Cryptocurrency and blockchain regulation in Lao PDR

The rise of cryptocurrency has placed the decentralised system of finance in the spotlight with the recent record high in the price of Bitcoin (“BTC”) reaching more than USD$68,521 earlier this month. Take Southeast Asia for example with the region experiencing resounding impact of this digital phenomenon especially in the uptake of retail market participants and adopters. The Southeast Asian crypto world has amassed itself a somewhat contagious popularity, even so that governments are beginning to show interest and scrutiny in the major factors that drive and regulate this system, including the Government of Lao PDR.

Decision on Digital Asset Transactions

The Ministry of Technology and Communication (“MOTC”) recently issued the Decision on Digital Asset Transactions No. 888/MOTC dated 9 November 2021 (the “Decision”) which provides regulatory guidance in relation to digital asset transactions utilising blockchain technology in Lao PDR.

Under the Decision, “Digital Assets” are classified as either (i) Cryptocurrency; or (ii) Digital tokens, defined as electronic data created as a system of coins to be used for specific purposes by the creators of the coins or for determining the rights of any persons in the receipt of goods or services or co-investment.

The Decision importantly identifies the distinction between “Investment Tokens” and “Utility Tokens”, however has not yet provided definitive details relating to how such Investment Tokens may interact with applicable investment promotion or securities regulations.

Cryptocurrency Exploitation Transactions

Following the recent Lao PDR government announcement authorising six Lao companies to undertake cryptocurrency trade and mining operations relating to Ethereum, Bitcoin and Litecoin, the Decision now deals with the standards and conditions applicable to the exploitation of cryptocurrency transactions. Notably cryptocurrency exploitation transactions are reserved for Lao nationals and the implementation of a cryptocurrency exploitation facility shall utilise not less than 10 megawatts of electrical power, to be supplied by Electricite du Laos.

The Decision aims further regulates cryptocurrency exploitation transactions whereby operators must first obtain a license from the MOST, have entered into a power sale and purchase agreement with Electricite du Laos, including the approval by the Ministry of Energy and Mines. The intention of the regulatory framework under the Decision in relation to “exploited cryptocurrencies” shall be brought into certain Cryptocurrency Sale and Purchase Centers authorised in Lao PDR as regulated by the Bank of Lao PDR.

The Decision provides further guidance with respect to the implementation of proposed secondary market participants in Lao PDR, with the intention of cryptocurrency sale and purchase transactions to occur in Lao KIP within specific OTC service providers. The Decision also deals with certain e-KYC and identification requirements for customers wishing to transact in digital assets within the Cryptocurrency Sale and Purchaser centers.

Additional Decision on the Implementation of Credit Policy to Reduce Impacts of the Covid-19 Pandemic

The Bank of Lao PDR has issued the Additional Decision on the Implementation of Credit Policy to Reduce Impacts of Covid-19 Pandemic No. 256 dated 13 May 2021 (“Decision”). The Decision outlines additional measures to reduce Covid-19 related hardship for loan customers of commercial banks and financial institutions whose ability to repay their loan obligations has been impacted by the Covid-19 pandemic and related lockdown measures.

The Decision requires Lenders to delay repayment of consumer/personal lending from May 2021 to July 2021 upon receiving evidence of hardship from affected customers. Lenders are prohibited from imposing additional interest or fees on loans which are subject to this Decision.

Should you require further information or assistance, please do not hesitate to contact us at enquiries@mpalawyers.com.

Notification on authorisation of entry-exit documentation for Vientiane Capital

The Department of Health of Vientiane Capital, on behalf of the Covid-19 Taskforce, has issued Notification No. 378 dated 10 May 2021 addressing the authorisation of entry-exit documentation for Vientiane Capital until 20 May 2021 (the “Notification”).

The Notification allows for movement of persons for employment and personal reasons if certain documentation is provided. All persons (including Lao nationals and foreigners) and legal entities seeking to exit Vientiane Capital must obtain prior approval from the local administrative authorities at their desired destination. Entry to Vientiane Capital must be approved by the relevant provincial Covid-19 Taskforce. Foreigners wishing to exit Vientiane Capital within one (1) month of their arrival will need to obtain a negative Covid-19 test.

Should you require assistance with travelling in or out of Vientiane Capital at this time, please do not hesitate to contact us at enquiries@mpalawyers.com.

Notification on the extended deadline for submission of FY 2020 financial reports to 30 June 2021

The Notification on the extended deadline for submission of FY 2020 financial reports (the “Notification”) No. 2081/MOF dated 30 April 2021 was issued by the Government of Lao PDR under the Ministry of Finance. Under the Notification, the Ministry of Finance has agreed to extend the deadline for submission for the FY 2020 financial reports for a second time and up to 30 June 2021, for all legal entities in Lao PDR. The second extension comes amid further preventative measures to contain the Covid-19 outbreak in Laos and to ensure the Tax Department is able to prepare for, and facilitate submissions by reducing risks from congestions and follow the guidelines as stipulated by the Covid-19 taskforce. Late submissions after the updated deadline will still face penalty measures as set forth under the Tax Administration Law No. 66/NA dated 17 June 2019. Should you require assistance with your tax filing requirements, please do not hesitate to contact us for a free consultation at enquiries@mpalawyers.com.

Ministry of Foreign Affairs Lao PDR Issues Updated Entry and Exit Guidelines

The Ministry of Foreign Affairs has issued updated entry and exit guidelines to support the gradual return of Lao nationals and foreigners to the Lao PDR, which are valid until at least 30 June 2020.

Individuals who already have a valid entry visa may use it to enter Lao PDR. Those who do not have one should apply for a visa from a Lao embassy or consulate in their country of origin.

Representative offices of foreign diplomatic missions, international organisations and companies in Lao PDR wanting to bring in diplomats and foreign staff are required to submit a document detailing their intentions to the Ministry of Foreign Affairs and National Taskforce Committee for Covid-19 Prevention and Control, Ministry of Health (“Taskforce”) for approval.

Individuals or legal entities wanting to bring in foreign investors to explore investment opportunities in Lao PDR also need to seek the approval from the Ministry of Foreign Affairs and the Taskforce.

All incoming foreigners must be tested for Covid-19 and obtain a certificate indicating they have tested negative for the virus. This must be issued in the country from which they have departed and presented to authorities at the Lao border. The certificate must have been issued no less than 72 hours before the start of their journey.

Upon arrival at the Lao border, all incomers need to have their temperature checked and fill in a health declaration form. Anyone found to have Covid-19-like symptoms will be taken to a hospital where they will be isolated and tested for Covid-19.

People who have no symptoms are required to undergo a 14-day quarantine period at a hotel and provide samples for testing. After the 14-day quarantine period and testing negative for Covid-19, new arrivals will receive a certificate from health authorities enabling them to proceed to a place of residence and start work.

Foreigners wishing to depart Laos are required to submit an application to their embassy in Lao PDR. The embassy will then submit the application along with details of the departure plan and the applicant’s passport to the Ministry of Foreign Affairs.

Please contact our team at enquiries@mpalawyers.com should you require any assistance in relation to entry and exit procedures and visa applications and processing.

Guidelines on the conditions and measures for businesses to re-open during COVID-19 in Lao PDR

The Lao National Taskforce Committee for COVID-19 Prevention and Control (“Taskforce”) has issued Guidelines on Conditions and Measures for Businesses to Operate During the COVID-19 Outbreak to Align with Guideline No. 031/NTC, dated 21 April 2020, No.071/NTC dated 11 May 2020 (the “Guidelines”).

These Guidelines aim to mitigate the impact on the Lao economy by enabling businesses to reopen subject to adhering to a number of conditions to limit the risk of community transmission of COVID-19. An inspection, including a COVID-19 prevention plan which aligns with the Guidelines, and ongoing supervision by the Taskforce are required before a business can operate.

The Guidelines require businesses to promote and enforce social distancing of at least one (1) metre between persons and ensure that persons attending the premises (i.e. workers and delivery drivers) are provided with access to hand-washing facilities and face masks. Businesses are also required to engage a cleaner to manage waste disposal and thoroughly clean the premises.

Businesses are required to monitor the temperature of persons, including workers, attending the premises and provide access to hand sanitizer upon entry, which shall be supervised by a security guard. Persons who record an elevated temperature or respiratory concerns shall be promptly quarantined in a designated area within the business’ premises and immediate advice should be sought from 166 or 165 and an on-site consultation with a medical doctor should be arranged without delay.

For further information please feel free to contact us to understand how this may apply to your business in Lao PDR at enquiries@mpalawyers.com Wishing everyone safe and well during this period.

Instruction on the conditions and measures for businesses to re-open during COVID19 in Lao PDR

21 April 2020

Instruction on the conditions and measures for businesses to re-open during COVID19 in Lao PDR

The Lao National Taskforce Committee for COVID-19 Prevention and Control issued the Instruction on Conditions and Measures for Business Sectors able to Operate Business Activities during the COVID-19 Pandemic Period No. 031/TC dated 21 April 2020 (the “Instruction”) in order to advise on guidance and measures for the re-opening of certain enterprises in Lao PDR. Nine specific conditions and six strict measures have been provided for by the taskforce in order for enterprises to re-open and commence operations upon the inspection of the Taskforce and its approval.

For further information please feel free to contact us to understand how this may apply to your company in Lao PDR at enquiries@mpalawyers.com. Wishing everyone well and safe during this period.

Service Area: Corporate & Commercial

KEY CONTACTS

Kaz Patafta

Director

Bou Liemphrachanh

Deputy Director

Positive Change in Response to Covid-19

13 April 2020

Positive Change in Response to Covid-19

Companies and businesses are facing unprecedented challenges in adapting to work amid the global Covid-19 pandemic. Remote work and communication has rapidly developed into the norm and forced businesses to consider their crisis response and modify their operations.

During this constant and challenging period of change, there are a number of things that all companies and businesses, no matter the industry, location or size, can do to support a positive response to the current global situation and safeguard their future.

Understanding your obligations at law

More now than ever before it is important that employers understand their legal obligations to their employees, including freelance contractors and frontline workers.

In the event that an employment contract does not address what happens to employees’ entitlements in the event of a suspension of operations or downturn in trade, it is important that you act swiftly to reach agreement between you and your employees to ensure that you are not in breach of your obligations under Lao labour law.

In the event that your company or business is continuing to operate, either remotely or onsite, it is important that you protect the health and safety of your employees. In Laos, the Ministry of Labour and Social Welfare and other relevant government authorities have issued, and continue to issue, guidelines that employers must follow in response to the Covid-19 pandemic or risk penalties.

MPA Lawyers can assist in ensuring you are meeting your employment law obligations and support you and your employees during this uncertain period.

Risk mitigation

Understanding contractual obligations, termination clauses and relief measures that may effect your company or business at this time will ensure that you can position your company or business to mitigate any risk or exposure that may arise and support a positive response to the Covid-19 pandemic.

In the event that you need to enter into or terminate an existing contract, it is important to consider whether the contract contains a force majeure or pandemic clause and the scope and operation of such clause.

Companies that are making decisions abruptly in response to the developing situation, need to be aware of their obligations to shareholders and ensure that they are acting in accordance with their obligations at law to avoid any unforeseen consequences in the future. For example, if a company’s corporate documents only provide for votes to be made in person or do not provide for the Director’s powers in the event of an emergency situation, such as a pandemic, it is important that the necessary steps are taken to protect the company’s interests.

Our team is experienced at facilitating remote solutions and support to our clients within the Lao PDR and across the globe. Reach out to us today should you require assistance in responding to the Covid-19 pandemic and safeguarding your interests for the future at enquiries@mpalawyers.com

Service Area: Corporate & Commercial

KEY CONTACTS

Kaz Patafta

Director

Rosie Cole

Legal Advisor

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

10 April 2020

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.

Service Area: Taxation, Corporate & Commercial

KEY CONTACTS

Rosie Cole

Legal Advisor

Bou Liemphrachanh

Deputy Director

New Notice on Procedures to Start a New Business

02 March 2020

New Notice on Procedures to Start a New Business

The Ministry of Industry and Commerce (“MOIC”) released a notice for domestic and foreign investors who wish to start a business in Lao PDR, (“The Procedures to Start a Business”) dated 29 January 2020 referring to Order No. 02/PM, dated 01 February 2018 on the Improvement of Regulation and Coordination Mechanism for Doing Business in Lao PDR.

The Procedures to Start a Business have been renewed to focus on improving, solving, and reducing unnecessary procedures to reduce the time and expenses for starting a business in Lao PDR. It must be noted that these Procedures to Start a Business are only related to the registration of a sole trader enterprise or legal entity and will not encapsulate the procedures for applying in investment or business operating license schemes at this stage.

The notice states that the requirement for applying for Certificate of Office Location has been cancelled, the Registration of Articles of Association of Company has been moved to be a procedure after the procedures to start a business, and the requirement for applying for a Taxpayer Identification Number Certificate has now become combined with the same procedure for enterprise registration. This will mean that an enterprise will receive an enterprise registration certificate together with taxpayer identification number. Further, the requirement for Tax Orientation and Providing Taxpayer Identification Number has now been moved to be the procedure following the procedures to start a business, the requirement in Registration of Value Added Tax has been cancelled, the Registration of Company seal has now been combined in the same procedure with the procedure of carving seal, which will mean that an enterprise will receive the Approval for the Use of Seal together with the company seal. Finally, the requirement for Applying for Company Signage Content Approval has been cancelled.

Under Lao PDR laws on starting a business the Procedures to Start a Business will now only require three (3) procedures. These procedures are listed below:

The maximum time for notifying enterprise registration is 10 working days.
The maximum time for Carving Seal and Approval for the Use of Seal is 5 working days.
The maximum time for Registration of Social Security is 2 working days.

The Procedures to Start a Business in Lao PDR must comply with the relevant regulations, and in the event that any person or authority requires the conduct of further procedures, they must notify the Enterprise Registration and Management Sector in order to report and consider problem-solving measures with higher authorities.

It is always recommended to consult your concerns for starting a business in Lao PDR with an Arion legal advisor. Please do not hesitate to contact us should you require assistance with any changes from the previous system of starting a business, and understand your registration obligations at enquiries@arionlegal.com.

Service Area: Corporate & Commercial

KEY CONTACTS

Kaz Patafta

Director

Bou Liemphrachanh

Deputy Director

Articles & Updates

Cryptocurrency and blockchain regulation in Lao PDR

Additional Decision on the Implementation of Credit Policy to Reduce Impacts of the Covid-19 Pandemic

Notification on authorisation of entry-exit documentation for Vientiane Capital

Notification on the extended deadline for submission of FY 2020 financial reports to 30 June 2021

Ministry of Foreign Affairs Lao PDR Issues Updated Entry and Exit Guidelines

Guidelines on the conditions and measures for businesses to re-open during COVID-19 in Lao PDR

Instruction on the conditions and measures for businesses to re-open during COVID19 in Lao PDR

Instruction on the conditions and measures for businesses to re-open during COVID19 in Lao PDR

Positive Change in Response to Covid-19

Positive Change in Response to Covid-19

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

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

New Notice on Procedures to Start a New Business

New Notice on Procedures to Start a New Business

Lao PDR

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