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​ 

October 26, 2021
Attorneys from Tilleke & Gibbins’ Bangkok office have written the Thailand chapter of the newly released Fashion Law 2021, a guide to law surrounding the business of fashion in jurisdictions around the world. The guide covers 18 key jurisdictions for the global fashion industry, offering insights into local legal frameworks surrounding vital issues such as brand enforcement and protection, e-commerce and marketing, and sustainability considerations. The Thailand chapter of Fashion Law 2021 provides detailed information on the following topics: Trademarks, designs, copyright, and other intellectual property types, as well as the main intellectual property legal tools available to protect fashion products in Thailand. Strategic local contractual arrangements for manufacturing, distributing, and advertising fashion products. Overview and application of online marketing regulations and consumer protection regulations in Thailand. The most relevant unfair competition rules for fashion businesses and local courts’ interpretation and enforcement of the rules. ESG (environmental, social, and governance) concerns and sustainability issues for the fashion industry. Customs monitoring and local import and export guards against counterfeit products. Frequently asked questions and common concerns regarding fashion business operations in Thailand. The full Thailand chapter is available for free on the Global Legal Post website, or it can be downloaded as a PDF through the button below. Tilleke & Gibbins also contributed the Vietnam chapter to the guide.
Read More
October 25, 2021
Michael Ramirez, a counsel in Tilleke & Gibbins’ dispute resolution group in Bangkok, has updated the firm’s contribution to the Global Attorney-Client Privilege Guide, published by Lex Mundi. The newly expanded guide provides information on what constitutes attorney-client privilege in over 70 countries around the world. The Thailand section of the guide contains in-depth information on the function and applications of attorney-client privilege in Thailand (or, as explained in the guide, an equivalent concept enshrined in Thai law), including coverage of the following topics: Privilege in corporations Common interest doctrine Litigation funding Crime-fraud exception Work product doctrine/litigation privilege Other privileges including mediation, accountant-client and settlement negotiation The interactive guide features expert contributions by Lex Mundi member firms from jurisdictions worldwide. Readers can browse the contributions, generate country-specific reports, and compare attorney-client privilege in multiple jurisdictions. For more information, please visit the Lex Mundi website.
Read More
October 14, 2021
As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2021. This guide outlines all of the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Guides to Doing Business series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource when planning an international business strategy or researching a new market.
Read More
September 30, 2021
Thailand’s Board of Investment has consolidated its definition of promoted business activities in the digital space, replacing promotions for e-commerce, digital services, and software, with a single category for “Development of software, platform for digital services, or digital content.”
Read More