Guidelines on the Obligation of Overseas Digital Goods Suppliers and Digital Platforms or E-Commerce Activities to Pay Value Added Tax to Consumers in Laos

Article

Lao People's Democratic Republic
Peace, Independence, Democracy, Unity, Prosperity
Ministry of Finance No. 0558/MF
Vientiane Capital. Date: 14 February 2024

Guidance
On the Implementation of Value Added Tax Obligations for Foreign Suppliers of Digital Goods, Digital Format Services (Website or Application) or Cross-Border Electronic Commerce Activities to Users in the Lao PDR

- Pursuant to the Law on Tax Administration No. 66/NA, dated 17 June 2019;
- Pursuant to the Law on Value Added Tax No. 48/NA, dated 20 June 2018;
- Pursuant to the Law on Amendments to Certain Articles of the Law on Taxation No. 01/NA, dated 7 August 2021;
- Pursuant to Decree No. 327/PM, dated September 16, 2014, on the Management of Internet Information;
- Pursuant to Decree No. 296/PM, dated April 12, 2021, on Electronic Commerce;
- Pursuant to Decree No. 600/PM, dated October 14, 2021, on the Organization and Operation of the Ministry of Finance.
The Minister of Finance issues the following guidance:

1. Objective:
To manage, monitor, and inspect the collection of value-added tax from foreign suppliers of digital goods and digital-form services (online or platform) or e-commerce activities to users in the Lao PDR, aiming to ensure accurate, complete, and effective collection of state budget revenues.

2. Scope of Application:
This guideline applies to foreign suppliers who have no domicile and are not registered in the Lao PDR.

3. Objective:

Suppliers of digital and electronic goods from abroad to consumers in the Lao PDR must collect tax from the supply.
If the supply of digital goods and digital services is through a digital platform service (for personal use), the digital platform operator (platform provider) is considered the supplier and is responsible for calculating and collecting value added tax at the time of supply of digital goods and digital services, acting on behalf of foreign and domestic suppliers: they must declare and remit the value added tax to the tax authorities of the Lao PDR correctly and completely.
Digital platform service operators (platform providers) include all operating parties.
As follows:
1) Digital platform operators directly or indirectly determine the terms and conditions under which digital goods and digital services are supplied;
2) Digital platform operators (payment service providers) are directly or indirectly involved in processing payments for digital goods and digital services;
3) Digital platform operators (delivery service providers) are directly or indirectly involved in the delivery of digital goods or digital services;
4) Digital platform operators (customer support service providers) provide customer support services related to the supply or use of digital goods and digital services.
Invoices or other documents provided to users related to digital goods and digital services must specify the details of the supply, whether carried out entirely or partially by the operator in digital form [71(?)>?].

Foreign suppliers registered in the value-added tax system must collect value-added tax starting from August 1, 2024.

4. Explanation of certain terms:

Some terms in the guidelines have the following meanings:

1) Supply of electronic services from abroad means the supply of electronic services by individuals, legal entities, and organizations conducting business outside the territory of the Lao PDR, without a place of business in the Lao PDR, including intangible assets transmitted via the internet or
Other electronic channels, using information technology, mainly include:

- Online games, mobile application services, online advertising services;
- Digital goods such as mobile applications;
- Software programs;
- Images, videos, and digital financial data;
- Digital music, movies, and games;

2) Providing distance education school booking services, through management, provision, or support of business search engines, such as specific information search services;

Services acting as intermediaries between buyers and sellers;

Services for arranging digital goods and digital services for online marketplace sales or online auctions;

Services for publishing or transmitting images or sounds not associated with content providers;
Advertising services provided in digital form without identity;

Ancillary services carried out by electronic means to prepare and facilitate the completion of transactions, which may not be in digital form, such as: fees paid to intermediaries, service fees for users and stores for selling goods through electronic markets;

Digital form means software and technology used to integrate, improve business operations and IT systems, serving as the structure of the company for operations and customer engagement. In addition, it also includes website, channel, store or market services that facilitate through the internet or electronic channels.
Other electronic services. Including the supply of digital goods and digital services through intermediaries to individuals, legal entities, and organizations in the Lao PDR. Not included in the supply of electronic services:

Teaching services delivered live by the instructor via the internet or electronic network;

Services provided by specialists that involve human participation and are not automated, such as: consulting services provided by experts via email or video chat, consulting or advertising services provided via email to recipients in the Lao PDR, must calculate and deduct value-added tax.
Before each payment to foreign service providers, VAT withheld must be declared and remitted in accordance with legal regulations. Sales of newspapers, magazines, and textbooks in electronic form (8-0004ຣ) are exempt from VAT. Furthermore, foreign suppliers of e-books and e-books (8-0004ຣ) are not required to register for VAT in the Lao PDR or declare and remit tax; 3) Non-digital goods (various types of goods) that are unrelated goods, and image capture that does not involve computer use. Internet documents: VAT system: Tax 5) Foreign supplier means an individual, legal entity, or organization that has no domicile, does not reside, and
Having no permanent residence in the Lao PDR but generating income in the Lao PDR from the supply of digital goods and digital format services (e.g., software, games) or e-commerce to users in the Lao PDR:

6) Value-added tax registrant means individuals, legal entities, and organizations that have no domicile and are not registered to establish an enterprise in the Lao PDR but generate income in the Lao PDR from e-commerce, supply of digital goods and digital format services (e.g., software, games) or e-commerce activities to users in the Lao PDR:

7) Digital tax service system means the electronic system developed by the Ministry of Finance to serve as a channel for providing services, facilitating
Convenience, at the Ministry of Finance, the system allows online registration into the VAT system, perform VAT declaration and payment; review payment and update some information electronically by oneself.

For the details mentioned above, foreign suppliers collecting VAT must register by themselves or through the system (service provider) at:

5. Calculation and collection of VAT:

Calculate and collect VAT at the time of supply of digital goods and digital services (ICT, mobile apps) or supply of e-commerce to users in Lao PDR.

6. Basis for calculating VAT:

The basis for calculating VAT is the total value of the supply of digital goods and services
Digital form (digital type) actual value from individuals, legal entities and organizations in each case as follows:

1) In case of digital goods: value of goods + fee or service charge (if any);

2) In case of digital services: value of service + fee or service charge (if any).

7. Value Added Tax rate:

Supply of digital goods and digital form services (digital type) or e-commerce activities shall be subject to Value Added Tax at the rate in effect in each period of the Lao PDR.

8. Method of calculating Value Added Tax:

Tax base + VAT rate = calculated VAT.

Due to Dek J
P. Kana Xay

Country supplying digital goods and digital form services (digital type)
5. As an individual consumer in the Lao PDR (including those with a license) or e-commerce, and report invoice information in the VAT declaration period. However, foreign suppliers must provide information when requested by tax authorities; 2) Foreign suppliers providing electronic services to legal entities registered for VAT or being VAT taxpayers in the Lao PDR (including those with a license) must issue electronic VAT invoices (as mentioned) and report information in the VAT declaration period. In addition, they may submit to the Tax Department for approval of the invoice format, and the invoice content must at least include:
- Name or tax identification number of the supplier;
- Name or tax identification number of the legal entity or organization receiving the supply;
- Invoice number with specific characteristics;
- Date, month, year of invoice issuance according to the calendar, printed automatically from smallest to largest number;
- Name, quantity, and price of goods/services supplied in US dollars (USD), Euros (EUR), or Yuan (CNY);
- Amount of value-added tax calculated from the value of supply of digital goods and digital services, clearly separated: in case of discounts, specify the discount amount or percentage before calculating VAT.

For the aforementioned foreign suppliers, they must maintain information related to value-added tax for a period of 10 years.
10. Declaration and Payment of Value Added Tax:
The declaration and payment of value added tax shall be made in 3 quarters, each quarter of 4 months, as follows:

1) First quarter: from January to April, declare and pay within May;
2) Second quarter: from May to August, declare and pay within September;
3) Third quarter: from September to December, declare and pay within January of the following year.
Through the National Payment Committee, through the banking system.

11. Payment Channels:
Payment shall be made to the national treasury account in US dollars (USD) or Euros (EUR) or Yuan (CNY) or other currencies, as notified by the Tax Department from time to time, through the following channels:
Part 2 Article 6 and Approved Certificate Declaration 01 Products and Services Network Results Electricity:

1) Payment channels, credit cards, transfers and bank payments:
2) Through international money transfer system under Articles 118 and 187.

Tax

13.

Refund and Deduction of Tax

Foreign electronic suppliers not established or registered in the Lao PDR supplying digital goods and digital services through electronic systems. Providing electronic marketplace services to individuals and legal entities in the Lao PDR (under Articles 151 and 155 of the Tax Law) are not allowed to withhold input VAT.

VAT refund is only for cases with commercial reasons, such as: cancellation of order
Digital goods and digital services. Overcharging due to system errors and others. The refund of value-added tax can be used as a credit to offset value-added tax only, and must attach supporting documents of the refund to the user through the banking system. Various documents must be submitted in the system (within 8 working days). For credit to offset value-added tax, the period for claiming refund is within 183 days. Rights and obligations of foreign suppliers: 1) Foreign suppliers may authorize a legal entity established in the Lao PDR as a representative or
Act on behalf of the company at the Taxpayer Service Office of the Tax Department on working days;

2) Registration in the VAT system, updating information will be exempt from fees and service charges;

3) Foreign suppliers providing electronic services must register themselves and enter the VAT system to develop business in the Lao PDR through the digital tax service system (using the website) on the Tax Department's website, along with the following documents:

- Passport of the manager or authorized representative (copy or original with photo);
- Bank account number of the foreign supplier (copy or original) for payment to the national treasury account of the Lao PDR;
- Registration
4) Must register according to the following periods:
- Through the system (012+5 digits) starting from May 2024;
- Through the tax office starting from March 2024.
5) Data retention:
Foreign suppliers have the obligation to retain transaction data such as:
- Reference documents for digital goods supply and digital service transactions;
- Customer name and address;
- Amount paid;
- Calculation basis, value-added tax rate, and fees or service charges (if any).
Transaction activity data shall be retained for a period of 10 years, and if requested by tax officials, shall be provided.
Taxes in the Lao PDR must be provided in an electronically readable form within 30 days after the end of the quarter.

Report preparation and tax payment shall be subject to penalty measures as specified in Article 14 of this guideline.

14. Article In each of the following cases:
1) A fine of 800 kip per quarter for late declaration and payment of value-added tax;
2) A fine of 0.1% per day of the outstanding value-added tax amount in the VAT declaration;
3) A fine per occasion as follows:
- For the first reminder, a fine of 30% of the VAT payable;
- For the second reminder, a fine of 60% of the VAT payable;
- For the third reminder, a fine of 100% of the VAT payable.
4) Propose to the sector of technology and communication to temporarily suspend or terminate the channels of digital trade and digital services;
5) Propose to banks to temporarily or permanently suspend or cancel the payment channels of payment service providers, depending on each case.
15. Effect:
This guideline replaces Notification No. 0541/ dated February 24, 2022 (specifically on the provision of electronic services by foreign electronic service providers to users in the Lao PDR) and shall take effect from August 1, 2024 onwards.