Laos has returned its value-added tax rate to 10% from the 7% rate that had been observed for the last two years. The new rate was specified in Ordinance No. 003/PDT, dated March 19, 2024, and announced on the website of the Ministry of Trade and Commerce. Prior to this, the last announcement of an adjustment in the VAT rate came in the last week of December 2021, when the Ministry of Justice published the Law Amending Certain Provisions of the Laws on Tax No. 01/NA, dated August 7, 2021, in the Government Gazette. This law, which entered into force in January 2022, amended the VAT rate from 10% to 7%. Under Lao law, the ordinance is effective from its date of signing by the president of Laos (i.e., March 19, 2024). However, the tax authorities have indicated that the new rate will not be enforced immediately but will be implemented in the near future, such as when it is published in the Lao Official Gazette. This change of the VAT rate to 10% does not come as a surprise. Some international experts and organizations had been recommending that Laos adopt a 10% VAT rate given its current economic challenges, arguing that Laos should prioritize collecting tax and replenishing the state budget. This was, for instance, recommended by the World Bank in the November 2023 Lao PDR Economic Monitor. Tilleke & Gibbins will continue to monitor the situation to determine when the 10% VAT rate will be enforced. For more details on the rate changes, or on any aspect of tax law in Laos, please contact Tilleke & Gibbins at [email protected].

On February 1, 2024, Laos’ Decree on Condominiums No. 352/GOV took effect. This decree expands on the Law on Land (2019), which introduced the concept of condominiums into the Lao regulatory framework and opened the possibility for foreigners to own apartment units (redefined as “condominium units”—see below). The Law on Land revolutionized concepts of property ownership and investment in a country where foreign ownership is still uncommon. The recent Decree on Condominiums elaborates on the law by clarifying definitions, outlining procedures for acquiring a unit, setting requirements for operating a condominium business in Laos, and addressing issues related to ownership of condominiums. Definitions Condominium: The Decree on Condominiums defines a condominium as a multistory building containing several units and various facilities. The construction must be on a parcel of land registered as “condominium land.” The units composing the condominium can be sold or assigned to domestic and foreign individuals, legal entities, or organizations. Unit: This refers to any of the units that compose the condominium and whose ownership can be by Lao or foreign individuals, legal entities, or organizations. The decree classifies units into three categories: Residential units for living in; Office units for working spaces for enterprises; and Commercial and service units that serve as a trade or service center, such as for department stores, restaurants, fitness centers, and so on. Unit owners must register the unit in accordance with its specific purpose, which must be in line with any applicable urban planning restrictions on certain types of units. Apartment building: This is a building composed of several floors and rooms that cannot be sold to Lao or foreign nationals. According to the Decree on Condominiums, rooms composing the apartment building can only be offered for rent by the owner. This is the main difference between “condominium” and

Dino Santaniello, head of Tilleke & Gibbins’ office in Vientiane, and Sayphin Singsouvong, associate, provided an updated Laos chapter for Foreign Investment Review 2024, a global guide to the legal and regulatory environment for foreign investment in 27 jurisdictions worldwide. Published and distributed by Lexology Panoramic, the guide discusses law and policy on oversight of foreign investment, regulatory frameworks, procedural requirements, and other important considerations for foreign investors. The Laos chapter aims to give investors an understanding of what to expect when establishing operations and operating in the Lao market, covering: Law and Policy: Government policies and practices, main laws and their scope of application (including details on investment promotional measures), definitions, rules for state-owned enterprises and sovereign wealth funds, relevant authorities and oversight, and national interest provisions. Procedure: Jurisdictional thresholds, national interest clearance, securing approval, the review process for competition clearance and associated penalties, involvement of authorities, facilitation of clearance, and post-closing regulatory powers. Substantive assessment: Substantive tests for clearance, authorities’ consultation with other countries and other relevant parties, transactional prohibitions and objections, mitigating arrangements and challenges to a decision, and protection of confidential information. Recent cases, updates, and trends: Relevant recent case law, key recent and ongoing developments. A PDF of the Laos chapter can be accessed through the button below. Tilleke & Gibbins also contributed the Cambodia, Myanmar, and Vietnam chapters to Foreign Investment Review 2024. Readers can also gain 30 days of complementary access to the full Foreign Investment Review 2024 guide and the rest of Lexology Panoramic’s varied offerings through this link.

On October 13, 2023, Laos’ official gazette published the amended Law on Commercial Banks No. 39/NA dated July 17, 2023. The amended law came into effect on September 15, 2023, following its promulgation by the president of Laos. Below are some of the significant changes. Registered Capital Under the amended law, the minimum registered capital for establishing a commercial bank has been increased from LAK 500 billion (approx. USD 24.2 million) to LAK 1 trillion (approx. USD 48.4 million), while the minimum registered capital for Lao branches of foreign commercial banks has been raised from LAK 300 billion (approx. USD 14.5 million) to LAK 600 billion (approx. USD 29 million). Currently, the Bank of Lao PDR (BOL) is preparing a new regulation that will define the timeframe within which banks established in Laos before the enactment of the amended law must increase their registered capital. This change is not as significant as it may seem. Since the last Law on Commercial Banks (which also stipulated an increase in registered capital), Laos has seen a sharp depreciation of the Lao kip against foreign currencies. The increase of capital mandated by the amended law is meant to compensate for this depreciation. Change of Status of a Commercial Bank of a Brand of a Foreign Commercial Bank Another article in the amended law outlines two scenarios in which banks may alter their status. First, a foreign commercial bank in Laos holding 100% shares may change its status to a Lao branch of a foreign commercial bank. Conversely, a Lao branch of a foreign commercial bank may elevate its status to that of a foreign commercial bank holding 100% shares. In both cases, the bank must request a business operating license from the BOL corresponding to its new status, requiring it to meet