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Ministry prepares to launch VAT



The Ministry of Finance yesterday held a workshop in Vientiane as a forum for custom officials and business people in the capital to discuss the Value Added Tax (VAT) Law before implementing it in the next fiscal year.

The law was adopted by the National Assembly in December 2006, and was expected to be put it into practice within 18 months.

Minister of Finance Somdy Douangdy presided over the meeting, calling on participants to make an effort to familiarise themselves with the new law.

He said that although Laos now has a law, a prime ministerial decree, guidelines and references as to how to implement it, it was still extremely important that everyone understood it first.

“The most important thing is to make sure that people from all walks of life, including police, soldiers and ordinary people, understand and know how to use the law,” he told participants at the workshop.

He also emphasised that officials, and particularly customs officials who are involved directly with the implementation of the law, must know the law in detail and be able to answer people's questions to ensure that everyone is happy with its implementation.

He said that once the new law was enforced, it would change the Lao tax collection system; instead of collecting tax money from business owners, the taxes would come from consumers when they make purchases.

He explained that the current tax collection system could not ensure justice and, in some cases, customs officials had been charging tax on the same products several times once they were sold into different markets, causing prices to rise.

There are also loopholes in the current tax collection system, which have caused losses for both the government and consumers, such as traders illegally importing goods from neighbouring countries to avoid paying taxes, he said.

It is easy to see how the new tax collection system will be more simple and easy for the government to implement, he added.

Mr Somdy explained that the introduction of the VAT was not a new idea; the Lao government had proposed the law in the 1990s, but the fallout from the Asian economic crisis in 1997 meant the government could not complete a draft of the law as planned.

After the Lao economy recovered from the crisis, in 2003 the government established a committee for drafting the new VAT law and presented it to the National Assembly for approval in 2006, he said.

Mr Somdy confirmed that the introduction of the new law was also a part of the reform of the finance ministry's mechanisms, particularly in the areas of tax collection, treasury and budget management, to ensure the ministry could fulfil its political objectives.



By Ekaphone Phouthonesy