,220,000 LAK. The tax for this respective threshold is 12,000,000 LAK.
• For an annual income threshold equivalent to 180,000,001 LAK (Lao Kip) to 300,000,000 LAK (Lao Kip): The basis of computation for PIT is 120,000,000 LAK. Personal Income tax is levied at a rate of 15%, and therefore, the total tax liability also stands at 32,220,000 LAK. The tax for this respective threshold is 18,000,000 LAK.
• For an annual income threshold equivalent to 300,000,001 LAK (Lao Kip) to 780,000,000 LAK (Lao Kip): The basis of computation for PIT is 480,000,000 LAK. Personal Income tax is levied at a rate of 20%, and therefore, the total tax liability also stands at 128,220,000 LAK. The tax for this respective threshold is 96,000,000 LAK.
• For an annual income threshold equivalent to 780,000,001 LAK (Lao Kip) and higher: The applicable tax rate is 25%.
Dividend Withholding Tax: Dividends are also subject to a Withholding Tax at a rate of 10%.

Corporate Income Taxation in Laos

Entities that are registered in Laos are subject to Corporate Income Taxation on their worldwide income. This includes all forms of legal entities that are incorporated within Laos. On the contrary, companies that are formed in Laos under the foreign law are subject to income that has been earned and sourced within Laos only.

The standard rate of Corporate Tax for companies is as follows:
• Companies that are listed in the Laos stock exchange – for the first four years from registration: Taxation is levied at a rate of 13% – previously that rate was set at 19%.
• Companies that produce, import as well as distribute tobacco products: Profits for companies in this category are taxed at a rate of 22%.
• Companies in the mineral industry with concession agreement: Profits for entities in this category are taxed at a rate of 35%.
• Trading and Research Centers: The applicable profit tax for these companies is 5%.
• Companies using green technology: Applicable profit tax for these companies is 7%.
• All other companies not falling in the aforementioned categories: The applicable tax rate for these companies is 20%.
Lump Sum Tax
This tax regime is applicable for companies classified as small and medium enterprises. This tax is paid as a compensation of the Profit Tax. The lump sum tax rates are levied as follows:
• For an annual turnover equivalent to 50 Million LAK or less: There is no lump sum tax levied.
• For an annual turnover more than 50 Million and up to 400 Million:
o For manufacturing and agricultural concerns: Lump Sum Tax is levied at a rate of 1%.
o For commerce related companies: Lump Sum Tax is levied at a rate of 2%.
o For service bearing companies: Lump Sum Tax is levied at a rate of 3%.

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