Govt hikes excise tax on luxury, non-essential goods to boost foreign currency reserve

President Thongloun Sisoulith has signed a new presidential ordinance that raises excise taxes on certain goods deemed to be luxury and non-essential items, in an attempt to boost the country’s foreign currency reserves by reducing expenditure.
Laos has experienced a shortage of foreign currency in recent years, leading National Assembly members attending the most recent parliamentary sitting to suggest raising the excise tax on luxury and non-essential goods to discourage their importation and save on the expenditure of foreign currency.
The presidential ordinance imposes a rise in excise tax on 18 items listed in six categories, ranging from fossil-fuel-powered vehicles to alcoholic beverages and other drinks, tobacco, and gaming machines.
The excise tax on fossil-fuel-powered SUVs and cars with an engine size not exceeding 1,000cc increases from 26 to 31 percent under the new ordinance, which was signed on October 9, 2023, and comes into effect immediately.
Following are the other items named and the amount by which the excise tax levied on them will rise:
Fuel-powered SUVs and vehicles, according to engine size:
- Over 1,000cc to 1,600cc vehicles will incur a tax rise of 31 to 41 percent,
- Over 1,600cc to 2,000cc tax rises from 36 to 56 percent,
- Over 2,000cc to 2,500cc tax rises from 41 to 66 percent,
- Over 2,500cc to 3,000cc tax rises from 52 to 82 percent,
- Over 3,000cc to 4,000cc tax rises from 77 to 127 percent,
- Over 4,000 cc to 5,000cc tax rises from 92 to 200 percent,
-  Vehicles with an engine size greater than 5,000cc will see the tax rise from 102 to 220 percent.
The excise tax on beverages with an alcohol volume of over 23 percent will now be charged at 110 percent, an increase on the previous 80 percent tax. Drinks with an alcohol volume of 10-23 percent will incur a tax of 90 percent instead of 70 percent as previously. Drinks with an alcohol volume of less than 10 percent will incur excise tax of 72 percent, an increase from 62 percent.
Different increases in tax will be applied to beer, the most commonly consumed alcoholic drink in Laos.
The excise tax on beer with an alcohol volume of over 5 percent will rise to 70 percent from the previous rate of 60 percent. Beer with an alcohol volume of 0.5 to 5 percent will see the excise tax increase to 60 percent from 20 percent.
To discourage smoking and minimise spending on imports, the excise tax will also be raised on tobacco products. The tax charged on cigars and cigarettes will rise to 72 percent from 57 percent. Soft drinks and energy drinks will also see a slight increase in excise tax.
The new rates replace the previous ones as defined in the relevant laws, including the Law on Excise Tax.

By Souksakhone Vaenkeo 
  (Latest Update January 4, 2024)