Illustrative photo ( Photo: Vientiane Times) Vientiane (VNA) – The President of Laos on March 19 signed a decree restoring the value-added tax (VAT) rate to 10% to support the country’s budget revenue and contribute to its socio-economic development.
The rate was cut to 7% from January 1, 2022, aiming to boost the economy in response to the COVID-19 pandemic and to encourage more businesses to register for VAT.
The restoration of VAT from 7% to 10% has been recommended by many parties to the Lao Government as one of the measures to improve budget collection ability to help solve the economic and financial difficulties that Laos has faced in the last few years.
The Lao Ministry of Finance pointed out several factors backing an increase in VAT rates, including the fact that the current tax rate is not as effective in stimulating the economy as predicted. In addition, the number of businesses registered under the VAT Law is lower than expected, so the government needs to increase revenue to reduce the budget deficit and stabilise its domestic currency.
In addition to increasing the VAT rate, the ministry is also considering other measures to improve the tax system. These measures include accelerating the construction of a tax refund mechanism to help reduce the government's financial losses through tax exemptions, while also supporting local businesses./.
