Home » Laos Publication » Final Payment of Annual Profit Tax for FY2020
Final Payment of Annual Profit Tax for FY2020

Final Payment of Annual Profit Tax for FY2020

March 11, 2021

The deadline for the final annual profit tax payment is fast approaching, are you ready?

Are you aware of the new 50% penalty on final annual profit tax payments that are in excess of 10% of the total prepaid profit tax?

What should you do to minimize the risk of penalties on the excess?

The Minister of Finance Instruction No. 0819/MoF Implementing the Income Tax Law dated 10 February 2021 (the “Instruction”) reemphasizes that the final annual profit tax payment must be declared and paid when the financial statements are submitted, i.e. by 31 March 2021.

Although the Income Tax Law and its Instruction allow taxpayers to prepay their annual profit tax in two installments based on three options (option 1 – the actual profit incurred in the first or second six months, if the accounting report can be prepared; option 2 – the annual business plan; or option 3 – 50% of the previous year’s profit tax payment), with anybalance to be paid by 31 March, the Instruction imposes a 50% penalty on the balance if it is in excess of 10% of the total profit tax prepaid in the two installments.

Does the penalty apply for FY2020, or from FY2021 onwards?

There is no clear answer to this question. However, in our informal discussions with tax officials, they suggested that taxpayers contact the tax authority where they are registered to declare and pay the balance as soon as possible, even before submitting the financial statements (by 31 March 2021) in order to minimize the risk of a penalty sanction.

For more tailored approach to your specific situation, please contact the undersigned or your usual VDB Loi adviser.


Daodeuane is regarded as one of Laos’s most experienced and knowledgeable tax advisers. She has over 20 years of experience, including leading the tax team at PwC in Laos, and prior to that, working at a top regional law firm.

Daodeuane has provided tax and legal advisory services to a large number of multinational and local firms in Laos across a wide range of sectors, including mining, hydropower, gas exploration and banking, and has formed excellent working relationships with the government authorities in Laos – in particular with the Tax Department.

With a Bachelor’s in Education from the National University of Laos and a Diploma in Business Administration and Accounting, Daodeuane leads our very experienced tax team and has extensive knowledge with regard to tax and legal advice, tax compliance, tax planning and structuring, tax and legal due diligence, acquisitions and mergers, and corporate and investment advisory.

Read more