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IFC Supports Lao PDR in Simplifying the Tax System and Easing Compliance

Vientiane, Lao PDR, September 10, 2009— IFC, a member of the World Bank Group, is working with Lao PDR to improve the country’s tax and revenue collection procedures, helping reduce administrative burdens and boost government revenues.
The government’s Tax Department will introduce a project to improve the tax system for small and medium enterprises in October 2009, and a new value-add tax in January 2010. The measures aim to strengthen the government’s ability to stimulate the domestic economy and fund large-scale development projects. The plans were announced today at a stakeholder workshop that included representatives from ministries, local level authorities, the Lao Chamber of Commerce and Industry , and the World Bank Group.
“The repercussions of the global economic crisis have led to losses in government revenues. We need to find better ways to boost the central budget, while at the same time ensuring that we do not overburden the private sector with complicated administrative procedures,” said Manivone Insixiengmay, Director General of the Tax Department.  “To do this, we need an effective value-added tax system and comprehensive improvements to the tax regime, especially for small and medium enterprises.”
The value-added tax law was enacted in December 2006, but implementation was delayed to give taxpayers time to prepare. To ensure successful implementation of the tax in January, the Tax Department will launch a campaign this October to inform the public of the system’s workings and  benefits. IFC is supporting the information campaign and will work with tax authorities to improve the tax regime for small and medium enterprises by simplifying procedures and making tax compliance easier.
“We are pleased to be a part of this important project and expect it to result in a practical tax system that is easy for taxpayers to follow,” said Charles Schneider, IFC Program Manager for Investment Climate Advisory Services in the Mekong. “If we can reduce the time and cost of tax compliance, it will encourage more small and medium enterprises to pay taxes and ultimately increase government revenues.”
IFC advises governments, private companies, and industry sectors on how to grow businesses sustainably and create a healthy investment climate. In Lao PDR, IFC advisory services are delivered in partnership with Finland, Ireland, the Netherlands, New Zealand, and Switzerland.
About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit www.ifc.org .