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​ 

June 5, 2023
Vietnam’s Law on the Protection of Consumer Rights (“Consumer Protection Law” or “CPL”) was passed in 2010 and has been effective since July 1, 2011, providing a legal framework for protecting the rights of consumers in Vietnam. Over the past 12 years of implementation and application, however, the CPL has revealed its shortcomings and limitations. For example, there are issues related to inconsistency between the CPL and other laws such as the Civil Code, Law on Competition, Enterprise Law, and Cybersecurity Law. The current CPL also has not kept pace with modern consumption practices, especially the rapid changes and emerging trends in e-commerce, cross-border transactions, and services via digital platforms. The government of Vietnam has therefore entrusted the Ministry of Industry and Trade (MOIT) to take the lead in drafting a new amended CPL to replace the old one, to improve the policies and legislation on consumer protection, and protect the vulnerabilities of consumers in transactions with businesses. During the 5th session of the National Assembly at the end of May 2023, the National Assembly discussed and reviewed the latest draft of the CPL (“Draft CPL”), which is expected to be approved on June 21, 2023. The following are some key contents of the Draft CPL: 1. Revised Subjects of Application Unlike the current CPL, which applies only to consumers; traders of goods and services; and agencies, organizations and individuals involved in consumer protection activities within the territory of Vietnam, the Draft CPL adds “the Vietnamese Fatherland Front, socio-political organizations and social organizations participating in protecting consumers’ interests” as new subjects of its application, and clarifies that “agencies, organizations, and individuals” include both domestic and offshore agencies, organizations, and individuals involved in activities of consumer rights protection. The Draft CPL also removes “within the territory of Vietnam” from the
Read More
June 2, 2023
In April 2022, Myanmar’s State Administration Council established the Foreign Exchange Supervisory Committee (FESC) to approve foreign currency conversion, make exemptions to foreign exchange restrictions, and permit overseas foreign currency transfers. Because of the FESC’s establishment and related regulatory changes, companies that would like to transfer funds out of Myanmar for capital reduction, share capital for liquidated companies, share transfers, or share dividends must abide by the FESC’s requirements, which vary depending on the type of company. The Myanmar Investment Commission (MIC) has announced that companies permitted by or endorsed under the Myanmar Investment Law must submit various supporting documents when applying to transfer foreign currency internationally. These documents, which must be addressed to the MIC chairman, include the following: Prescribed form for transfer of foreign currency; Application letter giving a specific reason for the transfer; Original board of directors’ resolution; Audited financial statements for the relevant financial year; Up-to-date bank statement of the company; Tax assessment confirmation letter for the relevant financial year; Tax clearance certificate for the relevant financial year, in the case of liquidated companies; and Copy of the updated quarterly performance report using the form prescribed by the MIC. If the transferor cannot submit the documents in person, the required documents need to be accompanied by a power-of-attorney or appointment-of-representative letter. Though the FESC has not announced its own documentation requirements, experience shows that MIC companies must submit an application to the MIC Investment Monitoring Division before submitting their offshore remittance application to the FESC. Once the MIC has received a complete application, it will request a recommendation from the Central Bank of Myanmar (CBM). With this recommendation in hand, the Investment Monitoring Department will then seek FESC approval internally. Aside from MIC companies, DICA companies (i.e., companies that do not require approval from the
Read More
May 19, 2023
On May 15, 2023, Vietnam’s Deputy Prime Minister Tran Hong Ha signed Decision No. 500 of the Prime Minister approving the National Power Development Plan for the period 2021-2030, with a vision to 2050 (“PDP VIII”), following extensive public consultations and multiple rounds of review since the first draft version was circulated in 2021. The plan was approved in the context that in the past few years, a number of large power projects have been behind schedule for operation, while new projects have not been able to be implemented due to waiting for additional planning. PDP VIII is the master plan for the development of the power source and transmission grid at 220kV or higher; services in renewable energy and new energy in Vietnam; and works connecting the power grids of Vietnam and neighboring countries. We set out below some quick updates regarding PDP VIII. 1. Development Targets Key development targets are summarized in the table below: Investors in coal, domestic gas, and LNG projects may need to have a conversion plan ready given the 2050 targets to convert to other sources of energy. 2. Solar Projects A list of 27 solar power projects that were planned for the period of 2021-2030 but which have not been assigned to investors are not allowed to be deployed but can be considered after 2030, except in the case of deployment in the form of self-production and self-consumption (Appendix IV). These projects represent 4,136.25 MW of capacity that will be left on the sidelines until 2030. 3. Hydropower Projects A list of 14 potential hydropower projects can be considered if economic and technical conditions allow for more hydropower development (Appendix III). These projects represent 1,244 MW of capacity that can be added to the hydropower targets for 2030. 4. Projects Prioritized for
Read More
May 18, 2023
Thailand’s Office of the Securities and Exchange Commission (the “SEC Office”) has revamped various rules relating to private placements by listed companies with a view to streamlining the offering process and reducing the documentation required for submission to the SEC Office. Most of these rules were revised by the Capital Market Supervisory Board on December 28, 2022, and will come into effect on July 1, 2023. The key amendments in the new rules are summarized below. Elimination of Application Requirement Issuers are no longer required to apply to the SEC Office prior to offering their shares via private placement, according to new rules laid out in the Notification of the Capital Market Supervisory Board No. TorChor 28/2565 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement (the “TorChor 28/2565 Notification”). The rules detailed in this notification will replace the current private placement rules under the Notification of the Capital Market Supervisory Board No. TorChor 72/2558 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement. Under the TorChor 28/2565 Notification, issuers may offer their shares via private placements that are share offerings to no more than 50 high-net-worth or ultra-high-net-worth investors within 12 months, share offerings valued at no more than THB 20 million within 12 months, or share offerings to institutional investors (excluding share offerings to the issuer’s directors or employees), so long as the issuer complies with its information disclosure and corporate approval requirements, which remain mostly unchanged under the new notification. To fulfill these requirements, notice of a shareholders’ meeting must be submitted to all shareholders at least 14 days in advance, and the offering must be approved by a supermajority vote of the shareholders, which means approval by at least three-fourths of the shareholders present and
Read More