Laos Reduces VAT to Support Hard-hit Economy

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Laos reduces value added tax (VAT)

Laos has lowered its value-added tax (VAT) rate as part of the government’s post-Covid-19 economic recovery efforts.

Under new regulations issued in December, the standard VAT rate has been reduced from 10 percent to seven percent, while also providing for more business activities that are exempted from VAT.

Minerals and power-related activities will also now see a new VAT calculation.

The amended VAT Law came into effect on 1 January following a severe economic downturn in Laos that has seen the country experience its slowest growth in 30 years, ASEAN Briefing reports.

Laos is also suffering from one of the highest inflation rates in the region, with the Lao kip depreciating to its lowest value in 15 years.

While Laos has seen 6-8% economic growth for the past decade, the World Bank’s Global Economic Prospects report suggests Laos will see economic growth of 4.5 percent in 2022, however, and could rebound to see 4.8 percent growth in 2023.

Under the amended law, the standard VAT rate for the supply of goods and services, and importing goods, has been reduced from ten percent to seven percent.

Activities exempt from VAT now include electricity imports, exported minerals, export of electricity, and the supply of electricity to electricity enterprises in Laos.