Ministry of Finance Issues New Notification Announcing Personal Income Tax Exemptions to Mitigate the Impacts of COVID-19
The Ministry of Finance of the Lao PDR issued a new Notification (No. 1027/MOF) on 10 April 2020 to implement the Prime Minister’s Decision on Policies and Measures to Mitigate Impacts Caused by the COVID-19 global pandemic.
The main points of this Notification are as follows:
- Salaries of LAK 5 million or below for all employees (whether public or private) will be exempt from personal income tax (“PIT”) for three months (April, May and June). For employees with salary levels above LAK 5 million, the first LAK 5 million will be exempt from the PIT calculation. Salary income above this LAK 5 million threshold will be taxed at progressive rates of 10%-25% in accordance with Article 39 of the Income Tax Law. The PIT filing and tax payment deadlines remain the 20th of the following month.
- An income tax exemption for micro-enterprises (as described in the Income Tax Law) for three months (April, May and June 2020). Micro-enterprises that have already made prepayments of income tax for April, May and June under a contract with the tax authorities can carry such payments forward to be used as a deduction in the following months.
- Those who pay PIT under the lump sum tax system in accordance with a concession agreement must continue to declare and pay such PIT and will not be eligible to the exemptions described in Item 1 above.
- Taxpayers can declare and pay PIT through the normal process. The TaxRIS online filing system will automatically exempt the first LAK 5 million of salary when calculating PIT.
As always, please stay safe and let us know if you have any questions or queries on any of the above.
We will continue to provide regular updates on the latest COVID-19 related tax measures and relief in the Lao PDR.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
Partner & Head of Regional Tax Practice