Navigating Lao E-Commerce: Understanding the Latest Tax Regulations

Posted by Written by Ayman Falak Medina Reading Time: 2 minutes

In February 2024, the Ministry of Finance of Laos issued regulation number 0558/MOF which sets out the latest guidance regarding tax obligations for e-commerce and digital platform providers.

Under the latest guidance, non-resident suppliers of digital goods and services, e-commerce providers, and digital platform providers must register and pay for VAT through the DTax System. The new rules will apply to transactions from August 1, 2024, and also apply to foreign e-commerce providers who are not residents or registered enterprises in Laos but earn income from the country.

E-invoices can be paid in USD, EUR, and CNY currencies.  

Imposing tax on the provision of digital services

Digital service providers will be charged a 10 percent VAT rate. This includes the following transactions:

  • Online games and online advertising services;
  • Mobile applications;
  • Software programs;
  • Digital music, photos, videos, and games; and
  • Electronic database management such as websites, and web hosting, among others.

If the digital goods and services are provided through a digital platform, then that digital platform is responsible for collecting VAT on these goods and services. Further, the new regime covers services made to both B2B sales and B2C sales located in Laos.

Categorizing digital platform operations

A taxpayer will be recognized as an electronic digital platform operator if they undertake in one of the following activities:

  • Those that directly or indirectly dictate the terms and conditions for digital goods and services;
  • Those who are directly or indirectly involved in the payment processing activities for digital services;
  • Those who are directly or indirectly involved in activities related to the delivery of digital services; and
  • Those that provide support services to customers of digital services.

VAT filing

VAT filings must be submitted via an online LTD portal and are done three times per year.

1st filing – reporting period between January to April and to be filed by May 31;

2nd filing – reporting period between May to August and to be filed by September 30; and

3rd filing – reporting period between September to December and to be filed by January 31 of the following year.

As previously mentioned, VAT payments can be made in USD, EUR, and CNY, or other currencies approved by the Laos tax department.

Penalties for non-compliance

The Laos tax department can apply the following fines and penalties:

  • A penalty of US$800 for late VAT filing per quarter;
  • Interest payment of 0.1 percent per day for outstanding VAT payments;
  • 30 percent of the VAT payable for the first demand of payment, 60 percent of the VAT payable for the second demand of payment, and 100 percent of the VAT payable for the third demand of payment by the Laos tax department.

The Laos tax authorities can also propose to suspend or terminate the digital service provider for non-compliance.

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