Laos struggles with poor tax management
Much revenue from taxes and tariffsis being lost in Laos due to poor management by officials and a lack of cooperation from businesses, the country’s Minister of Finance Phouphet Khamphounvong said according to a September 30 report by the Vientiane Times.
Most of the taxes lost were those levied on imports and exports including vehicles and petrol, he said. In addition, the government is deprived of revenue due to its tax exemption policy for foreign investors.
In total, the government missed out on taxes amounting to $152 million in fiscal year 2011-12 and $165 million in 2012-13.
Revenue is also lost because some businesses import goods illegally, while customs officers do not manage their work properly, the minister said. In addition, many traders try to avoid paying tax and do not meet their obligations to the government, he added.
He cited the example of an importer buying a Toyota Vigo costing $30,000 but registering it as being valued at only $20,000 so that less tax would have to be paid.
There is also widespread tax dodging in the natural resources sector.
“We have collected almost $20 million in taxes on timber exports but Laos has actually sold wood products to neighbouring countries worth hundreds of millions of dollars a year,” the minister said, adding that “some authorities” cooperate with traders in the illegal export of wood products, included protected wood species.
Other revenue is lost through inadequate tariff collection, and many businesses find ways to avoid paying customs duty. Some businesses have registered in Vientiane but also operate in other provinces. When Vientiane authorities ask them to pay duty on goods, they claim they have already paid it at another location. Conversely, when provincial authorities ask them to pay, they say the duty has been paid in Vientiane.
The government is also suffering from the inadequate collection of land taxes, especially those levied on land concessions, land trading and land transfer.
However, Phouphet said the finance sector is working to collect sufficient revenue to meet the target each year and to ensure the budget is sufficient to pay officials’ salaries and allowances.
In fiscal year 2011-12, the finance sector bolstered revenue collection by about 20 per cent over the previous year, but this year expenditure increased by about 40 per cent.
To ensure the government’s coffers are filled, the Ministry of Finance will improve its operations by using new technology and encouraging greater responsibility and coordination between various sectors in both private and government bodies. The ministry also has set up a taskforce committee to monitor the macroeconomy and ensure that revenue collection reaches the set target.
Much revenue from taxes and tariffsis being lost in Laos due to poor management by officials and a lack of cooperation from businesses, the country's Minister of Finance Phouphet Khamphounvong said according to a September 30 report by the Vientiane Times. Most of the taxes lost were those levied on imports and exports including vehicles and petrol, he said. In addition, the government is deprived of revenue due to its tax exemption policy for foreign investors. In total, the government missed out on taxes amounting to $152 million in fiscal year 2011-12 and $165 million in 2012-13. Revenue is also...
Much revenue from taxes and tariffsis being lost in Laos due to poor management by officials and a lack of cooperation from businesses, the country’s Minister of Finance Phouphet Khamphounvong said according to a September 30 report by the Vientiane Times.
Most of the taxes lost were those levied on imports and exports including vehicles and petrol, he said. In addition, the government is deprived of revenue due to its tax exemption policy for foreign investors.
In total, the government missed out on taxes amounting to $152 million in fiscal year 2011-12 and $165 million in 2012-13.
Revenue is also lost because some businesses import goods illegally, while customs officers do not manage their work properly, the minister said. In addition, many traders try to avoid paying tax and do not meet their obligations to the government, he added.
He cited the example of an importer buying a Toyota Vigo costing $30,000 but registering it as being valued at only $20,000 so that less tax would have to be paid.
There is also widespread tax dodging in the natural resources sector.
“We have collected almost $20 million in taxes on timber exports but Laos has actually sold wood products to neighbouring countries worth hundreds of millions of dollars a year,” the minister said, adding that “some authorities” cooperate with traders in the illegal export of wood products, included protected wood species.
Other revenue is lost through inadequate tariff collection, and many businesses find ways to avoid paying customs duty. Some businesses have registered in Vientiane but also operate in other provinces. When Vientiane authorities ask them to pay duty on goods, they claim they have already paid it at another location. Conversely, when provincial authorities ask them to pay, they say the duty has been paid in Vientiane.
The government is also suffering from the inadequate collection of land taxes, especially those levied on land concessions, land trading and land transfer.
However, Phouphet said the finance sector is working to collect sufficient revenue to meet the target each year and to ensure the budget is sufficient to pay officials’ salaries and allowances.
In fiscal year 2011-12, the finance sector bolstered revenue collection by about 20 per cent over the previous year, but this year expenditure increased by about 40 per cent.
To ensure the government’s coffers are filled, the Ministry of Finance will improve its operations by using new technology and encouraging greater responsibility and coordination between various sectors in both private and government bodies. The ministry also has set up a taskforce committee to monitor the macroeconomy and ensure that revenue collection reaches the set target.
