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IFC Continues to Support Lao PDR’s New Simplified Tax System for Small Businesses

Vientiane, Lao People’s Democratic Republic, June 6, 2016 —IFC, a member of the World Bank Group, is assisting Lao PDR implemention of tax system improvements to enable businesses to operate more efficiently and transparently. The country’s tax department is rolling out a new simplified system that makes it easier for small businesses to report on their activities.
Transparent and simplified taxation is key to supporting a stable and healthy investment climate, contributing to economic growth and poverty reduction. Over the past few years, IFC, in partnership with the World Bank, has been advising the Lao government on developing a more business friendly tax system, which increases efficiency for companies, especially micro, small and medium enterprises, in complying with tax requirements.
From May 23 to June 9, more than 60 tax officials from Vientiane and other provinces are participating in a training of trainers, co-organized by the Ministry of Finance’s Tax Department and IFC to ensure correct and consistent implementation of the new tax-filing procedures.  
“District tax officials must understand the new tax rules and administrative procedures and improve their taxpayer service capacity,” said Bounnam Chunlaboudy, Deputy Director General from the Tax Department, Ministry of Finance. “This training will prepare our staff to assist small business taxpayers to comply with the new tax procedures and to implement basic accounting practices.”
The new tax system takes effect in October in Vientiane Capital following pilot programs in Saysetha District in Vientiane, and Luang Prabang District in Luang Prabang Province. Nationwide implementation will take place in 2017.
“The new, simplified tax procedures will improve transparency for small businesses, encouraging more of them to register for tax,” said Phongsavanh Phomkong, IFC Head of Office in Lao PDR. “IFC is committed to supporting the Lao authorities in further improving the taxation system and making it easier for entrepreneurs to pay taxes, grow their businesses, and create jobs.”
Business owners have welcomed the new system. “I started to maintain bookkeeping and issue invoices only now, even though I have run my business for several years,” said owner of a motorbike spare parts business in Saysetha District. “It was quite difficult in the beginning, but I found that I now manage my business better.”
IFC supports Lao PDR’s transition toward a market-driven economy by improving the investment climate and promoting growth through improved access to services and infrastructure. IFC has been active in the country since 1998 and its tax advisory program is implemented in partnership with Switzerland’s State Secretariat for Economic Affairs (SECO).
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
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