Lao Government Mandates Licensing for Commercial Land Use

Patuxay Monument (Photo: Laotian Times)

In a move aimed at regulating land-related businesses and tax management, the Lao government has introduced a ban on issuing land titles to buyers acquiring land use rights for commercial purposes without the requisite licenses from the natural resources and environment sector.

The directive, issued by the Department of Land under the Ministry of Natural Resources and Environment, took effect on 10 May.

As per Article 5 of the Land Business Agreement, individuals, legal entities, or organizations intending to partake in land-related businesses must register their projects with an enterprise registration official and secure a license from the natural resources and environment sector.

However, the Land Department notes that a significant number of individuals and entities involved in such businesses have been operating without the required licenses.

In response to these concerns, the Minister of Natural Resources and Environment has issued instructions on the registration of activities and changes in land use rights, emphasizing the importance of compliance with the Lao Law on Land and the Agreement on Business Related to Land, thereby ensuring tax obligations to the government are met, as reported by state media.

In accordance with the regulations, individuals, legal entities, or organizations engaged in the buying and selling of land use rights, including installment sales, must obtain a license from the provincial Department of Land or the Department of Natural Resources and Environment. Failure to comply will result in the denial of a new land title associated with land use rights.

The government has clarified that this measure is aimed at assisting the natural resource and environment sector in better managing the country’s land resources and preventing tax evasion by individuals involved in land-related businesses.

The Lao government has been actively addressing various land-related issues, particularly focusing on improving tax management to bolster the state budget. 

In early May, the government restored the value-added tax (VAT) to support the country’s budget revenue and socio-economic development. The rate, previously reduced to 7 percent from 1 January 2022, in response to the COVID-19 pandemic and promoting business registration for VAT, was thus reinstated.

Additionally, in February, the Ministry of Finance introduced new regulations mandating that all digital shopping platforms comply with mandatory tax payments. The notice categorized digital platform shopping websites into three groups including registered enterprises in the Value-Added Tax (VAT) system, micro-enterprises, and revenue-generating individuals, legal entities, and organizations.