Laos Personal Income Tax

Under Tax Law No. 70/NA, dated 15 December 2015, income tax is imposed on the income of individuals and legal entities 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 and are exempted from having to pay income tax abroad
  • Lao employees who work in embassies, consular offices or international organizations in foreign countries and generate income in Laos
  • Foreigners who work in Laos and receive salary in Laos or foreign countries, 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 Tax Law No. 70/NA, dated 15 December 2015, profit tax is a direct tax imposed on the profits of enter­prises, including individuals who engage in business activities. 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 income from guarantee fees received according to contracts or other binding obligations
  • Income from prizes, lotteries in cash or in kind over LAK5 million
  • 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 million
  • Profit from the sale of shares on the Laos Securities Exchange
  • Marital support to the wife or child of up to 18 years old, allow­ance for a woman who gives birth, sickness, accident or labor benefits, one-time allowances, pensions and per diems for stu­dents, as provided under the current regulations
  • Dividends paid to partners or shareholders of the companies listed on the Lao Securities Exchange unless otherwise indi­cated in specific rules
  • Income from the provision of public services, such as artistic activities, sports and other activities approved by relevant agencies
  • Interest on deposits and on government bonds or debentures
  • Individual or corporate life and property insurance payments

Personal deductions and allowances. Amounts withheld for pen­sion 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 1,000,000 0 0 0
Next 2,000,000 5 100,000 100,000
Next 3,000,000 10 300,000 400,000
Next 6,000,000 12 720,000 1,120,000
Next 12,000,000 15 1,800,000 2,920,000
Next 16,000,000 20 3,200,000 6,120,000
Above 40,000,000 24

Business income. The following are the progressive rates of profit tax, is imposed on private enterprises, including freelancers who engage in business activities.

Taxable income Tax rate Tax due Cumulative tax due
LAK % LAK LAK
First 3,600,000 0 0 0
Next 4,400,000 5 220,000 220,000
Next 7,000,000 10 700,000 920,000
Next 10,000,000 15 1,500,000 2,420,000
Next 15,000,000 20 3,000,000 5,420,000
Above 40,000,000 24

 

Other income. The following are the flat tax rates applicable to other types of income:

Type of income                                                              Rate (%)

Dividends or other benefits received

by shareholders or partners                                                         10

.
Profits from the sale of shares:

Sale with supporting documents for cost

(tax rate applied to gain)                                                              10

.
Sale without supporting documents for cost

(tax rate applied to gross sales price)                                          2

.
Interest, commission from brokerage or

agency and income from guarantees

according to contracts or other binding

obligations                                                                                   10

.
Income from prizes and lotteries in

cash or in kind over LAK5 million                                                  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:

 

Sale with supporting documents for cost

(tax rate applied to gain)                                                                5

.
Sale without supporting documents for cost

(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.

Social security

Contributions. Under the Law on Social Security System No. 34/ NA, the rates for social security contributions in Laos are 5.5% for employees and 6% for employers. These rates are applied to salaries up to LAK2 million. Consequently, the maximum monthly contributions are LAK110,000 for employees and LAK120,000 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

Under Instruction No. 2751/MLSW, dated 24 July 2015, foreign employees who work for a labor unit in Laos and have salary or wages are subject to Lao social security contributions.

Tax filing and payment procedures

Payroll taxes are deducted at source and payable by the 15th 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 10 days after receipt of the income. The recipient of the income must file a tax declaration with the authorities.

Entities or individuals who make certain payments must withhold tax and file a declaration within 10 days after making such pay­ments. The following are the payments:

  • Dividends
  • Interest on loans
  • Payments for intellectual property
  • Payments for the purchase of shares
  • Payments for prizes and lottery wins over LAK5 million

Tax treaties

Laos has entered into double tax treaties with several countries, including Brunei Darussalam, China, Indonesia, Korea (North), Korea (South), Luxembourg, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

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 non-governmental 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 govern­ment, 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 journal­ists 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 following:

  • 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 foreign­ers who are authorized to have permanent stay in Laos.

Transit (TR-B3). Transit (TR-B3) visas are issued to foreign visi­tors 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 fol­lowing 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.

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 Ministry of Labor and Social Welfare. 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.

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.