The New 10% Value Added Tax Rate is Going to Be Effective Shortly! Are You Ready for It?

The Ministry of Finance issued Notice No. 1360/MOF dated 23 April 2024 stating that effective from 1 May 2024, the 10% value added tax (“VAT”) rate will be implemented as discussed in our news alert dated on March 20, 2024.

Here are brief details of the notice.

VAT-taxable activities

• Importation of goods from overseas and special economic zones.
• Supplies of goods and services in the country by individuals, entities, and organizations registered in the VAT system.
• Purchasing/receiving of goods and services from non-registered entities in the Lao PDR.

VAT calculation

Any invoices for goods and services issued in May 2024 and onwards should include VAT calculated at 10%, regardless of the date of the relevant contract, except for water, electricity, and telephone bills issued in May 2024, which will have VAT calculated at the old rate of 7% because they cover consumption in April 2024.

VAT invoices

VAT invoice booklets that have the 7% VAT rate written on them – These can be used by crossing out the 7% and writing 10%. Otherwise, users can apply to the Tax Department for a new booklet.

Computerized VAT invoices – These can be updated accordingly.

Early 10% VAT application

If 10% VAT was used by mistake before 1 May 2024, it will be treated as follows:

• For output VAT, 3% must be adjusted in block 21 as excess VAT collected.
• For input VAT, 3% must be adjusted in block 20 as excess VAT paid.

7% input VAT carried forward from periods before May 2024

Any input VAT paid at 7% will be continually carried forward, offset, or refunded in accordance with the VAT Law.

If you have any questions about this alert or need further information regarding the above, please contact the undersigned, your usual VDB Loi adviser, or Chanhsamone Phetsavang (Senior Tax Consultant) at [email protected].