You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 4, 2020

Laos Provides Tax Relief and Other Measures to Reduce the Economic Impact of COVID-19

Subscribe to Updates

On April 2, the prime minister of Laos issued the Decision on the Policies and Measures to Reduce the Impact from the COVID-19 Pandemic. A number of the measures announced will affect locally established business operators.

Relief Measures

The latest decision reiterates previously issued measures from the Ministry of Finance and the Bank of Laos (see here and here). The most salient new measures provided in the decision are primarily concerned with tax relief as follows:

  • Salary tax exemption for both private and public sector employees, applicable for monthly salaries below LAK 5 million (approx. USD 550), in effect from April to June.
  • Deferment of payments for affected businesses, including normal contributions to the National Social Security Fund (NSSF), in effect for the months of April to June. The new deadline for contributions to the NSSF has not yet been specified.
  • Profit tax exemption for micro-enterprises from April to June.
  • Exemption from customs duties, tax, and related official fees, on medical devices and other products for prevention, control, and preparation in regard to COVID-19 (e.g., masks, sanitizers, medical equipment, and other necessary items—a more detailed list will be provided later).
  • Postponement of tax obligations for eligible business operators in the tourism industry for the months of April to June 2020. A detailed list of the businesses that will benefit from this provision will be provided by the Ministry of Information, Culture, and Tourism.

Other measures in the decision include postponement of the payment of annual road tax to June 30; confirmation of the Bank of Laos’ proposal to decrease the interest rate and ratio of the compulsory reserve for private commercial banks; and an announcement that the government is studying the possibility of reducing and deferring electricity and water bill payments for both individuals and businesses.

Public Sector Expenditures

The prime minister stated that large-scale investment projects should be encouraged to maintain their ongoing operations, private investment should be facilitated, and ministries and local authorities should decrease their usual administrative expenses by at least 10% of their budget for 2020. Expenses that will be reduced include those relating to (1) meetings and seminars, (2) welcoming of foreign guests, (3) scientific studies, (4) construction expenses, (5) national celebrations, (6) fixed assets, and (7) other expenses. The resulting cost savings will be redirected to the government’s COVID-19 prevention efforts.

New public investment infrastructure projects that have already been approved by the National Assembly in 2020 will be delayed to 2021. Projects deemed to be overvalued or to have a limited impact will be reassessed and suspended or renegotiated.

Lao Airlines is singled out as a state enterprise that may need to adapt its business plan, and it should be ready to resume its activities as soon as the COVID-19 pandemic has passed.

Comments

As is the case in many other jurisdictions, the government of Laos has taken a series of extraordinary measures over the past week to address the far-reaching impacts of the COVID-19 pandemic, and these further clarifications by the prime minister are welcome. Further details will be required in regard to the deadlines and eligibility for some of the relief measures, and we expect that these issues will be treated on a case-by-case basis by the line ministries until further explanations are provided through official channels.

Related Professionals

Practices

Corporate/M&A

Employment

Tax

Location

RELATED INSIGHTS​ 

July 7, 2025
On June 20, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 19116 to clarify when board members and company directors must receive salaries and pay payroll taxes. Board members and company directors who are not considered employees are subject to a withholding tax. This category consists of people who complete services for a nonresident individual and people who perform independent work for a company in Cambodia. Board members and company directors who are considered employees, including those appointed by a foreign head office to temporarily manage a company in Cambodia, must pay payroll taxes on any salary they receive, regardless of whether they are paid by a local or foreign branch of the company. The above obligations apply regardless of whether the person has a work permit. Board members and company directors are exempt from paying payroll tax if they: Are not present and not performing a regular management role at the company despite being registered on the company’s statutes or patent tax card; Participate only in board meetings and occasional shareholder meetings; and Do not receive a salary from a company in Cambodia. Overall, this instruction provides an important clarification regarding the tax obligations of board members and company directors. Companies should pay attention to the classification of their board members and directors and be mindful of the exemption.   This article was written with the assistance of Tilleke & Gibbins interns Amelia Gemma Erickson and Amrin Keat.
Read More
July 7, 2025
On June 27, 2025, Thailand issued the new Ministerial Regulation Prescribing the Criteria and Rates for Receiving Unemployment Benefits (No. 2) B.E. 2568 (2025), which amended a similarly named ministerial regulation by boosting the rate of social security benefits to alleviate hardships for employees who are terminated. The new ministerial regulation took effect the following day. Under this new ministerial regulation, eligible terminated employees are entitled to receive unemployment benefits under the Social Security Fund (SSF) for a maximum of 180 days per year, at the rate of 60% of the employee’s monthly wages at the time of termination, up from 50% previously. However, the maximum wage used as the basis for calculating the benefit remains capped at THB 15,000 per month. Therefore, the maximum unemployment benefit that an employee can receive from the SSF is now THB 9,000 (up from THB 7,500) per month for a period of up to six months. To qualify for the unemployment benefits from the SSF, employees must be registered with the Social Security Office and must have contributed to the SSF for at least six months within the 15 months prior to the start date of the relevant unemployment period. This new ministerial regulation was enacted to increase the amount of financial support provided to insured persons in the case of termination, as part of the government’s objective of alleviating economic hardship under current economic and social conditions in Thailand. For more details on unemployment benefits in Thailand, or on any aspect of employment law in the country, please contact Pimvimol (June) Vipamaneerut at [email protected], Dusita Khanijou at [email protected], Ketnut Pukahuta at [email protected], or Chomanut Arif at [email protected].
Read More
July 4, 2025
On July 1, 2025, new minimum daily wage rates for Bangkok and certain business types nationwide were published in the Government Gazette, taking effect on the same day. The daily minimum wage rate for Bangkok has been increased to THB 400 per day, while the minimum wage rates for other provinces remain unchanged from the rates that took effect on January 1, 2025. However, daily minimum wage rates have also been increased to THB 400 nationwide for type 2, type 3, and type 4 hotels under the Hotel Act and for entertainment establishments under the Entertainment Place Act. This THB 400 rate applies to all businesses that meet the criteria, even if the province’s general rate is lower. The new minimum wage rates supersede any lower wages agreed upon in existing employment contracts or conditions of employment that were in force before this announcement came into effect. As a result, these employees must be paid their wages at the newly prescribed rate for work performed from July 1, 2025, onward.
Read More
July 2, 2025
On June 17, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 18574 on Tax Obligations for Share Premiums to clarify that enterprises are not required to pay any income tax on share premiums that meet the conditions set out in the instruction. As outlined in the relevant provisions of the Law on Taxation (Royal Kram No. NS/RKM/0523/004) and Prakas No. 578 MEF.PrK.GDT on Tax on Income, taxable income is the difference between an asset’s value at the beginning and end of a period. This calculation deducts capital contributions, which are not taxable. A share premium is the amount of money that a company receives in excess of the par value of a share when the company issues new shares to a shareholder through a share subscription. In other words, share premiums are capital contributions made by shareholders into the equity of the company and, as a result, are not taxable. However, the government may nevertheless view share premiums as taxable if the company fails to meet certain legal conditions. Cambodian law requires share subscriptions to be properly recorded in the company’s accounting books and supported by documentary evidence. The recent instruction states that if an enterprise does not have proper documentation, any increase in equity, such as a capital increase through share premiums, will be treated as taxable income in accordance with the law. The instruction provides the following example: Enterprise A issues 200,000 new shares to an investor. The shares were registered with a par value of KHR 4,000 per share and were sold for a sale price of KHR 10,000 per share. The share premium of KHR 1.2 billion, which is calculated by subtracting the total par value (KHR 800 million) from the total value of the new capital (KHR 2 billion), is a capital
Read More