Investment Promotion Law Undergoes Amendments to Boost Growth
Drafted amendments to the Investment Promotion Law that policy makers are currently drawing up are set to offer maximum profit tax exemptions of up to eight years for businesses operating in certain promoted areas.Three promoted areas are categorised with minimum profit tax exemptions of one year and the areas with the most hardship conditions will be granted maximum profit tax exemptions in a move to promote investment in rural communities.
Those investors who expand their businesses will also benefit from the profit tax incentives, according to the draft’s Article 52.
After the profit tax exemption is finished, an enterprise employing 300 domestic workers or more is eligible to request for profit tax exemption for another three years, according to the draft.
Other tax incentives such as tariff exemptions for imported raw materials, equipment and vehicles as well as tariff exemptions for exported goods from those doing business in the promoted areas will also be granted in line with the existing relevant regulations.
In addition, those investing in public sectors such as hospitals, education and research institutes would be exempted land lease fees between 5-15 years coupled with profit tax exemptions for 2-5 years depending on the conditions of the particular area where the businesses were located, according to the draft.
The drafted amendment sought to reduce the maximum concession period for investment projects in Laos from 99 years to 50 years after learning the existing period was too long, Director General of Investment Promotion Department, Ministry of Planning and Investment Mr Manothong Vongxay said.
Those granted an investment license but do not take action to implement the project within one year as indicated in the project economic study, or do not pay taxes and other obligation fees for one year, will be warned and if no resolution will have their license revoked.
The amendment requires any investor doing business in Laos to fulfil environment-safety criteria and social obligations for employees such as health insurance and social security.
According to the drafted Article 52, policy makers are also mulling to increase Lao receipts from mining projects to not less than 48 percent of the overall revenue to be generated from the mining projects, up by three to six percent from the current proportion.
Currently, Laos received somewhere between 42-45 percent of overall revenue the mining projects generate, according to the Department of Mines under the Ministry of Energy and Mines.
The drafted amendments seek to promote public private partnership (PPP) and Lao outbound investment. This is the first time that the PPP and Lao outbound investment are set to be incorporated into a law.
The move comes as the government is aware of the growing need for greater participation by the private sector in the development process including through the PPP.
Additionally, although only a few Lao companies had started to explore investment opportunities overseas, Laos needed to have a law in place to facilitate this potential perspective amid regional integration, Deputy Director General of the Investment Promotion Department, Ministry of Planning and Investment Ms Manichanh Thiengthepvongsa said on Friday.
The draft is planned to be submitted to the National Assembly slated for October for debate and approval.
Source: Vientiane Times