Share this page

IFC Helps Improve Tax Transparency and Fairness for Lao Small and Medium Enterprises

Luang Prabang, Lao PDR, May 9, 2014 —IFC, a member of the World Bank Group, is working with the Tax Department of Lao People’s Democratic Republic to develop guidelines to make taxation more efficient, transparent, and easier for small and medium businesses.
Today, IFC and the Tax Department held a consultation session with tax officials at both central and district levels to better understand how tax liability is assessed and calculated.
“We want businesses to practice simple accounting and issue proper invoices, which are key to transparent and fair taxation,” said Sansack Soulisack, Deputy Director General of Lao PDR’s Tax Department. “By reaching out to tax authorities from around the country, we hope to reform the tax system and further support the growth of small and medium enterprises.”
The Lao government introduced the General Tax Law in January 2012, which allows small and medium enterprises earning less than 400 million Lao kip a year to be assessed under a less administratively burdensome presumptive tax system, which calculates tax liability based on annual turnover and according to standardized tax rates. Implementation of the regime, however, has had limited success so far.
To improve compliance across the country, IFC is working with the Tax Department to develop administrative guidelines to clarify the General Tax Law’s provisions on presumptive taxation. The new guidelines will address practical problems in applying the tax law and help ensure that the legislation will be applied uniformly.
“This will help improve the transparency of the taxation system, making it easier for entrepreneurs to pay taxes, grow their businesses, and create jobs,” said Michael Engelschalk, an IFC Tax Specialist. “Our goal is to ensure that all taxpayers, especially small and medium enterprises, are treated equally, have access to the required information, and have a better understanding of the tax compliance process.”
Since 1998, IFC has been helping the Lao government improve infrastructure, streamline business start-up procedures, and simplify its tax regime in order to make the country a better investment destination.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org .
Stay Connected