Laos Taxes Foreign Tech Firms

Laos to tax foreign tech firms

The Ministry of Finance in Laos has issued a notice requiring foreign e-commerce and tech platforms to register for Value Added Tax (VAT) in the country.
The move comes as a number of countries in Southeast Asia enjoy the benefits of taxing tech giants that make earnings in their territory.

Laos has quietly begun taxing non-resident e-commerce companies and digital service providers, with non-resident companies not registered in Laos now subject to tax.

These include companies like YouTube, Zoom, and Netflix, as well as advertising companies, online hotel booking services, and e-commerce platforms such as Lazada.

Any non-resident company which makes more than LAK 400 million (about USD 34,000) each year will be required to register to pay the Lao VAT by creating a Tax Identification Number. An additional profit tax will also be required.

The decree also covers resident and non-resident individuals who earn income from e-commerce of digital platform services.

This development in Laos is part of a larger trend of taxing digital businesses in Southeast Asia in recent years.

Thailand, Indonesia, Singapore, and Malaysia have all begun taxing such companies. In the Philippines, the move to tax tech giants like Google and Facebook was directly in service of fundraising for Covid-19 support.

Vietnam has also introduced a digital tax, and has now created an e-portal and app, under the management of the Ministry of Finance, for cross-border companies to track their earnings, find out what they owe, and file their tax documents.

The Vietnamese Ministry of Finance will also be cooperating with foreign tax authorities to support businesses in following the regulations and dole out penalties for those who don’t.