Ministry of Finance updates guidance for non-resident providers of B2C digital services
The Laos authorities have updated the compliance obligations on foreign providers of digital or electronic services to local consumers. The obligation for such non-residents to charge Value Added Tax was imposed in February 2022.
Businesses must use the new Digital Tax Services System (‘Tax System) from May 2024. This is a simplified compliance regime, with no right to deduct VAT.
Lao electronic services by non-residents providers and digital marketplaces come into VAT net
From early 2022, the Lao Ministry of Finance has made non-resident providers and marketplaces sellers of electronic or digital services liable to VAT. There is a VAT registration threshold of LAK 400 million (approx €31k or $34k) per annum. There is a simplified registration process via the DTax System.
VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.
What digital services are liable to Lao VAT?
Income from the following services are subject to VAT:
- Streaming or download music, movies
- Online gaming
- Apps
- Advertising
- B2C commercial and sharing economy hotels or accomodation
- Marketplace intermediary fees
Determining if VAT is due in Laos
Under the destination principle, providers of services must determine if their consumer is resident and/or enjoys the service in Laos. If so, the local VAT should be charged and collected. Providers may rely on the following evidence:
- Billing address of the customer
- Address of bank, credit card etc of payment method
- IP address of the device used to access the service
- International telephone line country code
VAT registration and compliance
Non-residents over the threshold of LAK 400 million should register for a TIN (Tax Identification Number). A local fiscal representative must be appointed.
There are no requirements to produce VAT invoices for B2C sales.
VAT returns must be filed on a quarterly basis. Reporting is due at the end of the second month following the report quarter.
Asia Pacific VAT on digital services
| Comments (click for details) | Rate | Date | Threshold | Comments |
| Australia | 10% | Jul 2017 | AUD $75,000 | |
| Azerbaijan | 12% | Jan 2017 | – | |
| Armenia | 20% | Jan 2022 | AMD 115million | |
| Bangladesh | 5% - 15% | Jul 2019 | – | B2B and B2C |
| Bhutan | 7% | Jul 2021 | Nu 5million | |
| Cambodia | 10% | Mar 2022 | KHR 250m | |
| China | 6%-13% | N/a | Nil | Withholding VAT; B2B and B2C |
| Fiji | 9% | TBC | FJD 300,000 | |
| India | 18% | Jul 2017 | - | |
| Indonesia | 11% | Aug 2020 | IDR600m or 12k customers | |
| Japan | 10% | Oct 2015 | JPY 10 million | |
| Kazakhstan | 12% | Jan 2022 | Nil | |
| Kyrgyzstan | 12% | Jan 2022 | Nil | |
| Laos | 10% | Feb 2022 | LAK 400m | |
| Malaysia | 8% | Jan 2020 | RM500,000 | |
| Nepal | 13% | Jul 2022 | Rupees 2m | Also 2% DST |
| New Zealand | 15% | Oct 2016 | NZD 60,000 | |
| Pakistan | 2% | Sep 2021 | Nil | Marketplace Withholding VAT |
| Palau | 10% | Jan 2023 | $300,000 | |
| Philippines | 12% | 2024 ? | P 3million | |
| Singapore | 9% | Jan 2020 | S$ 100,000 | |
| South Korea | 10% | Jul 2015 | Nil | |
| Sri Lanka | 18% | 2025? | LKR 60m | Proposals only |
| Taiwan | 5% | May 2017 | NTD 480,000 | |
| Tajikistan | 14% | Jan 2021 | ||
| Thailand | 7% | Sep 2021 | 1.8m Baht | |
| Uzbekistan | 12% | Jan 2020 | Nil | |
| Vietnam | 10% | Dec 2020 | – |
