Laos’ National Assembly (NA) is considering a proposal to exempt subsidized residential electricity from Value-Added Tax (VAT) as the government looks for ways to ease living costs for low-income households.
The Standing Committee raised the proposal during its monthly meeting on 6-7 August.
According to the NA, the VAT exemption would support a subsidy policy for low-income electricity users, building on measures introduced by the government over the past year.
However, authorities have not yet disclosed details of the proposed subsidy or said when it could take effect.
The proposal comes as households continue to face high electricity costs and broader economic pressures.
Electricity Costs
Laos currently applies a 10 percent VAT rate to electricity users for domestic and general consumption.
The government has previously adjusted VAT as part of efforts to ease pressure on households. It cut the rate from 10 percent to 7 percent in January 2022 as pandemic relief before restoring it to 10 percent in March 2024.
Electricity prices have also been rising under a 2025-2029 tariff roadmap designed to gradually increase rates and help address the financial needs of state-owned Electricity of Laos (EDL).
Under the roadmap, household electricity rates are set to increase gradually through 2029.
By December, the lowest tier, 0 to 25 kilowatt-hours (kWh), will rise from LAK 807 (USD 0.03 in August) to LAK 850 (USD 0.04) per unit, while the highest tier, over 1,500kWh, will climb from LAK 1,946 (USD 0.08 in August) to LAK 2,086 (USD 0.09)..
The proposed VAT exemption would reduce the tax applied to electricity covered by the subsidy, although the government has yet to explain which households would qualify or how the policy would work.
