Cash-strapped Laos rolls out major tax revamp
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Laos is set to tackle its revenue shortfall with the launch an electronic tax-collection system early next year, with tests first on motor vehicles.
“One of the measures we are proposing to resolve tax collection issues is the use of a modern electronic system, and tests of the system will begin next month,” Minister of Finance Phouphet Khamphounvong said on Wednesday.
Loopholes and violations have helped blow a huge hole in revenue collection this year, which has resulted in an increased budget deficit and a hike in government debt.
Phouphet said the new method of taxation would calculate tax based on a vehicle’s engine capacity, its brand and model, but not its price.
Though a large number of vehicles are imported each year, the government only raises a small amount of tax from the trade. Importers and dealers often report their sale prices as lower than reality or use other means to avoid payment of duties.
By using different criteria to assess tax to be paid and ensuring all vehicle imports have duty levied on them, the new system aims to help end tax avoidance. Phouphet said he was confident the government would earn more revenue from this source.
He said a full trial would begin next year and would gradually be applied to other sectors of business.
