Notification on the Implementation of the Income Tax Exemptions based on the policies and measures to reduce the impact from Covid-19

The Notification on the implement of tax treatment as provided by the Decision on policy and measures to reduce the impacts of COVID-19 disease to the Lao PDR economy (the “Notification“) No. 1027/MOF dated 10 April 2020 was issued today by the Government of Lao PDR under the Ministry of Finance.

Under the Notification, employees working in both public and private sectors in Lao PDR shall be provided with personal income tax (“PIT“) exemptions during the months of April, May and June of 2020. Employees who earn less than 5,000,000 LAK within a respective calendar month during April, May or June will be exempt from paying any PIT, whereas employees who earn more than 5,000,000 LAK will be entitled to deduct their taxable income by 5,000,000 LAK in order to calculate their PIT payment obligation pursuant to Article 39 of the Income Tax Law No. 67/NA, dated 18 June 2019 (“Income Tax Law“).

Further, exemptions shall be applied to the income tax obligations on micro-enterprises as defined by Article 29(2) of the Income Tax Law and any enterprises which have paid tax in advance, may deduct such amount against the tax payable in the months of April, May and June 2020.

Lump-sum PIT obligations or fixed rate taxes as agreed with the Government of Lao PDR shall not be exempt under the Notification by the Minister of Finance.

It is always recommended to consult your intended business activities in Lao PDR with a legal advisor. Please do not hesitate to contact us should you require our assistance to establish a Lao PDR business entity at enquiries@mpalawyers.com.