Ministry imposes new charges on goods transitting through Laos

The Ministry of Finance will impose a new charge on so-called transit goods next month as the government seeks ways to benefit from Laos’ transformation from landlocked to a land bridge.
The Lao National Gazette website last week published the amended Ministerial Decision on Transit Goods Charges, making this government regulation effective in the middle of next month. 
Under this amended ministerial decision, goods which businesses import for export purposes will be subject to the new rates.
According to the new ministerial decision, which Deputy Prime Minister and Minister of Finance Mr Somdy Duangdy signed on January 10, any business that imports goods for export purposes is liable for the new fee.
The rate differs depending on the type of product and the quantity. For example, the transit fee charged on one litre of whisky, wine or other alcoholic beverage is US$1.
A business that imports petrol, oil or lubricant for export purposes will be charged a transit fee of US$0.25 per litre. The fee for a four-wheel vehicle with an engine size larger than 3,000cc is US$1,500 per unit.
Animals such as buffalo, cows, horses and sheep which enter Laos for export will also be subject to a transit fee. The details of these fees can be found at https://laoofficialgazette.gov.la.
Goods which are imported for export purposes will not be allowed to be distributed in Laos, according to the new ministerial decision.
Tax officials were not immediately available for comment on the revision of the ministerial decision on transit goods fees.
However, according to this government regulation, the transit fee is part of the government’s efforts to overcome Laos’ landlocked status and turn the country into a land link.
Laos’ strong economic growth and the need for expansion of the government’s revenue base are also reasons for the amendment of the ministerial decision.
The government has invested a large amount of public money in the construction of railways, roads and bridges to connect to neighbouring countries in order to transform Laos from being a landlocked country into a land bridge.
One of these mega investment projects is the Laos-China railway, which will be part of the Kunming-Singapore railway in the future. The railway running through Laos is scheduled for completion at the end of 2021.
Government officials believe that Laos has huge potential to serve as a logistics hub, through which business operators can bring in goods and ship them to other countries in the region.
The Ministry of Finance has been actively creating new revenue streams by revising the tax laws and introducing new mechanisms to boost revenue collection.
This is in line with the government’s increasing need for revenue for public expenditure and development projects.

By Ekaphone Phouthonesy
(Latest Update February 28, 2020)