Vientiane, Lao PDR, October 24, 2014
—IFC, a member of the World Bank Group, and the Bank of Lao People’s Democratic Republic are helping leasing companies improve tax compliance so that they can maintain a sustainable operation and provide an alternative source of access to finance for small and medium enterprises.
Representatives from 15 leasing companies joined a taxation workshop hosted yesterday by IFC, the Bank of Lao PDR and the Ministry of Finance to better understand the taxes they owe the government. In Lao PDR, leasing companies are important financial institutions that help smaller businesses access the equipment they need to grow their businesses without investing significant capital upfront. Competition among leasing companies promotes more diverse services and options for smaller businesses with financing needs.
“IFC’s support has helped more lending companies understand their tax liability and improve tax compliance,” said Akhom Praseuth, General Director of the Financial Institution Supervision Department at the Bank of Lao PDR. “Having a greater number of leasing companies in the market will help provide more leasing options for small and medium enterprises.”
Over the past two years, IFC has also been supporting the Bank of Lao PDR on drafting and enacting the legislation of a leasing decree that sets international best practice standards for leasing companies.
“Leasing is a great alternative source of access to finance for small and medium enterprises, especially for those who do not own land to use as collateral,” said Phongsavanh Phomkong, Head of IFC Lao PDR office. “In Lao PDR’s lending market, competition is high and a lack of clarity of taxes owed can make or break a leasing company. We want to help such companies adopt best practices to improve their sustainability.”
Globally, IFC plays a leading role in leasing as it brings small and medium enterprises into the formal financial system. IFC is chiefly involved in the development of financial leasing, which is the primary stage in leasing development in most emerging and transitional economies. With financial leasing, legal ownership remains with the lessor, while the lessee enjoys the right to economic usage of the asset. The asset could range from something as simple as a bicycle to a truck, or even the development of sustainable-energy equipment to fight climate change.
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 about 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, we provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development. For more information, visit