VDB Loi Laos Alert – Your 2016 Annual Profit Tax return: Are you ready?

Profit tax policy has changed in 2016 for many reasons, one of the main factors contributing to the change in orientation being the lack of tax resources. Thus, with the 2016 profit tax return filing deadline looming, it’s a good time for Lao companies to thoroughly review their tax risk areas and the effects of these changes on their tax position.

The most recent changes to profit tax were made via the Amended Tax Law No. 70/NA that was adopted on 15 December 2015, published in the Lao Official Gazette on 9 May 2016, and came into force on 24 May 2016. Some of the most pertinent are as follows:

• The filing deadline for the last quarter’s profit tax return was moved from 10 March to 10 January
• Updated depreciation rates
• Deemed profit tax rate mechanism for withholding or compulsory tax calculation for entities not complying with Lao accounting standards.
• Clarification of and additions to the list of non-deductible expenses

At the same time, the Tax Authority has maintained its audit practices regarding profit tax, which most of the time results in poorly understandable profit tax assessments. Some such practices are:

• Comparing declared turnover per the VAT declaration and total sales reported in the financial statements
• Rejecting deductible expenses in the profit tax calculation because of a lack of official invoices
• Rejecting of deductible payroll expenses in the profit tax calculation if personal income tax has not been submitted
• De-recognizing tax losses
• Automatically applying a 30% penalty, without providing a clear reason for the penalty

At VDB Loi, we encourage our clients to develop a preventive approach regarding their tax risks. For that reason, our team offers an annual profit tax return review and preparation service, as well as tax audit assistance, if needed.

Should you have any questions regarding this or would like assistance with your annual profit tax return filing, please do not hesitate to contact Ms. Daodeuane Duangdara ([email protected]) or Mr. Anthony Assassa ([email protected]).

Did you know that VDB Loi Laos is licensed to provide compliance accounting services to complement our tax compliance services?

VDB Loi is a network of leading law and advisory member firms and affiliated companies that comprises 10 partners and over 100 lawyers and advisers, with offices in Cambodia, Indonesia, Laos, Myanmar and Vietnam and representatives in Japan and Singapore. We provide the highest quality solutions for transactions and taxation.