Home | About us | Newsletter | Comparison of Investment Incentives Given to Foreign Investment

Comparison of previous & newly amended Foreign Investment Law

Contents

Law on the Promotion and Management of foreign Investment in the Lao PDR (1994)
  

Law on the Promotion of Foreign Investment In the Lao PDR (2004)

 

Form

 

 of FDI

 

•  2 forms of FDI:

a) A joint Venture with one or more domestic Lao Investors

b)  A 100% foreign- owned enterprises

  • Exemption from import duties for intermediate components and raw materials imported for processing and re-export;
  • Uniform flat rate of 1% of import value of equipment, means of production, spare parts and other materials used in operation of investment projects;
  • No export duties on finished products;
  • Annual profit tax at a uniform flat rate of 20%
  • Special privileges, including reduction or exemption from theprofit-tax rate, are given based on the size of investments and the significant positive impacts that such investments have on the socio- economic development of Lao PDR;
 

•  3 forms of FDI:

a)  Business Cooperation by contract;

b) A joint venture with one or more domestic Lao investors (Foreign equity should not be less than 30% of total investment capital); or

c) A 100% foreign- owned enterprise

  • 0% of import duties on production vehicles, machinery, equipment and raw materials
  • No export duties on finished products;  
  • Profit tax is classified into 3 groups: 20%, 15% and 10% and profit tax exemption is offered for a certain period depending on activities, investment areas and size of investment

1) Zone One (area with no economic information infrastructure)

  • 7 years profit tax exemption
  • thereafter a profit tax of 10%

2) Zone Two: (areas with certain level of economic infrastructures)

  • 5 years profit tax exemption
  • 3 years profit tax of 7.5%
  • thereafter a profit tax of 15%

3) Zone Three ( areas with good infrastructure)

  • 2 years profit tax exemption
  • 2 years profit tax of 10%
  • thereafter a profit tax of 20%
Other

 Incentives

 
  • Investment term is up to 30 years
  • Freedom to expatriate their earnings back home or to third countries
  • Right to employ foreign expatriates
  • Personal income tax at a flat rate of10%
 
  • Investment term is up to 75 years
  • Freedom to expatriate their earnings back home or to third countries
  • Right to employ foreign expatriates (not exceed 10% of the enterprise's labor)
  • Personal income tax at a flat rate of 10%

Information provided on the DDFI Web site is subject to change without prior notice. Although an effort is made to present current and accurate information, the DDFI makes no guarantees concerning the Web site content or related matters.
© DDFI 2003