The session considers Value-added Tax Law

         Today, 20 December the session of the National Assembly of the Lao PDR (Sixth Legislature) continues debates on proposed Law on Value-added Tax (VAT), which was presented by Deputy Finance Minister Mr Somdy Duangdy yesterday.

Members of the National Assembly from many constituencies basically expressed satisfaction with the proposed VAT Law because now, it is time for the country to have this law. However, deliberation is needed before the law is adopted. They showed strength and weak points in some Articles, particularly purpose of VAT exemption, basic accounting, rate setting, levying etc. The condition of entry into VAT system is also on deliberation because the law will cover around 4,000 to 4,500 medium and large-scale enterprises with an earning capacity of 400 million kip or more per year. Business units earning lower income require holding business accounts and other documents to pay taxes.

Under the law, 10 percent will be added onto the value of products imported and used in the country; therefore setting rate is on debate with aim of making this point to be useful for consumers and sellers as well as country.

They expressed debates on the organisational system, which is responsible for managing VAT, enhancing duties of tax officers and paying attention to measures dealing with law violators.

Value-added tax is an indirect tax that suits the mechanism of a market economy. Under this law, consumers will have to pay tax at the time they buy products. If they buy more, they will pay more money in tax.

The current tax collection system is sometimes complicated, and does not protect the interests of businesspeople. Therefore, the VAT Law was formulated. The draft law comprises seven parts and 49 articles, and has been under consideration since 2004 and debated in many meetings of all levels, until it was approved at a government meeting in October.

            The formulation of the Value-added Law is on based on the five-year plan of the National Assembly’s Standing Committee for formulating and amending laws. This aims to make laws regarding several sectors to be comprehensive gradually. It is also to help the socio-economic management of the State to integrate into the system, which is managed by laws in line with the Party policy.

            In general, the VAT Law will promote the socio-economic development, particularly financial and monetary sector and upgrade its quality in the years to come. The law will be an up-to-date legal paper capable of promoting production, businesses and services domestically. It will also encourage the export of Lao goods, making the cost of goods cheaper and better able to compete with products from other countries.

            Besides avoiding repeated tax collection, the law will reduce loopholes in the tax collection system and play a role in inspecting VAT collection in each stage, for instance, accounting, while ensuring greater revenue for the state budget.