G/SCM/N/343/LAO  
G/SCM/N/372/LAO  
29 January  2021 
(21-0794) Page: 1/8 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:I  
OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT  
ON SUBSIDIES AND COUNTERVAILING MEASURES  
LAO PEOPLE'S DEMOCRATIC REPUBLIC  
The following submission, dated 27 January 2021  is being circulated at the request of the Delegation 
of Lao People's Democratic Republic.  
 
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The followin g notificatio n provide s detail s of suppor t programme s for the period 2016-2020. It 
serves as a notification for subsidies effective during the notified period . This notification may be 
supplemented, in due time, to incorporate further elements or clarifications.  
Althoug h Lao PDR has some doubt s as to whethe r some of these programme s fall within the 
definitio n of a subsidy , they are being notifie d in the interes t of transparency.  As provide d for unde r 
Article 25. 7 of the Agreemen t of Subsidie s and Countervailin g Measures , Lao PDR's notification on 
these measures does not prejudge either their legal status under the GATT 1994 and the Agreement 
on Subsidies and Countervailing Measures, the effects under the Agreement, or the nature of the 
measure itself.  
Members may wish to note that the Law on Investment Promotion (Amendment) No. 14/NA, dated 
17 November  2016; Amendment La w on Article 12 on Law on Investment Promotion (Amendment) 
No. 14/NA, dated 1 7 November  2016, No. 80/NA, dated 4 December  2019; the Decree on Special 
Economic Zone, No. 188/GOL, dated 0 7 June 2018 do not provid e for any measure s which are either 
contingen t upon local content requiremen t or expor t performance.   G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  TABLE OF CONTENTS  
I. INCENTIVES FOR INVESTMENTS  ................................ ................................ ................  3 
II. INCENTIVES FOR INVESTMENT IN THE SPECIAL ECONOMIC ZONE  ...........................  6 
 
  G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  I. INCENTIVES FOR INVESTMENTS  
1. Title of the programme  
Incentives for enterprises  operating in promoted activities or regions.  These incentives are  not 
contingent upon local content or export performance requirements.  
2. Period concerned  
2016 - 2020 
3. Policy objective and/or purposes of the programme  
To enable convenient, expeditious, transparent and proper investments, as protected by the 
Government, aiming to ensure the rights and benefits of investors, the state,  public , enabling the 
regional and international integration, contributing to the continuous growth of national 
socio-economic development in line with green direction and sustainability.  
4. Background and authority for the programme  
(a) Background:  
- Law on Investment Prom otion (Amendment)  No. 14/NA, dated 17 November  2016. 
- Amendment Law  on Article 12 on Law on Inves tment Promotion (Amendment) 
No. 14/NA, dated 1 7 November  2016, No. 80/NA, dated 4 December  2019. 
The new Law on Investment Promotion No. 14/NA, dated 1 7 November  2016 has replaced the 
previous Law on Investment Promoti on No. 02/NA, dated 8 July 2009. 
(b) Authority:  
- Ministry of Planning and Investment.  
- Provincial and Vientiane Capital Planning and Investme nt Departments.  
5. Form of the subsidy  
- Profit tax exemption;  
- Value add duty, land use -related incentives and other incentives;  
- Import duty exemption;  
- Export duty exemption ; and 
- Deduction of annual losses from the profit.  
6. To whom and how the subsidy is provide d 
(a) Eligibility:  
Incentives may be provided to investors investing in the promoted activities and zones.  
Business sector granted incentives includes:  
1. High and modern technology application, scientific research, research and development, 
use of innovative, environmental -friendly technology application, and efficient use of 
natural resource and energy;  
2. Clean, toxic -free agriculture, planting seed production, animal breeding, industrial 
plantation, forestry development, protection of environment an d bio-diversity, activities 
promoting rural development and poverty reduction;  
3. Environmental -friendly agricultural processing industry, national traditional and unique 
handicraft processing industry;  
4. Environmental -friendly and sustainable natural, cultural and historical tourism 
development industry;  G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  5. Education, sports, human resource development and labor skill development, vocational 
training institutions or centers, production of educational and sports equipment;  
6. Construction of modern hospitals, pharmaceutical and medical  equipment factory, 
production of and treatment by traditional medicine;  
7. Investment, service provision and development of public infrastructure for urban traffic 
congestion reduction and residence  facilities, infrastructure development for agricultural 
and industrial production, transportation services of goods, transit services and 
international linkage;  
8. Policy banks and micro -finance institutions, focusing on poverty reduction for people and 
comm unities who have less access to a bank;  
9. Modern commercial centers promoting domestic products and world  - renowned brands, 
exhibition centers, fairs for domestic industrial, handicraft and agricultural products.  
An investment in any business sector entitle d to incentives under th ese business sector shall have 
a minimum investment capital of 1,200,000,000 (one  billion  and two  hundred  million ) kips ; or shall 
employ at least 30 (thirty)  Lao technical staffs or use 50 (fifty) or more Lao workers with an 
employm ent contract of at least 1 year.  
(b) How the subsidy is provided:  
Incentives by zone are defined into three zones:  
Zone 1 : poor zone, remote zone with socio -economic infrastructure unfavorable to investment;  
Zone 2 : zone with socio -economic infrastructure favo rable to investment;  
Zone 3 : special economic zone.  
For enterprises  investing in the promoted activities and zones, the following subsidies may  be 
grante d: 
Zone 1 : exemption for ten years, additional five years for investment in sectors set out in section 2, 
3, 5 and 6 of Article 9 of this La w. 
Zone 2 : exemption for four years, additional three years for investment in sectors set out in 
section  2, 3, 5 and 6 of Articl e 9 of this Law.  
The above exemption  periods shall be counted from the year the investing enterprise generates 
business revenues . Upon expiration of above exemption periods, the enterprise shall follow to the 
Tax Law.  
Zone 3 : shall comply with the specific  regulation.  
- In addition to profit tax incentives, investors investing in the Lao PDR shall receive 
incentives on customs duty and value -added as follows:  
1. Import of materials and equipment, which cannot be supplied or produced in 
Lao PDR, to form the company 's fixed assets and import of machinery and vehicles 
directly used for production will receive duty exemption and pay value -added tax at 
the rate of zero  percent  (0%); while import of fuel, gas, lubricant, vehicles for 
administrative purposes and other materials shall comply with relevant laws ; 
Temporary import of machinery and vehicles directly used for production shall comply 
with Tax Law.  
2. Import of raw materials, equipment and parts to be used in the production for export 
shall be e xempted from duty payment at the time of import and granted duty 
exemption at the time of export and pay value -added tax at the rate of zero  percent  
(0%); 
3. Use of domestic raw materials which are not natural resources to produce finished 
and semi -finished p roducts for export shall pay value -added tax at the rate of 
zero percent  (0%); The Government defines the list of semi -finished products for 
export.  G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  - Investors who re -invest their net profit by adding business activities or expanding their 
business sizes sh all receive one year profit tax exemption in the following accounting 
year based on the portion of their re -invested net profit . Investors suffering losses from 
business operation may carry such losses in the year to be deducted against the profit 
of three  following years subject to verification by the tax authority . Upon the end of such 
period the remaining losses will not be allowed for deduction from the profit . Expansion 
of investment and/or operation by investing additional capital shall also receive 
incentives under this Law.  
- Investors investing in sectors a s specified in Article 9 of the Law on Investment Promotion 
(Amendment) No. 14/NA, dated 1 7 November  2016 will receive exemption from rental 
or concession royalty of state land as follows:  
 Zone 1 : receive exemption for ten years ; for investment in sectors as specified in 
points  2, 3, 5 and 6 of Article 9 herein will receive additional five years of such 
exemption;  
 Zone 2 : receive exemption for five years ; for investment in sectors as specified in 
points  2, 3, 5 and 6 of Article 9 herein will receive additional three years of such 
exemption;  
 Zone 3 : to comply with specific regulations.  
- Investors in concession  investments  in the Lao PDR will receive the following 
land-use-related incentives:  
1. Investo rs have the right to lease or have concession over a state land to conduct 
their investment activities and may transfer the land use rights within the remaining 
term of concession after having invested and completed at least forty -five percent  
(45%) of the  approved project development master plan, feasibility study or after 
their business plan has  been approved and after fulfilment  of obligations under the 
concession agreement and approval from relevant sector authority.  
2. Investors have the right to lease or  have a concession of a state land outside of the 
concession area for their offices and residential construction within the term of 
investment subject to approval by the  relevant provincial, capital administering 
authority.  
7. Subsid y per unit or in case where this is not possible , the total amoun t or the annual  
amount budgeted for the subsidy  
Not assessable.  
8. Duration of the subsidy and/or any other time -limit attached to it  
Benefits obtained by enterprises under the old law and agreements previously signed with the 
Government shall remain unchanged until the termination of the agreements . Investors, developers 
and enterprises  wishing to obtain investment incentives under this Law, it shall have the rights to 
request from the relevant author ity within one  hundred  twenty days . The relevant authority shall 
then inform the investor for implementation.  
9. Statistic data permitting an assessment of the trade effects of the subsidy  
Not assessable . G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  II. INCENTIVES FOR INVESTMENT IN THE SPECIAL ECONOMIC ZONE  
1. Title of the programme  
Incentives for enterprises operating in the Special  Economic Zone.  The incentives are not contingent 
upon the use of local content requirements.  
2. Period concerned  
2018 - 2020 
3. Policy objective a nd/or purposes of the programme  
Compliment the implementation of the Law on Investment Promotion, with the aim of attracting 
investments through the formulation of special promotion policies in order to enable convenient, 
fast, proper, and transparent inve stments, ensure the rights and benefits of the State, people, Zone 
Developers and Investors, enable regional and international integration, and contribute to the 
continuous and sustainable national socio -economic development.  
4. Background and authority for t he programme  
(a) Background:  
- Decree  on Special Economic Zone, No. 188/G OL, dated 07 June 2018. 
The Decree on Special Economic Zone, No. 188/GOL, dated on 0 7 June 2018 has replaced the 
Decree on Special Economic Zones in Lao PDR, No. 433/PMO, dated 2 6 June 2010. 
(b) Authority:  
The Government supervise Special Economic Zones in a centralized and uniformed manner 
nationwide  by assigning the Ministry of Planning and Investm ent to be directly responsible and to 
actively coordinate with other relevant sectors and concerned local authorities.  
The supervisory authorities of Special Economic Zone consist of:  
1. Ministry of Planning and Investment;  
2. Special Economic Zone Promotion and  Management Office (SEZO);  
3. Special Economic Zone Authority (SEZA);  
5. Form of the subsidy  
Incentives  for Zone Developer include:  
- Tax and Custom Incentive  
- Land Use Promotion Incentives  
Incentives f or Investors  include:  
- Tax and Custom Incentives  
- Land Use and Real Estate Incentive  
6. To whom and how the subsidy is provided  
(a) Eligibility:  
Available to all zone developer  and investor . 
(b) How the subsidy is provided:  
- Zone Developers  in Special Economic Zones are entitled the following tax and custom 
incentives:  G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  1. Tax and custom incentives for import and export shall be as specified in the Law on 
Investment Promotion;  
2. Production industry, services on tourism industry development, servic es in public health, 
education, sport and physical activity, and real estate development shall receive profit 
tax incentives according to zones as follows : Zone 1 exempted from profit tax for sixteen 
years, and Zone 2 exempted from profit tax for eight yea rs; Upon the expiration of the 
exemption period, Zone Developers shall pay profit tax at thirty -five percent  (35%) of 
profit tax rate as specified in the Tax Law for the five years, and thereafter pay according 
to the rates set in the Tax Law;  
3. Construction  of road, electricity system, water supply, waste water treatment and waste 
disposal system shall be exempted from value added tax, while construction of other 
infrastructures shall pay value added tax at fifty  percent  (50%) of the value added tax 
rate as specified in the Law on Value Added Tax.  
- Zone Developers are entitled to land use rights in Special Economic Zones and shall have 
the right to sub -lease, handover , transfer to Investors during the term of the 
development agreement, after having completed at least forty -five percent  (45%) of the 
development plan in each period, as specified in the development master plan, subject 
to the approval of the Special Economic Zone Authority (SEZA).  
- Other Incentives  include:  
a. Zone Developers receive invest ment supports as specified in the Law on Investment 
Promotion;  
b. Zone Developers shall receive additional incentives based on the negotiation and 
terms of agreement according to conditions, locations, characteristics, such as 
investment in remote areas, and in business activity that the government gives 
priority to.  
- Investors in Special Economic  Zone are entitled the following tax and custom incentives:  
1. Tax and custom incentives for import and export shall be as specified in the Law on 
Investment Promotion;  
2. Investment in sectors specified in the Article 9 of Law on Investment Promotion 
shall be exempted from profit tax for additional two years from the pr ofit tax 
exemption period as stipulated in the Article 11 Paragraphs 2 and 3 of the Law on 
Investment Promotion . In addition, investments in business activities as specified 
in the Article 9 Points 3, 4, 5 and 6 of the Law on Investment Promotion, upon the  
expiration of the profit tax exemption period, shall pay the profit tax at 
thirty -five percent  (35%) of the profit tax rate specified in the Tax Law for the 
five years and thereafter pay the profit tax in accordance with the Tax Law;  
3. Factory construction for hundred  per cent  (100%) production for export shall be 
exempted from the value added tax and receive incentives for the use of electricity 
and water in the production by paying the value added tax at fifty  percent  (50%) 
of the value added tax rate spec ified in the Value Added Tax Law;  
4. For the construction and development of infrastructures to support business 
operations of the investors in sectors that are not  hundred  per cent  production for 
export, investors shall pay fifty  percent  (50%) of the value a dded tax rate as 
specified in the Value Added Tax Law;  
5. Import of raw material, equipment and spare parts for production, processing or 
assembling in Special Economic Zones for domestic sales, shall follow the laws and 
regulations on tax and custom;  
- In addition, Investors shall be entitled to other tax incentives specified in the Law on 
Investment Promotion.  G/SCM/N/343/LAO • G/SCM/N/372/LAO  
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  - Investors are entitled to use their leased land, and have the right to sub -lease or hand 
over, or transfer to other investors during the term of lea se which may not exceed the 
remaining term of the development agreement subject to the approval of the Special 
Economic Zone Authority (SEZA).  
Any person, who has acquired ownership in real estate in the SEZ, can hold the ownership for the 
term of real estate, and shall be entitled to sell, hand over, transfer or inherit the real estate ; the 
land where the real estate is located shall be transferred to be a State property after the expiration 
of the development agreement and the owner of that real estate ma y lease the land from the State 
or by other means in accordance with law and regulations.  
Foreigners, who acquire ownership of real estate (building structure in the zone) from making actual 
payment of more than USD 100,000, together with the wife or husba nd and children, shall receive 
a renewable multi -entry visa for an initial period of ten years . In addition, foreigners shall receive 
other facilitations according to the government 's decision in each period.  
Foreigners, who have entered into real estate r ental agreement (building for resident in the zone) 
with the owner and have planned to stay in Lao PDR for more than three months, shall receive 
multi-entry visa.  
7. Subsid y per unit or in case where this is not possible , the total amoun t or the annual  amount  
budgeted for the subsidy  
Not assessable . 
8. Duration of the subsidy and/or any other time -limit attached to it  
The Special Economic Zones that have received approval and benefited from the previous legislations 
regarding Special Economic Zone, and agreements that has previously been signed with the 
Government shall not be subject to any changes until the expiration  of the agreements, except in 
relation to Articles 95 and 96 of the Decree on Special Economic Zone and Specific Economic Zone 
No. 443/PM, dated 2 6 October  2010 and Article 13 of the Prime Minister 's Decision No. 73/PM, dated 
26 September  2015 on the Addit ional Investment Incentives for That Luang Specific Economic Zone 
and SEZs across the country which shall be subject to this Decree.  
9. Statistic data permitting an assessment of the trade effects of the subsidy  
Not assessable.  
 
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