Payment to Overseas Companies: How to Withhold Tax in Laos? Key Points on Withholding Tax Practice

向境外公司付款，老挝预扣税怎么扣？代扣代缴实务要点

ການຈ່າຍເງິນໃຫ້ບໍລິສັດຕ່າງປະເທດ, ການຫັກອາກອນ ຢູ່ ລາວ ຈະຫັກແນວໃດ? ຈຸດສຳຄັນໃນການຫັກອາກອນ ແລະ ນຳສົ່ງ

Published: 2026-07-07 · LaoPaniti legal guides

You are a Chinese-invested company in Laos, and recently you need to pay a consulting fee to a technical service company in Thailand. The finance department tells you that the money cannot be remitted in full directly; a portion must be withheld and paid to the Lao tax authorities. This is the withholding tax (source deduction) system under Lao tax law.

When is withholding required?

According to the Lao Income Tax Law and Tax Administration Law, when a domestic payer in Laos pays the following items to an overseas entity, the payer generally has the obligation to withhold tax: Service fee/charge, Royalty, Interest, Dividend, Rent, and other similar income. The payer (your company) must deduct the corresponding tax from the payment amount and declare and pay it to the tax authorities within the prescribed time limit.

How much to withhold? Depends on the nature of the payment and tax treaties

The withholding tax rate is not fixed but depends on the nature of the payment. For example, different categories such as dividends, interest, and royalties apply different rates. In addition, if the recipient's country has concluded a Double Taxation Agreement (DTA) with Laos, a lower treaty rate may apply. In practice, you need to first confirm the specific nature of the payment, then check the base tax rate under current Lao tax law, and also verify whether any applicable tax treaty benefits are available. Due to the complexity, it is recommended to consult a professional for calculation before proceeding.

Risks of non-withholding or under-withholding

The payer is the statutory withholding agent. If the withholding tax is not properly withheld, the tax authorities have the right to demand back payment of the tax and may impose Late Payment Penalty or Fine/Penalty. Therefore, for every payment abroad, you should first assess whether tax withholding is required and keep complete withholding vouchers and declaration records.

Practical tools and suggestions

Facing complex withholding tax rules, you can first use the free AI consultation of LaoPaniti, input the payment type and amount, and quickly clarify the framework. In addition, LaoPaniti also provides contract review and trademark search tools to help you avoid risks in business cooperation. Visit https://www.123laoai.com now for free use.

This article is compiled by LaoPaniti for reference only and does not constitute legal advice.

FAQ

Is withholding tax required for payment of overseas goods?

Generally, withholding tax mainly applies to income such as Service fee/charge, Royalty, Interest, and Dividend, rather than payment for goods trade. However, the specific determination still depends on the substance of the Contract, and it is recommended to consult a professional.

Which countries has Laos signed Double Taxation Agreements (DTA) with?

Laos has signed tax treaties with several countries, including China, Thailand, Vietnam, etc. For specific treaty content, you can refer to the announcements of the Lao tax authorities or use LaoPaniti to query.

How to declare and pay the withheld tax?

The payer should submit the withholding tax return and pay the tax to the competent tax authorities within the prescribed time limit after payment (e.g., withholding on wages/service fees is paid monthly by the 20th of the following month; dividend withholding must be declared within 15 days), subject to the provisions of the Tax Administration Law.

Legal basis

《所得税法》
《税收管理法》

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