Laos is relatively tolerant of foreign investment compared to its Southeast Asian neighbors.
The revised Foreign Investment Promotion Law of 1994 also includes provisions for free remittance of profits by foreign companies and active encouragement of foreign capital participation. In relation to this active encouragement, foreign investors were given the following preferential treatment, but now they are treated equally with Laotian investment companies.
1) Impose a 1% import duty on production equipment and materials used by foreign investment enterprises
2) Collect a 20% profit tax uniformly on foreign investment enterprises (At that time, Laotian investment enterprises were subject to a 35% profit tax—now, both domestic and foreign investment enterprises must pay a 24% profit tax.)
The specific details of the application of the Investment Attraction Act have changed through several revisions to the enforcement ordinance, and therefore, the conditions of permission in the Foreign Investment Attraction Permit must be carefully reviewed for special tax rate reductions and other necessary measures.
The Business Act of 1994 stipulates the types of investment corporations, including sole investment, joint investment, and limited investment.
Depending on the investment amount, the institution conducting the review process will vary (less than $1 million, $1 million to $5 million, $5 million to $10 million, $10 million or more).
And there are investment projects that are restricted to foreign investment, investment projects that require joint ventures with Laotians, and investment projects that can be done solely by foreigners.
The license review and issuance process has been greatly simplified in recent years, and the Foreign Committee for Investment and Cooperation (FIMC) process, which required foreign investors to initially undergo a document review, has been eliminated, and now the Ministry of Commerce and Industry issues foreign investment licenses directly.
For simple businesses such as consulting, you can obtain an investment license from the Ministry of Commerce and Industry and then obtain a business license from the tax office. However, for businesses such as construction and agriculture, etc. you must obtain additional permits and licenses from the Ministry of Construction, the Ministry of Agriculture, Forestry and Fisheries, etc. after receiving an investment license from the Ministry of Commerce and Industry At this time, you must also prepare and submit related documents such as a business plan (Feasibility Study) and environmental impact assessment (EIA).
As Laos has also entered the online era, the investment license process has become simpler and faster. However, you still have to go to each and every government office, etc., and take your time. At LAW A LAW FIRM, we help you with cost-effective procedures for issuing foreign investment licenses. If you request a consultation, we will ensure that your investment license is issued quickly and efficiently.