Regional Spherical- up 2020: Lao Pdr

Looking Back: 2020

In 2020, in order to reduce the impact of the COVID-19 pandemic on businesses, various legal and regulatory changes have been introduced. 2020 has also seen foreign nationals being permitted to own condominiums, and the Lao Civil Code 2020 and the amended Law in Insurance coming into operation. 

In addition, Laos’ Tax Law has been repealed and replaced by the Law on Tax Administration, the Law on Income Tax, and the Law on Consumption Tax to enhance tax administration in Laos.

Summaries of these key developments are provided below.

COVID-19 – Support and Enhanced Control Measures and Policies for COVID-19 Outbreak

In March 2020, the Lao Government put in place enhanced measures, restrictions and policies to reduce the impact of the COVID-19 pandemic on businesses. These include tax exemptions, extension of date for submission of financial reports, loan policies to help businesses, deferment of payment of social security obligations, restrictions relating to businesses/services and work, restrictions on movement and gatherings, and closure of borders.  Click here for more information.

The Government has since been updating its policies to contain the COVID-19 pandemic in the country.  

Foreign Nationals Now Permitted to Own Condominiums

Foreigners are now allowed to purchase suites or units in condominiums with the same term as the lifespan of the building or condominium. They can also have land use rights under land leases and concession agreements with Lao citizens and the Government. The land use rights on the land on which the condominium is built still belongs to the legal entity that owns the land. Click here for more information.

Lao Civil Code 2020 Comes into Operation on 26 May 2020

On 26 May 2020, the Lao Civil Code came into force. It is a comprehensive piece of legislation comprising 630 articles. It replaces and repeals civil and commercial laws containing similar provisions, including the Law on Contract and Tort, the Law on Property, the Law on Secured Transactions and other laws with respect to civil matters. Click here for more information.

Amended Law on Insurance Comes into Operation on 15 April 2020

On 15 April 2020, the amended Law on Insurance came into force (“Amended Law“). The Amended Law  addresses insurance activity in Laos, insurers’ daily operations, and the termination and liquidation of insurance companies. Click here for more information. 

The Repeal of the Tax Law

On 16 January 2020, the Tax Law was repealed and replaced by the Law on Tax Administration, the Law on Income Tax, and the Law on Consumption Tax.  

Law on Tax Administration: The law sets out the principles, regulations, and measures to ensure that individuals and entities or organisations comply with their tax obligations and that taxes are collected  efficiently.  

Law on Income Tax: The law encourages individuals to pay their income taxes effectively. The taxes covered in the Law include enterprise income tax, profit tax, micro-enterprise income tax, individual income tax for residents and individual income tax for non-residents.

Law on Consumption Tax: The law aims to regulate the collection of taxes on goods and services. The taxes collected will be used  to improve health care and environmental care, as well as enhance the socio-economic condition of the country on the national and international level.

Gazing Into: 2021

Laos’ economy moving forward  will see startups as drivers for economic growth. This can be gleaned from stories of emerging entrepreneurs finding success in e-commerce, such as Food Panda, the largest food order app in Laos, or Food Panda – Local Food & Grocery Delivery, the newest on-demand e-commerce service for grocery shopping. Meanwhile, bank services are increasingly shifting as demand for e-commerce grows locally, helping to shape a regulatory environment and payments system that can support online merchants.

Laos also intends to strengthen the rule of law in the country by amending its Law on Judgment Enforcement.

In addition, the following key trends and/or developments are to be noted:

  • promoting the development of small and medium-sized enterprises (SMEs);
  • opportunity and challenge of digital system toward the socio-economic development in Laos;
  • Official Launch of Transmission Lines Connecting Laos to Cambodia; and
  • Lao Visits Laos (Lao Thiao Lao) – While the tourism industry in Laos has been affected by the loss of international visitor arrivals, a domestic tourism campaign called “Lao Visits Laos” (“Lao Thiao Lao“) is beginning to take shape. The Lao Thiao Lao Marketing Campaign kicked off recently to promote domestic tourism.

Summaries of some of the 2020 developments leading to the trends highlighted above are provided below.

Draft Decree on Electronic Commerce

The Draft Decree on Electronic Commerce (“E-commerce Decree Draft“) was published in the Electronic Official Gazette on 21 February 2020  and is awaiting endorsement.  The E-commerce Decree Draft aims to regulate electronic commerce in Laos to, among others, protect the rights and interests of users and electronic merchants.  

Amendments to Law on Judgment Enforcement

The amendments to the Law on Judgment Enforcement 2008 were published in the Electronic Official Gazette on 18 March 2020 and are awaiting endorsement.  The amendments set out principles, rules, procedures, methods and measures in relation to the enforcement of penalties for fines, confiscation of property or things, and penalties for impunity without imprisonment. The amendments also aim to: (i) further strengthen State authority and the rule of law; (ii) protect the State and the collectives as well as the legitimate rights and interests of the collectives, citizens and organisations; and (iii) enhance social security, public order and justice. Click here for the published draft of the amendment in Lao language.  (The English translation is not available).