Laos taxes companies registered under Lao law, or incorporated under foreign law but carrying on business in Laos, on worldwide income. Laos has no CFC rules and no thin capitalization regime - interest deductibility instead depends on documentation demonstrating a genuine business purpose. Laos operates a self-assessment system.
The Lao tax year is the calendar year.
Laos's headline corporate income tax (CIT) rate is 20% (minimum 15% under international tax rules for MNE groups).
The headline personal income tax (PIT) rate is 0-25% progressive.
The standard VAT/GST (or equivalent consumption tax) rate is 10%.
All companies registered under Lao law, or incorporated under foreign law but carrying on business in Laos, are subject to Lao profit tax on worldwide income. For individuals, presence of 183 days or more in a tax year is treated as the residency threshold.
A non-Lao entity has a Laos permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Laos on the entity's behalf, following the OECD Model Treaty definition as applied under Lao domestic law and any applicable tax treaty.
There are no CFC rules in Laos.
Laos does not have a thin capitalisation regime. Instead, all interest payments must be supported by documentation demonstrating a genuine business purpose, or the tax authorities may disallow an element of the interest expense - a documentation-based test rather than a debt-to-equity ratio.
Laos does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Laos does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Laos does not provide a broad participation exemption for foreign dividends; relief from double taxation is available primarily through Laos's foreign tax credit system.
Laos has a foreign tax credit mechanism for foreign tax paid on foreign-source income also taxed in Laos, capped at the Lao tax otherwise due on that income.
Laos maintains a network of 12 double taxation agreements. Foreign income derived from a treaty country is taxed according to the applicable DTT. Given limited outward investment from Laos, treaty relief provisions tend to follow the approach taken by the treaty partner country. Specific treaty withholding rates on dividends vary by partner (e.g., 5% where the recipient company holds at least 10% of capital, versus 8-15% otherwise depending on the specific treaty).