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Enforcement against illegal foreign businesses in the Lao PDR

Enforcement against illegal foreign businesses in the Lao PDR

July 9, 2019

On 12 June 2019, the Division of Industry and Commerce, Vientiane (“DIC-Vte”) issued Instruction No. 0651 (the “Instruction”) regarding measures to be taken against the illegal operation of businesses by foreigners.

The Instruction’s scope covers foreigners who operate unapproved businesses, defined as those who:

  • Operate a business without an enterprise registration certificate (“ERC”) or business license; or
  • Violate or fail to comply with the terms of the ERC or business that has conditions for foreigners.

The Instruction sets out the following measures to address such matters:

  1. Operating a business without an ERC or business license: A fine of LAK10 million or USD 1,162 will be levied on the company and its business operations suspended. Additionally, the company must confirm in writing that it will apply for an ERC and business license within 90 days. If it does not do apply for such within those 90 days, an additional fine of LAK10 million or UDS 1,162 will be levied on the company, its business dissolved, and the foreign owner deported.
  2. Violating or failing to comply with the terms of the ERC: A fine of LAK3 million or USD 348 will be levied on the company. If the company wishes to conduct a business activity other than that stated in the ERC or business license, than it must amend its ERC and business license. If the authorities discover that it has not amended its license, an additional fine of LAK5 million or USD 581 will be levied, its business dissolved, and the foreign owner deported.
  3. Operating a business using of another person’s license: The company will be subject to the same measures as those specified above in item 1.
  4. Violating or failing to comply with the terms of the type of business that has conditions for foreigners: The company will be subject to the same measures as those specified above in item 2.
  5. Operating a business that is prohibited for foreigners: The foreign owner will be deported.
  6. Allowing a foreigner to lease their premises without permission: The lessor will be punished as per the applicable regulations.

If you have any questions about this alert, or would like assistance with bringing your business into compliance, please contact the undersigned or your usual VDB Loi adviser.

AUTHOR

Daodeuane is regarded as one of Laos’s most experienced and knowledgeable tax advisers. She has over 20 years of experience, including leading the tax team at PwC in Laos, and prior to that, working at a top regional law firm.

Daodeuane has provided tax and legal advisory services to a large number of multinational and local firms in Laos across a wide range of sectors, including mining, hydropower, gas exploration and banking, and has formed excellent working relationships with the government authorities in Laos – in particular with the Tax Department.

With a Bachelor’s in Education from the National University of Laos and a Diploma in Business Administration and Accounting, Daodeuane leads our very experienced tax team and has extensive knowledge with regard to tax and legal advice, tax compliance, tax planning and structuring, tax and legal due diligence, acquisitions and mergers, and corporate and investment advisory.


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