Customs-Tax

 

  

Guideline: Tax and Vat Incentive for Import Plan No.01-IPSC Dated 02.01.2019 (Lao Version) Download

 

 

 

Customs Sector has the roles and responsibilities in certifying the customs policy in accordance with Investment Promotion Policy.

Based on the instruction of the Minister of Finance on the implementation of Customs-Tax Policy in accordance with  Investment Promotion Policy No. 3578/MoF, dated 19/12/2012, they are as follows:

1        Purposes

The purposes are to organize and expand the Investment Promotion Law 2009 and the Decree of Investment Promotion Implementation Law 2011in setting principles, customs-tax policies, procedures and operational methods of approving the plan for importing raw materials, construction materials, tools, spare parts, engines, vehicles, machinery and others for the utilization in the investment activities, and to facilitate the investors in Lao PDR.

 2        Principles in certifying the annual plan

The investor is to create an annual import plan. If it is a new investment, the investor shall set the import plan as general, by separating the import list of raw materials, production materials, varieties, spare parts and others to be imported annually and the import list of construction materials for infra-structure construction; vehicles, machinery for business movement utilization and office equipment as the fixed assets whose import is allowed one time only with tax exemption during the enterprise establishment.

The approval for import, in line with the investment promotion policy, must be appropriate with the work volume by basing on the technical-economic analysis and actual requirement of each project, officially certified by concerned sectors and must not exceed the registered fund of the enterprise.

The investor must have submitted the annual import plan and attach complementary documents, i.e. request paper, enterprise registration certificate or tax registration certificate for general activities, and concession certificate for concession activities, certificate of registered fund deposit (as stipulated in Article 4 of Prime Minister’s Decree No. 119/PM, dated 20 April 2011), and the economic analysis submitted to a finance sector or One-Stop Service (OSS) of Planning and Investment (IP) sector.

 

3        Customs-Tax Promotion Policy

Enterprises whose investments were approved prior to Investment Promotion Law No. 02/NA,dated 8/07/2009 and Decree No. 119/PM, dated 20 /04/2011, wanted to receive the tax exemption policy must follow the procedures set in the instruction of this guidebook.  If the investors do not have any purpose to receive the tax exemption policy for the import in accordance with the Investment Promotion Law No. 02/NA,dated 08/07/2009, they can continue to follow the tax policy for the import of raw materials, equipment, spare parts and others, based on the conditions that the Investment Promotion Law has determined in the investment promotion license.

 

4        Plan of annual import

Plan of the enterprise annual import is a document providing information to concerned government parties for facilitation, inspection and evaluation, and needs to be implemented as follows:

1. Import quantity and volume of raw materials, variety, construction materials, equipment, tools, spare parts, engines, office equipment, vehicles, machinery and others for the use of the enterprise must be compatible with the investment scale and must only be used in accordance with the project objectives.

2. Actual plan of annual import is created by the investors and set based on the actual requirement for the use in their business activity development.  The documents comprise of:

- Main code of 4 digits based on commodity list,

- Description of commodity,

- Quantity of commodity,

- Weight of commodity,

- Value of commodity.

3. Commodities, items to be imported must be set in each individual list as follows:

- List of customs and tax exempted import plan,

- List of customs-exempted and tax-paid import plan,

- List of temporary import plan,

- List of customs-tax reduced import plan.

4. The proposal for annual import of the enterprise for the investment at central level shall be submitted to Customs Department, and for the investment at local levels, if OSS of Planning and Investment (PI) Sector has been established at a province, the request shall be submitted to OSS, if OSSof PI Sector has not been established at a province, the request shall be submitted to Finance Section of the province where the enterprise is located.

5. The certified annual import plan is not allowed for a change or amendment solely.

- The annual import plan is valid for 1 year or as per the time frame of the project operations.  After the expiration, commodities, items to be imported, but yet imported, must be cancelled immediately.

6. In case the enterprise has fund increase or decrease, the proposal for the amendment of the certified annual import plan can be done once a year to suit the actual business operations.

7. Vehicles, machinery and engines certified for import with tax-customs exemption or reduction in accordance with Investment Promotion Law must be used within the enterprise for at least 5 years before the import for replacement is approved.  Prior to the import for replacement, tax and customs for old vehicles, machinery and engines must be immediately paid in accordance with Customs Law, and then the import of the replacement will be approved as per the regulations.

 

5        Procedures of approving the annual import plan

Procedures of approving the annual import plan are divided in 2 levels: central and local levels.

  • Investment at central levels: Customs Department is to summarise the annual import plan, study and propose to the Minister of Finance to consider and issue the agreement to certify and annual import plan which is separately listed as follows:

-       List of customs and tax exempted import plan;

-       List of customs-exempted and tax-paid import plan;

-       List of temporary import plan;

-       List of customs and tax reduced import plan;

 

After that, Customs Department must distribute the annual import plans together with the agreement of the Minister of Finance to the concerned enterprises and sectors for information, and also issue a letter to advise the customs borders where the commodities and items will be imported for their implementation and facilitation as regulated.

          In case of some projects that concerned government sectors take the lead in organizing the meeting to study the annual import plan with the participation from concerned parties, including Customs Department in the consideration.  The Customs Department can certify the meeting resolutions to propose to Minster of Finance to consider the issuance of Agreement of Annual Import Plan.

          For the annual unplanned import of mainly the emergency equipment or spare parts to replace the old and broken items and the total value is not more than 30,000 US dollars and the import approval, not more than 2 times per year and certified by the concerned government sectors, shall be considered and approved by Customs Department in accordance with the regulations; In case the total value is more than 30,000 US dollars, the consideration must be carried out with concerned sectors in accordance with the regulations.

 

Remarks: In the study to certify the plan of importing fuel, vehicles, steel and cement for large-scale investment projects, concession projects, the study to certify the import plan at central level will be summarized at Customs Department (Ministry of Finance only),but in the investment in mineral-energy sectors under the Ministry of Energy and Mines, the concerned ministry will organize the meeting to study and certify the plan.

 

  • Investment at local levels: Provincial Finance Section or OSS of PI sectors is to summarize the annual import plan and propose to the president of provincial Committee for Investment Promotion (CIP) to consider and issue the certification of the annual plans, then distribute the annual import plans to concerned sectors and customs checkpoints.

          For the annual unplanned import of mainly the emergency equipment or spare parts to replace the old and broken items and the total value is not more than 30,000 US dollars and the approval of not more than 2 times per year, certified by concerned government sectors, provincial Finance Section or OSS of PI Sector, must be studied and discussed together with concerned sectors and submit the proposal to President of provincial CIP for approval in accordance to the regulations.

 

Remarks: The implementation at local levels that finance section studies and certifies the annual import plan to propose to the President of CIP at provincial levels exists only in 2 following provinces: Xiengkhouang Province and Champasack Province.  For other provinces, it is the provincial PI Section who proposes to the President of provincial CIP to certify the annual import plan.

 

6        Creating of import plan of projects out of investment promotion policy.

  1. Creating the import plan for grant and loan projects for developments will be proposed to the Ministry of PI to study and consider in accordance with the Decree on the Management and Utilization of Grant for Development No. 75/PM, dated 20/03/2009.
  2. Creating import plan for state-invested projects shall follow State Investment Law No. 08/NA, dated 26/11/2009.
  3. Creating annual import plan of developers or investors in Special Economic Zone and Specific Economic Zone is to comply with the regulations of Special Economic Zone and Specific Economic Zone.

 

  • Complementary documents required for approval of annual import plan

  1. Proposal of the enterprise;
  2. Investment license or Concession registration certificate;
  3. Enterprise registration certificate;
  4. Tax registration certificate (if any);
  5. Other documents from concerned sectors (if any);
  6. Economic analysis or development master plan;
  7. Project contract;
  8. Plan of requirement for the import of raw materials, equipment, machinery, and vehicles to be directly used in the production
  9. For factories, annual production plan must be created, then submitted for certification by Industry-Commerce Sectors;


1. Structure of Tax System of Lao PDR

2. Tax payers consists of 3 types:

1. As legal entity
2. As person
3. As organization

3. Holding of accounting comprises of 03 types:

1. Expanded accounting (annual income from2,4 billion and above);

2. Ordinary accounting (annual income from200million to 2,4 billion);

3. Fundamental accounting (annual income from200 million and below);

3. Updating the rate of turnover tax, profit tax and salary income tax.

  • Update of turnover tax: Cancel the use of 5% rate of turnover tax, and then use one single 10% rate.
  • Profit tax rate (Article29)

-      Profit tax rate of maximum 24% is used for domestic and foreign legal entity implementing in line with the updated Investment Promotion Law.

-      Profit tax rate of 26% is used for legal entity(tobacco products), 2% of this will be handed in the tobacco control fund as per Article 46 of Tobacco Control Law.

-      Profit tax rate used for individual enterprises and self-employed persons shall be collected as exponential rate from 0% to 24% as per the below table:

Level

Profit base of each level (Kip)

Calculation base

(Kip)

Rate

Tax of each level (Kip)

Total tax (Kip)

1

From 3,600,000 Kip and below

3,600,000

0%

0 Kip

0 Kip

2

3,600,001-8,000,000

4,400,000

5%

220,000

220,000

3

8,000,001-15,000,000

7,000,000

10%

700,000

920,000

4

5,000,001-25,000,000

10,000,000

15%

1,500,000

2,420,000

5

25,000,001-40,000,000

15,000,000

20%

3,000,000

5,420,000

6

from 40,000,001 Kip and above

...............

24%

................

...............

 

  • Rate of salary income tax.

1. Salary income,general wages, additional hour payment, overtime payment, positional payment, functional payment,annual bonus, directors fees of the executive councilor board of directors and other benefits received in the form of money or objects must be paid tax in unanimous exponential rate from 0 % to 24 % as per the below table:

Level

Salary base of each level (Kip)

Calculation base (Kip)

Rate

Tax of each level (Kip)

Total tax (Kip)

1

From 1,000,000 Kip and below

1,000,000

0%

0 Kip

0 Kip

2

1,000,001-3,000,000

2,000,000

5%

100,000

100,000

3

3,000,001-6,000,000

3,000,000

10%

300,000

400,000

4

6,000,001-12,000,000

6,000,000

12%

720,000

1,120,000

5

12,000,001-24,000,000

12,000,000

15%

1,800,000

2,920,000

6

24,000,001-40,000,000

16,000,000

20%

3,200,000

6,120,000

7

From 40,000,001 Kip and above

...............

24%

 

.............

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Income from dividend or profit dividend or other benefits to shareholders or stockholders, profit from stock trading of persons, legal entity: 10%;

3. Income from loan interest, income from brokerage or agent of person, legal entity, income from contract implemented guaranty or other bindings: 10%;

4. Income from organizing activities that are not businesses of governmental organizations, Lao Front for National Construction, Mass Organization and social organization:10%;

5. Income from prizes, lottery money prizes or materials whose value is above 1,000,000 Kip: 10%;

6. Income from rental: land, house, building, vehicle, machinery or other properties: 10%;

7. Income from intellectual properties: patent, copy right, trademark or other rights of person or legal entity: 5%;

8. Income from trading, transferring land-use rights, buildings or real estate apart from being stipulated in Article 45 Clause 18 of Tax Law: 5%;

 


 Services of Tax Identity Number and Import Customs Policy of Finance Sector

Tax sector is responsible for issuing Tax Identity Number (TIN) and tax payment certificate.

1. Purpose of issuing tax identity number.

-        For the database in managing tax payers (national database);

-        For the statistics (investors) of tax payers;

2. Necessity in issuing Tax Identity Number.

  • For tracking:

1)      The hand-over of tax commitments of business units.

2)      The change of information of business units in: increase of fund, change of director’s name, relocation and others.

3. Issuance of Tax Identity Number.

After concerned parties have considered the proposal requesting the investment and deemed appropriate to approve the investment for investors, tax sectors will issue tax identity number to the business units in accordance with the proposal of Planning and Investment (IP) sectors, Industry and Commerce (IC) sectors and the Executive Council of Special Economic Zone and Specific Economic Zone (SEZ) in line with the regulations.

4. Requesting Tax Identity Number and tax payment certificate.

1. Requesting tax identity number of investors in concession activities and general activities (concession license or enterprise registration certificate) shall comply with the procedures stipulated by One-Stop Service of PI Sector or IC Sector, by filling out the form  tax identity number request as determined andpaying the levies in accordance with the implemented Statute on Levies and Service fees No.003/President, dated 26 December 2012;

2. If the established enterprise conduct business movement without tax identity number, without tax payment declaration in accordance with the regulations, without handing over the annual account closing report, without tax payment certificate, the enterprise will not only receive any Government policies, but will be treated with measures in line with the stipulated regulations.

(based on letter of announcement of Tax Department, Ministry of Finance No. 1212/MoF.TD, dated 03/01/2012.)

5. Structure of Tax Identity Number.

Structure of tax identity number consists of 12 digits as follows:

AAAAAAAAB - CDD

 

 

 

-        Group A consists of 8 digits.  These digits indicate tax payer code automatically generated by computerized system after the tax payer data input;

-        Group B consists of 1 digit. It is the inspecting digit to prevent the error in Group A;

-        Group C consists of 1 digit. It is number 9 or number 0; number 9 indicates that the tax payer is in Value Added Tax, and number 0 indicates the tax payer is not in Value Added Tax;

-        Group D consists of 2 digits. The digits indicate the branch of enterprises, companies, legal entity or organizations, and are limited from  01 to 99; in case of no branches 00 digit is assigned;

6. Certification of Tax Identity Number issuance.

          Tax Department, the provincial and municipal Tax Unit issue tax identity number certificate to tax payers in their governance with each set of digits set for tax identity number by Planning and Information Section.

 

Certificate of  tax identity number must include the following information:

-      Name of tax payer;

-      Legitimate representative, legal entity or organization;

-      Tax identity number;

-      Date of issuance of tax identity number;

-      Kind of business/sector/association/organization;

-      Business or vocational sectors;

-      Enterprise registration certificate, tax registration certificate and others.

7. Business Unit Decentralization.

1). Business Unit Decentralization

A. Tax Department: Responsible for managing large-scale business units with nationally tactical movement aspects, with foreign relations, with involvement of various parties, various vocational sectors, company groups with a lot of branches and agents both in the country and in foreign countries, such as: banks, financial institutes, hotels, tourism, large-scale production business units, public service business units, project operation business units or large-scale concession of Government such as: hydro-powers, natural resource excavation and others.

B. Provincial, municipal Tax Section:Responsible for managing large and medium scale business units, with provincial, municipal specific tactical movements, as assigned by Tax Department.

C. Tax Office of districts:Responsible for medium and small scale business units as assigned by provincial, municipal Tax Section.

D.Village levels: Perform duties in income collections as assigned by the district.

2).      Activity types that require tax identity number at central-local levels

Investors, after receiving the investment license from the Government, for example, receive the concession registration certificate from PI Sector or enterprise registration certificate from IC Sector:

  • Central level:

1. To be approved by Ministry of PI, for instance: land concession, hydro-power projects, mines, airlines, telecommunications, insurances, financial institutes and large-scale projects that belong to Government’s preferential rights (based on Investment Promotion Law 2009 in Article 15).

2. General activities to be approved by the Ministry of Industry and Commerce.

  • Local levels: Concession activities approved by provincial, municipal Planning and Investment Section, or general activities approved by provincial, municipal Industry and Commerce Section.

8. Procedures of issuing the tax identity number

1). Issuance of tax identity number for the establishment of representative office and company in new concession activities.

1. Registration of holdings of representative office/company requires the following complementary documents:

-        Proposal to request the registration of company property list;

-        Company property list;

-        Company regulations approved by IPD;

-        1 copy of the application for establishing the representative office;

After that, bring the documents to register the company holdings with State Property Management Department of Ministry of Finance or State Property Management Section at provincial/municipal levels (in case the approval is at provincial/municipal levels).

2. Filling out the form to request tax identity number requires the following complementary documents:

-        Referral letter of PI Sector requesting  tax identity number;

-        (Draft) registration certificate of representative office/concession registration certificate from PI sector;

-        1 copy of the application for establishing the representative office/company;

-        Regulations of representative office/company whose properties has been registered;

-        Rental contract and rental tax payment (if not rented, copy of land title deed);

-        Certificate of office location certified by village authority;

-        Staff name list (position and salary);

-        Company property list;

After filling out the forms and preparing the complete documents the company must submit the documents the company must submit the documents to finance section of Vientiane capital to request 9 digits and document declaring the payment of levies, then bring along the receipt and documents to submit and request the 12 digits tax identity number from Tax Department for handing over to IPD for registering in the registration of representative offices.

Remarks: In case the representative office is located in provinces, it is not necessary to submit to municipal or provincial Finance Section.  The submission can be done via Tax Department.

 

2). Application for tax identity number for general activities

  1. Application for the registration of company’s properties and regulations requires the following complementary documents:

-        Proposal requesting the registration of company property list;

-        Company property list;

-        company’s regulations certified by IC sector;

-        Copy of application for enterprise registration: 1 book;

  1. Prepare form to request tax identity number with requires the following documents:

-        Referral letter requesting  tax identity number from IC sector;

-        Copy of enterprise registration certificate;

-        Application for enterprise registration: 1 book;

-        company’s regulations whose properties has been registered;

-        Rental contract and rental tax payment (if not rented, copy of land title deed);

-        Certificate of office location certified by village authority;

-        Staff name list (position and salary);

-        Company property list;

After preparing the complete forms and documents the company must submit the documents to Finance Section of Vientiane Capital to request the 9-digitcodeandthe tax payment receipt, then bring the receipt and documents to Tax Department to request 12-digit tax identity number(for general activities, the Industry and Commerce Sector issues the enterprise registration certificate, not necessary to return to the Industry and Commerce Sector for the code.  The Tax officer will print the code in the enterprise registration certificate).

 

9. Complementary documents for applying for tax identity number

Persons, legal entity starting a new business must prepare documents to apply for tax identity number at tax sector as follows:

1. Application form for tax identity number with 1 photo of 3x4 size;

2. Application form for annual tax hand-over: 1 set;

3. Application form for registering tax identity number(for enterprise unit with legal entity status) in printed form No. 02/07: 1 set;

4. Application form for registering tax identity number(Annexe, information about rights/shares) in printed form No. 02.1/07, 1 set;

(Items 1 to 4 use Form of Finance Sector: 1 set

5. Concession registration certificate/investment license, enterprise registration certificate, approved paper from concerned sectors and other approved papers (if any): 3 sets;

6. Copy of national identity card, family book, residential certificate or passport of the enterprise owner or of the attorney: 2 sets;

7. Regulations or economic analysis of the enterprise: 2 sets;

8. Map of office location certified by local authority, contactable desk phone no., mobile phone no., fax no., email:   2 sets;

9. Staff list and salary of the enterprise: 2 sets;

10. Property list: 2 sets;

11. Rights certificate or rental contract for office, store, warehouse (with land and rental tax payment receipts): 2 sets;

12. Bank deposit book of director or stockholders: 2 sets;

Tax Sector, after receiving documents for tax identity number request, must immediately verify the correctness or completeness of the documents, if the documents are incomplete, the tax sector must advise the tax payer at that moment, if the documents are complete, the tax sector then issues tax identity number within 3 to 5 official working days from the date of receiving the correct and complete documents for the request of tax identity number.

10. Complementary documents for issuing the tax payment certificate

Persons, legal entity who operate the business, have income, are in either the value added tax system or not, no matter Lao or foreign citizens,  each fiscal year they must prepare a financial document report to request the tax hand-over certificate with the following complementary documents:

  1. Balance sheet before and after physical checking;
  2. Summary of assets and liabilities in the fiscal year;
  3. Report of outcome in the fiscal year;
  4. Summary of fixed assets and depreciation table;
  5. Summary of the hand-over of all tax types in the fiscal year with the tax hand-over certificates;
  6. Summary of the utilization of the receipts;
  7. Business income-expense plans and tax hand-over plans of the following fiscal year;

The Tax Sector, after receiving the fiscal year report, must immediately verify the correctness or completeness of the documents, if the documents are incomplete, the tax sector must advise the tax payer at that moment in order for them to prepare additional documents, if the documents are complete, the tax sector must re-verify the payment of tax types according to the annual balance sheet with the comparison of the actual tax hand-over figure and the actual tax hand-over certificates.  If it is found that the tax hand-over is complete, then issues the certificate to the tax payer within 3 to 5 official working days from the date of receiving the financial report; in case it is found that the payment of any tax type in the balance sheet is incomplete, the responsible staff must calculate and issue the payment order immediately.  After the enterprise hands-over the complete payments, the Tax Sector considers the issuance of tax hand-over certificate.

At district levels, the collection of tax commitment shall be conducted in the form of lump-sum payment as per Article 56 of Tax Law No. 05/NA, dated 20 December 2011.

11. Fee for Application form, Fee for registering the assets and requesting tax identity number:

1. Application for tax identity number (Tax Department): 25.000 Kip/set;
2. Application for tax identity number(Tax Section of Vientiane Capital): 30.000 Kip/set;
3. Fee for registering the company’s assets and regulations:

- Sole company limited, Representative office: 20.000 Kip.

- Partnership: 520.000 Kip.

4. Fee for registration is collected based on the enterprise registered fund as stipulated in Decree No. 003/President, dated 26 December 2012.