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June 26, 2019

New Certificate Requirements for Foreign Traders in Laos

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As of June 27, 2019, foreign traders in Laos who have no registered business in the country will need a Trading Rights Certificate from the Department of Import and Export, Ministry of Industry and Commerce, in order to import or export goods. This development comes with Decision on Trading Rights of Foreign Traders No. 0623/MOIC, which was published in the official electronic gazette on June 12, 2019, and will take effect 15 days after publication.

Foreign traders—whether individuals or legal entities—cannot sell directly to consumers in Laos, and must therefore operate through authorized distributors. The Trading Rights Certificate qualifies foreign traders to sell and purchase goods via such distributors.

The certificate requirement is in addition to existing pre-requisites for importing or exporting goods.

Applying for the Certificate

To be eligible for a Trading Rights Certificate, foreign traders must:

  1. operate in accordance with the laws of their country of origin;
  2. not have committed an offense, or be involved in criminal proceedings related to trading or financial matters; and
  3. must come from a contracting member country of the World Trade Organization.

The following documents must also be submitted:

  1. application form from the Department of Import and Export, Ministry of Industry and Commerce;
  2. copy of passport or incorporation certificate from the country of the foreign trader;
  3. document certifying the overseas address of the foreign trader; and.
  4. criminal record, or certifications of no previous offense.

A power of attorney may also be required if submitted through a proxy.

These documents, in Lao and English, must be certified by a Lao embassy or consulate in the foreign trader’s country of residence or registration, or an embassy or consulate of the foreign trader’s country in Laos. The decision is not clear on whether documents in languages other than English or Lao will be accepted, although as a practicality this is quite likely.

Fees are expected to be set in a separate regulation.

The Department of Import and Export will issue the certificate within 20 working days of submission, or explain its refusal to do so within 15 working days of submission. The Trading Rights Certificate is valid for three years and can be renewed.

Duties of Foreign Traders

The decision reaffirms that imports and exports must be made through an international checkpoint and specifies that foreign traders must:

  1. maintain all original documents for each import and export for a period of three years, as of the date indicated in the tax notification, or as of the date that the goods left the warehouse or checkpoint;
  2. report imports and exports every month, quarter, and year to the Department of Import and Export, and the “relevant authorities” (a phrase which is not defined);
  3. notify the Department of Import and Export, and other relevant authorities, of each import and export, if there is a temporary suspension, renewal, or cancellation of the Trading Rights Certificate; and
  4. comply with local tax, duties, and all other laws and regulations.

In addition, foreign traders are legally required to provide a deposit or guarantee letter on goods, which can be returned after a follow-up customs declaration is made. As there is no official enabling mechanism, these actions must currently be performed through a customs broker.

For more information on this development, or for any other queries about trading in Laos, please contact Tilleke & Gibbins at [email protected].

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