April 4, 2022 - Phnom Penh, Cambodia
Lao PDR: Notification on the Implementation of the Tax Obligations of the E-Commerce and Digital Platform
by Segolene Leffy
The Ministry of Finance of the Lao PDR has issued the Notification on the Implementation of the Tax Obligations of the E-Commerce and Digital Platform No. 0541/MOF, 24 February 2022 with the purpose to disseminate the Decree on Electronic Commerce No. 296/Gov, 12 April 2021 and the implementation of the tax obligations of the e-commerce and digital platform business operators in the Lao PDR.
1. Local or Domestic Entity
- Local entity conducting business through (i) commerce through its own electronic channel, (ii) commerce in the electronic marketplace and (iii) provision of electronic marketplace services in accordance with the forms of electronic commerce under Article 6 of the Decree on E-Commerce such as DroppinX, Olaa, Sokxay, All, Ebuylaos, etc. with an annual business turnover of more than LAK 400 million must be registered in the VAT system and perform the tax obligations in accordance with the laws and regulations.
- Must present a TIN in the advertisement of goods and services through its own E-commerce channel, electronic marketplace, provision of electronic marketplace services. It must be registered for TIN if it does not have a TIN.
- All forms of E-commerce and provision of digital platform services must issue a tax invoice.
- Must file and pay the VAT and profit tax through the TaxRIS (http://taxservice.mof.gov.la/websquare/websquare.do).
- Have the duties to calculate, collect and withhold the income tax from the residents and non-residents on income from salary, wages and labor fees, incomes of freelancers (who are not registered as enterprises such as brokerage fees, consultation fees), services, sport activities, performance or other people providing the support, sale promotion activities, advertisement and sending of goods through the E-commerce channel and provision of digital platform services in accordance with the Income Tax Law and then file and pay the tax through the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do
- Provide information on E-commerce and information about digital platform services, and link its electronic information to the TaxRIS based on the request of the tax authorities.
2. Foreign Entity
- Legal entity that does not establish or is not registered as enterprise in the Lao PDR and provide E-commerce marketplace and digital platform services to the users within the Lao PDR (Lao PDR market) such as:
- provision of online movie, music, games and applications such as YouTube, JOOX, TikTok, Humble, Zoom, CODASHOP;
- provision of Streaming such as NETFLIX, Apple TV+, Disney+;
- provision of advertisement, advertising media such as Facebook, Google;
- provision of booking of hotel, accommodation, travel such as agoda, Booking.com, Airbnb;
- provision of being an intermediate between the buyers and sellers such as Shopee, Lazada.
- If such legal entity has incomes from the users within the Lao PDR more than LAK 400 million per year, it must be registered in the VAT system in accordance with the VAT Law.
- Must be registered for a TIN through the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do to provide electronic services in the Lao PDR (application documents and instruction are available in the website).
- Calculate and collect the VAT on the sale of goods and provision of services through electronic channel from the users within the Lao PDR in accordance with the laws and then file and pay the VAT Output through the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do in accordance with the form available in the website without deducting VAT Input.
- Calculate the profit tax on incomes arising within the Lao PDR in accordance with the OECD Regulation on E-Commerce and Digital Service Tax that is adopted from time to time and then file and then file and pay the profit tax through the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do in accordance with the form available in the system.
- Has obligations to calculate and withhold the Withholding Tax prior to making a payment to individuals who are resident of the Lao PDR on incomes arising from the e-commerce channel and provision of digital platform services and then file and pay income tax through the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do by attaching information relating to payments to such individuals (Transaction Information) based on the form provided in the system.
- The due date for filing and payment of taxes in items 2(4), (5) and (6) above is twice a year: by 20th July and 20th January of the following year (additional instruction is available in the TaxRIS: http://taxservice.mof.gov.la/websquare/websquare.do)
- Provide information on e-commerce and information about digital platform services, and link its electronic information to the TaxRIS based on the request of the tax authorities.
3. Individuals who are Residents and Non-residents that are not Registered as Enterprises
- Individuals who are residents and non-residents that are not registered as enterprises and have income from E-commerce and digital platform services in the Lao PDR must be registered for a TIN for individuals with the relevant tax authorities or through the application PTIN to file and pay their tax.
- Incomes from the online sale and purchase or income of resident individuals through its own E-commerce channel, trading on E-commerce marketplace, provision of E-commerce marketplace services will be subject to income tax at 2% of the total incomes (without deducting the costs or expenses prior to the calculation of tax) in accordance with Article 34(3) and Article 39(3) of the Income Tax Law.
- Filing and Payment
- For regular E-commerce business operators, the income tax must be declared and paid by 20th of the following month in accordance with Article 25 of the Tax Administration Law.
- For periodically E-commerce business operators, the income tax must be declared and paid within 15 working days from the date of incomes are generated in accordance with Article 32 of the Tax Administration Law.
4. Rights and Obligations of the Tax Authorities at Each Level
- Facilitate with the issuance of a TIN and bring information about individuals, legal entities or organizations conducting the e-commerce business into the tax management system of TaxRIS.
- Disseminate the Decree on E-Commerce and the tax legislations relating to tax implications of trading and incomes from e-commerce.
- Coordinate with the relevant sectors, the Lao National Chamber of Commerce and Industry and E-Commerce
- Association and relevant sectors with respect to the implementation of the Decree on E-Commerce and the tax legislations.
- Manage, monitor and inspect the implementation of the tax obligations in the TaxRIS, business operation, sale promotion, advertisement of goods of individuals, legal entities through its own electronic channel and digital platform or report to the higher level authorities in case of the direction for implementation is needed.
- Coordinate to obtain information on payments through the banking system from the domestic payment service providers within the country and represent the government to exchange information about the taxpayers with other countries to which Lao PDR has bilateral treaties, multiple treaties in accordance with the laws and treaties to use such information for revenue management purpose.
5. Measures Against the Violators
The following measures are imposed to the taxpayers who do not perform the tax obligations as provided in the tax laws
- re-education, warnings, fines and case proceedings in accordance with the laws;
- propose to temporarily suspend or cancel an e-commerce technical standard certificate;
- propose to temporarily suspend or cancel the payment channel of the payment service providers;
- propose to temporarily suspend or cancel the dissemination and all channels to operate e-commerce and
- provision of digital platforms;
- propose to temporarily suspend or cancel the business operation and e-commerce certificate.
This notification is effective for implementation from the date of signature (24 February 2022).
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.
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