The Ministry of Finance will introduce Value Added Tax in 2009 but only large companies with a yearly income greater than 400 million kip will pay the tax, according to the Head of the Legal Division of the Taxation Department, Mr Phommy Nammavong.
“To pay this tax, all businesses are required to a hold bank account; at present only the larger companies do this,” he said.
Mr Phommy spoke to Vientiane Times yesterday after taking part in a training course on VAT Enforcement held at the Lao Plaza Hotel in Vientiane , presented by Japanese experts. More than 30 tax officials attended the training.
Deputy Minister of Finance Ms Viengthong Siphandone presided over the opening ceremony.
Mr Phommy said that the department had on record more than 4,000 business units that were of the size required to pay the tax.
There were still many large companies without bank accounts, he added.
He said that the department was investigating these companies, and ordering them to establish bank accounts by the end of the year. “If they do not do so, they will be warned and punished in accordance with the law,” he said.
He explained that many companies did not hold bank accounts simply to avoid paying taxes to the government. Some companies had more than one bank account, enabling them to hide their profits and avoid paying tax.
Mr Phommy confirmed that companies earning an annual income of less than 400 million kip would continue to operate under the old income tax laws. However, any companies volunteering to pay the new tax would be welcomed.
He said that the Ministry of Finance was currently improving its computer system and training officials in enforcing the new tax, in hopes that preparations would be complete on time.
The National Assembly passed the VAT Law in 2006, hoping to replace current income tax laws by 2009. The law is one of the policy improvements of the Lao government, which will enable it to enter the Asean Free Trade Area (AFTA) at the end of 2008.
Once Laos joins the AFTA, it will have to reduce import tariffs for member countries, enabling them to sell their products in the Lao market without tariff restrictions. The Lao government hopes that the VAT will generate more income through taxation to replace the loss of import tariffs.
In the 2005-2006 fiscal year, taxation brought in 1,650 billion kip, and 2033 billion kip in the 2006-2007 fiscal year, according to the Ministry of Finance.
TOPIC: Good idea or not? Laos will start value added tax for big companies !
If they want to tax big companies, the most big companies doesn't want to stay Muang Lao no ? Altough Tax can help people Lao, I think that Lao government loose more if big companies boycot Lao :) I hope I have understand the situation lol
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Khoy tcha pay meuang Lao ! PS : Sorry for my pathetic English :)
Taxing to the taxpayer is never fair. What is happening here is good to see. This is what we should see more of - something that is transprarent. Even if it doesn't work well at least we can see that they have a go.
With this new taxation system, they could also have introduced some incentives to attract more companies to operate in Laos. There are many Lao owned companies already have their warehouses just outside of the country just to avoid exactly that - not to mention bureaucracies.
They should also fixing up the eduction system, too. It's so bad. It's so democratic & corrupt therefore it suites only the rich and the wealthy. The poor bright students have nowhere to study but rice paddy. The selection process is suck. This is no good for the country and we should reward our brightest bcoz they are the future.
Yes, i read that Laos is the second most corrupted country of Asean, it's normal cause it's easy money and poor population. With developping, corruption will be banned.
And i agree with the fact that, if they tax it's the best if we know where are going money (=transparent)
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Khoy tcha pay meuang Lao ! PS : Sorry for my pathetic English :)
No matter how much they tax, the corruption will go on and the tax revenue will go to the Lao officials. The big companies import the luxury merchandises to sell for the rich and corrupted Lao officials and their families. No benefit for poor or rural people.
The money will NOT go to Lao official, why? Businesses have to deposit (tax, vat,..) money in the national treasury by them self. Businesses have to have permit paper on how much they should deposit, depending on their business income. Corruption usually occur when business tried to bribe official. So vat or tax money WILL NOT go to Lao official. Conclusion: Vat is a good idea,why? Lao People will not have any good roads, buildings or good infrastructure. if there's no VAT money to substitute the income when free trade do not exist, Lao development will stop in a sudden cuz no money to invest in building public goods period.!!!
