[Tlc] L-economics

[justinm at ucr.edu]

FYI.
Thanks,
justin



2009-0107 - VTE Times - Laos: Gov't Starts Imposing 10% Value-added Tax On Consumer Products

http://www.mysinchew.com/node/19892

Laos: Gov't Starts Imposing 10% Value-added Tax On Consumer Products

* Business

2009-01-07 13:40

VIENTIANE, LAOS: The Lao government has introduced a value-added tax (VAT), which requires consumers to pay an additional 10% of the basic purchase price of certain products bought in Laos.

The new tax came into effect on 1 Jan. It will apply only to some locally produced and imported products such as electricity, water, some beers, some drinking water, and fuel.

The price of Beerlao has already risen 2,000 kip a case since last month to take the new tax into account.

Taxation Department Deputy Director General, Lamngeun Palamany, said VAT would replace the old business tax system, under which the government charged companies 5% to 10% of their business profits.

He said the government would not impose VAT on all business units because many of them were not in a position to participate in the new scheme. At present only companies with an investment of more than 5 billion kip will be subject to VAT.

“For the time being we will apply both the new and old tax systems until everyone is ready to use VAT,” he said.

Some 400 companies in the country have an investment capital of more than 5 billion kip.

These companies will start to use the new tax once they can be sure their accounts record accurate sales data.

The VAT law states that companies with an investment of more than 400 million kip can use VAT.

Lamngeun said the government would try to put VAT into practice in some business units to test the system before introducing it to all firms. “We hope we can introduce the system fully in the next fiscal year,” he said.

He said there were many challenges in introducing the new system on a wide scale because it involved different reporting methods than those used in the collection of business profit tax.

VAT requires accurate reports from businesses on the amount of goods they sell so officials can calculate the amount of tax to charge business operators. Without accurate data, the government cannot collect the full amount of taxes it is owed.

The introduction of VAT requires the cooperation of purchasers. Consumers must request a receipt every time they buy an item so the purchase is recorded and business operators pay the requisite tax to the government. Without a receipt there is no proof of sale and business owners can avoid paying the 10% tax.

“We need to have a widespread campaign on the new tax system to encourage consumer participation,” Lamngeun said.

Economists say the introduction of VAT is beneficial because it will enable the government to collect taxes more accurately. They say the amount of taxes collected under the scheme depends how much people buy; if people consume less, the government will get less revenue. (By EKAPHONE PHOUTHONESY/ The Vientiane Times/ ANN)

MySinchew 2009.01.07

__._,_.___

______________
Dr. Justin McDaniel
Dept. of Religious Studies
3046 INTN
University of California, Riverside
Riverside, CA 92521
951-827-4530
justinm at ucr.edu