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Tax Dodging Traders Sneaking through Rural Border Crossings

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Many traders are using the shortcomings of smaller, informal border crossings to avoid paying customs duty on goods purchased in other countries, an official has admitted.

Because the authorities don’t have the resources to check all the goods arriving at these border crossings, people can often sneak past customs officials without inspection.

An anonymous official at a rural border crossing in the country’s south told Vientiane Times on Friday there are usually only two or three customs officials on duty to check traders and other people bringing in goods from neighbouring countries.

“While they are busy inspecting some people and assessing tax payments on their purchases, others take the opportunity to slip their goods through without paying any taxes,” he said.

Shoppers are charged tax on their purchases if the total value amounts to 500,000 kip or more.

If these informal border checkpoints were better staffed and used modern equipment, the state would be able to collect more tax.

The situation is different at international border crossings as there are more customs officials on duty.

Prime Minister Thongloun Sisoulith advised Champassak provincial authorities to do more to tackle illegal trade when he visited the province last week.

Director of the province’s Commerce and Industry Department, Mr. Sombat Senphansong, said Champassak shared two informal border crossings with Thailand. In the past, people had been able to take goods through these checkpoints without paying tax.

But things have changed since officials decided to step up inspections of imported items.

The Customs Department of the Ministry of Finance says it will start collecting Value Added Tax (VAT) next month at the Lao-Thai Friendship Bridge between Vientiane and Thailand’s Nong Khai province.

Under the scheme, upon entry through land border crossings or international airports Lao citizens or expats living in Laos will be charged VAT of 10 percent of the value of their new or used personal effects. The tax will be waived for people who cross borders less than twice a month and bring in items worth less than US$50.

To start with, VAT will only be charged at the main international border crossings. However, there are concerns that this may encourage more people to bring in goods across other, more informal border crossings to avoid paying tax.

 

Source: Vientiane Times