G/SCM/N/253/LAO  
 
19 July 2013  
(13-3890)  Page: 1/9  
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 10 July, 2013 is bein g circulated at the request of the Delegation 
of Lao People's Democratic Republic. 
 
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The following notification provides details of support programmes for the period 2010-2013. 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. 
 Although Lao PDR has some doubts as to whether some of these programmes fall within the 
definition of a subsidy, they are being notified in the interest of transparency. As provided for 
under Article 25.7 of the Agreement of Subsidies and Countervailing Measures, Lao PDR's notification on these measures does not prejud ge 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 No. 02/NA, dated 8 July 2009 
and the Decree on Implementation of the Investment Promotion Law No. 119/PM, dated 
20 April 2011 do not provide for any measures which are either contingent upon local content requirement or export performance. The said De cree provides for an elaboration of incentives 
provided under profit tax exemption, import duty  exemptions, export duty exemptions and profit 
reinvestment which have been notified under the Section I of this notification.  Members may further wish to note that the local content requirements set out in some articles of 
the previous Prime Minister's Decree which are incompatible with international economic 
integration for Lao PDR were cancelled under Decree on the Cancellation of Local Content Requirements set out in Previous Legislations No. 154/PM, dated 05 March 2012. G/SCM/N/253/LAO 
 
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  TABLE OF CONTENTS 
 
I. INCENTIVES FOR INVESTME NTS ............................................................................. 3  
II. INCENTIVES FOR DOMESTIC AND FORE IGN INVESTMENT THAT HAVE BEEN 
GRANTED UNDER THE ABROGATED LEGISLATION ............................................................ 5  
III. INCENTIVES FOR INVESTMENT IN THE SPECIAL ECONOMIC ZONE ......................... 6  
IV. INCENTIVES FOR INVESTMENT IN THE DENSAVANH VILLAGE BORDER 
TRADE ZONE ....................................................................................................................  8 
 
 G/SCM/N/253/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 
 2010 – 2013.  3. Policy objective and/or purposes of the programme 
 To encourage investment, particularly in poor and mountainous regions; to promote growth of value-added industrial base and human resource de velopment, develop infrastructure as part of 
long term development, thus contributing to nati onal policy objectives on regional development, 
including poverty reduction, improvement of livelihood of the people and employment. 
 
4. Background and authority for the programme 
 
 (a) Background:  
- Law on Investment Promotion No. 02/NA, dated 8 July 2009. 
- Decree on the Implementation of Investment Promotion Law No. 119/PM, dated 
20 April 2011. 
 
The new Law on Investment Promotion No. 02/NA, dated 8 July 2009 has replaced the previous Law on the Promotion of Domestic Investment No. 10/NA, dated 22 October 2004 and the Law on 
the Promotion of Foreign Investment No. 11/NA, dated 22 October 2004. 
  (b) Authority:  
- Ministry of Planning and Investment. 
- Provincial and Vientiane Capital Pl anning and Investment Departments. 
 
5. Form of the subsidy 
 
- Profit tax exemption; 
- Import duty exemption; 
- Export duty exemption; and - Deduction of annual losses from the profit.  
6. To whom and how the subsidy is provided 
 
(a) Eligibility: 
 
Incentives may be provided to investors investing in the promoted activities and zones.  
The list of promoted activities and investment promoted zones are contained in the Annexes 1 
and 2 to the Decree on Implementation of the Inve stment Promotion Law, respectively. The list of 
promoted activities is determined according to 3 different levels (top, medium and low level of promotion), based on the prioritized activities by the Government, activities related to poverty 
reduction, improvement of living conditions of the people, construction of infrastructure, human 
resource development, employment, etc.  
The zones are classified under the three levels of promotion (top, medium and low), having in 
mind the socio-economic infrastructure and geographical conditions.  
(b) How the subsidy is provided: 
 For enterprises investing in the promoted activities and zones, the following subsidies may be granted: G/SCM/N/253/LAO 
 
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- Zone 1: receiving profit tax exemption from 4 - 10 years, depending on the promotion level of activities.  - Zone 2: receiving profit tax exemption from 2 - 6 years, depending on the promotion level 
of activities.  
- Zone 3: receiving profit tax exemption from 1 - 4 years, depending on the promotion level of activities. 
 
In addition, the following profit tax exemptions are available:  
- Profit tax exemption is granted for the production of new products, research and new 
technology development
1. 
- Investors operating beyond the profit tax ex emption period are entitled to an exemption 
from the profit tax in the following accounting ye ar if they reinvest the net profit to expand 
their business.  
- Annual losses can be deducted from following year 's profit within the period of three years.  
 
Regarding the duty exemptions, investors are entitled to: 
 
- Exemption from the payment of customs duty  for import of raw materials, equipment, 
machineries, spares parts and vehicles that are directly used for production (except for all 
types of fuel), when investing in promoted activities and prescribed concession activities; 
- Exemption from the payment of export duty for exporting general products. 
 
In addition, special incentives are also provided for investment in hospitals, kindergartens, 
schools, vocational schools, colleges, universities, research centres and public utilities. The following subsidies may be granted: 
 
- Zone 1: exemption of rental or land concession for 15 years. - Zone 2: exemption of rental or land concession for 10 years. - Zone 3: exemption of rental or land concession for three years. 
 
Investment in hospitals, kindergartens, schools, vocational schools, colleges, universities, research centres and public utilities shall obtain profit tax exemption for an additional five years to that 
provided in Article 51 of this Law (described in the first paragraph under 5(b)), irrespective of the 
zone.  
7. Subsidy per unit or in case where this is not possible, the total amount 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 subsidies are granted based on the new Law on Investment Promotion in line with the time 
limits as specified above under 5(b) for specific ty pes of subsidies. In the case an investor wishes 
to obtain incentives provided by this Law, the investor must submit a written request to this effect. 
The new incentives apply immediately once this request has been accepted, and the incentives 
previously granted under the abrogated Laws are withdrawn for the investor in question. 
 9. Statistic data permitting an assessment of the trade effects of the subsidy 
 Not assessable.  
                                               
1 Production of new products means the production and processing of raw materials within the country 
to produce a new product under a new brand by using a new process and technology  in the production and 
processing stage. Research and new technology development refer to the investment in the construction research centres and laboratories, as we ll as the scientific testing centres, to develop and invent new products. G/SCM/N/253/LAO 
 
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  II. INCENTIVES FOR DOMESTIC AND FOREIGN INVESTMENT THAT HAVE BEEN 
GRANTED UNDER THE ABROGATED LEGISLATION 
The Law on the Promotion of Domestic Investment of 2004, the Law on the Promotion of Foreign 
Investment of 2004 and the relevant implemen ting decrees have been abrogated in 2009, 
following the adoption of the Law on Invest ment Promotion of 2009. Currently investment 
incentives are granted pursuant to the new legislation, as notified under the Section I, although certain subsidies previously granted under the abrogated regulations are still being utilized. For 
that reason this section provides information on the programs that had been available under the 
abrogated legislation.  1. Title of the programme 
 Incentives for domestic and foreign enterprises operating in promoted activities or zones. These incentives are not contingent upon the use of domestic products, since local content requirements 
have been cancelled by the Decree on the Cancellation of Local Content Requirements set out in 
Previous Legislations No. 154/PM, dated 05 March 2012.  
2. Period concerned 
 
2010 – 2013.  
3. Policy objective and/or purposes of the programme 
 
To encourage domestic investment in strategic businesses and poor (mountainous) regions, to 
promote growth of value-added industrial base  and human resource development, and develop 
infrastructure as part of long term development.  
4. Background and authority for the programme 
 
(a) Background:  
- Law on the Promotion of Domestic Investment No. 10/NA, dated 22 October 2004 
(abrogated on 8 July 2009). - Law on the Promotion of Foreign Investment No. 11/NA, dated 22 October 2004 
(abrogated on 8 July 2009). 
- Decree of the Prime Minister Regarding the Im plementation of the Law on the Promotion of 
Domestic Investment No. 300/PM, dated 12 October 2005 (abrogated on 8 July 2009). 
- Decree of the Prime Minister Regarding the Im plementation of the Law on the Promotion of 
Foreign Investment No. 301/PM, dated 12 October 2005 (abrogated on 8 July 2009).  (b) Authority: 
 
- Ministry of Planning and Investment. - Provincial and Vientiane Capital Planning and Investment Departments. 
 
5. Form of the subsidy 
 
- Profit tax exemption; 
- Reduced profit tax rate; - Import duty exemption; and - Export duty exemption. 
 
6. To whom and how the subsidy is provided 
 
(a) Eligibility: 
 Incentives were provided to investors satisfying three of the five prescribed criteria, as follows: 
 
 1) Use local labour for at least 90% of total labour.  2) Use modern technology.  3) Preserve the environment according to the Law on Environmental Protection. G/SCM/N/253/LAO 
 
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   4) Must be generally promoted activities to other domestic production. 
 5) Carry out production activities for export at least 80% of the total production cost.  
(b) How the subsidy was provided: 
 
For domestic and foreign investment enterprises investing in the promoted activities and zones, the following subsidies were granted: 
 
- Zone 1: profit tax exemption for seven years, thereafter subject to profit tax rate of 10%. 
- Zone 2: profit tax exemption for five years, thereafter subject to a reduced profit tax rate at half of 15% for three years and thereafter a profit tax rate of 15%. 
- Zone 3: profit tax exemption for two years, th ereafter subject to a reduced profit tax rate 
at half of 20% for two years and thereafter a profit tax rate of 20%. - Exemption from minimum tax during profit tax exemption/reduction periods. 
- Exemption from profit tax during the accounting year on profits reinvested. 
- Exemption from import duties on capital and raw materials which do not exist or are 
insufficient domestically. 
- Exemption of any applicable export duties on exported products. 
- Exemption and reduction of import duties and taxes on raw materials and semi-finished 
products imported for manufacturing. 
 
7. Subsidy per unit or in case where this is not possible, the total amount 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 subsidies were granted based on the abrogated legislation, and are utilized in line with the time limits as specified above under 5(b) for specific types of subsidies. In the case an investor wishes to obtain incentives provided by the new Law on Investment Promotion, the investor must 
submit a written request to this effect. The new incentives apply immediately once this request has 
been accepted, and the incentives previously gr anted under the abrogated Laws are withdrawn. 
Otherwise, the investor that had been granted incentives under the previous laws may utilize such 
incentives, but no new incentives may be granted based on the abrogated legislation. 
 9. Statistic data permitting an assessment of the trade effects of the subsidy 
 Not assessable.  
III. 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 
 2010 – 2013.  3. Policy objective and/or purposes of the programme 
 To encourage investment in the Special Economic Zone in order to promote growth of value-added industrial base and human resource development, develop infrastructure as part of long term 
development, thus contributing to national policy  objectives on regional development, including 
poverty reduction, improvement of livelihood of the people and employment.  
4. Background and authority for the programme 
 
(a) Background:  G/SCM/N/253/LAO 
 
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  - Decree of the Prime Minister on the Mana gement Regulations and Incentive Policies 
Regarding the Savan-Seno Special Economic Zone No. 177/PM, dated 13 November 2003. 
 
(b) Authority: 
- Savan-Seno Special Economic Zo ne Administrative Authority. 
 5. Form of the subsidy 
 
- Turnover tax exemption; - Excise tax exemption; - Customs duty exemption; 
- Profit tax exemption; and 
- Land tax exemption.  
6. To whom and how the subsidy is provided 
(a) Eligibility: 
 
Available to all investments in the Savan-Seno Special Economic Zone. 
 
(b) How the subsidy is provided: 
 
- Turnover tax  will be exempted for all goods imported into the zone from foreign countries 
for use, processing, production or sale within the zone;  - Excise tax  will be exempted for goods imported into the zone from foreign countries or 
within the country but outside the zone for purposes of utilization, services, processing, 
production and purchase/sale inside of the zone; - Customs duty  will be exempted for goods imported into the zone, including construction 
materials; raw materials; materials; semi-finished products; machineries; vehicles; and 
spare parts to be used in the production; - Profit tax  will be exempted as follows: 
 
For production category:  
 
- Enterprises exporting 70% or more of production or for the manufacture or assembly of 
high-technology equipment, instruments and products shall be exempted from profit tax for 
10 years followed by profit tax rate  of 8% in subsequent years.  
- Enterprises exporting between 30% and 69% of production shall be exempted from profit 
tax for seven years followed by profit tax rate of 8% in subsequent years. 
- Enterprises exporting less than 30% of produc tion shall be exempted from profit tax for 
five years followed by profit tax ra te of 8% in subsequent years.  
 
For trade business category (for example: impo rt-export, in-transit trade, duty-free shop, 
wholesale, etc.):  
- An enterprise exporting products produced in the zone, shall be granted profit tax 
exemption for a period of five years, starting from the profit-making year of its operations; beyond that period, it shall be subject to profit tax rate of 10%.  
- An enterprise importing foreign products for re-exporting to a third country shall be 
exempted from profit tax for a period of three years, starting from the profit-making year of 
its operations; beyond that period, it shal l be subject to profit tax rate of 10%.  
- Apart from the enterprises mentioned above, other trade enterprises operating in the zone 
shall be exempted from profit tax for a period  of two years starting from the profit-making 
year of their operations; beyond that period, th ey shall be subject to profit tax rate of 10%. 
 
For service business category (for example: tr ansport, warehousing, construction, tourism, 
banking, insurance, university, and public service business such as entertainment park, tourist site 
service business, etc.): 
 
- An investment with a value from US$50,000 to US$149,999 shall be exempted from profit tax for a period of two years, starting from th e profit-making year of its operations; beyond 
that period, it shall be subject to profit tax rate of 10%. G/SCM/N/253/LAO 
 
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  - An investment with a value from US$150,000 to US$299,999 shall be exempted from 
profit tax for a period of four years, starting from the profit-making year of its operations; beyond that period, it shall be subject to profit tax rate of 10%. - An investment with a value from US$300,000 to US$499,999 shall be exempted from 
profit tax for a period of six years, starting from the profit-making year of its operations; 
beyond that period, it shall be subject to profit tax rate of 10%. - An investment with a value from US$500,000 to US$1,999,999 shall be exempted from 
profit tax for a period of eight years, starting  from the profit-making year of its operations; 
beyond that period, it shall be subject to profit tax rate of 8%. - An investment with a value of US$2,000,000 or more shall be exempted from profit tax for 
a period of 10 years, starting from the profit-making year of its operations; beyond that 
period, it shall be subject to profit tax rate of 8%. 
- Vocational, primary and secondary schools shall be exempted from profit tax.  
 
7. Subsidy per unit or in case where this is not possible, the total amount or the annual 
amount budgeted for the subsidy 
 Not assessable. 
 8. Duration of the subsidy and/or any other time-limit attached to it 
 
From 13 November 2003 for the Decree of the Prime Minister on the Management Regulations and 
Incentive Policies Regarding the Savan-Seno Special Economic Zone.  
9. Statistic data permitting an assessment of the trade effects of the subsidy 
 
Not assessable. 
 
IV. INCENTIVES FOR INVESTMENT IN THE DE NSAVANH VILLAGE BO RDER TRADE ZONE 
1. Title of the programme 
 
Incentives for enterprises operating in the Densavanh Village Border Trade Zone. These incentives 
are not contingent upon local content or export performance requirements.  
2. Period concerned 
 
2010 – 2013. 
 
3. Policy objective and/or purposes of the programme 
 To encourage investment in the Densavanh Village Border Trade Zone in order to promote growth 
of value-added industrial base and human resource development, develop infrastructure as part of 
long term development, thus contributing to nati onal policy objectives on regional development, 
including poverty reduction, improvement of livelihood of the people and employment. 
 
4. Background and authority for the programme 
 
(a) Background: 
 - Decree of the Prime Minister on Densavanh Village Border Trade Zone No. 25/PM, dated 
25 March 2002. 
 
(b) Authority: 
 
 - Densavanh Village Border Trade Zone Administrative Authority. 
 5. Form of the subsidy 
 
- Turnover tax exemption; - Profit tax exemption; - Income tax exemption; G/SCM/N/253/LAO 
 
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  - Import duty exemption; 
- Profit reinvestment; - Deduction of annual losses from the profit; and - Land lease fee exemption. 
 
6. To whom and how the subsidy is provided 
 
(a) Eligibility: 
 Available to all investments in the Densavanh Village Border Trade Zone.  
(b) How the subsidy is provided: 
 
- Turnover tax exemption, except for goods imported into the border trade zone for 
exhibition or a trade fair and subsequently so ld in the border trade zone which will be 
subjected to a turnover tax of 20% of the normal rate.  - Profit tax exemption for four years, starting from first year of profitability. A grace period 
of four years will follow with a profit tax rate of 50% of the normal rate.  
- Income tax exemption from payment of income  derives from dividends during the profit 
tax exemption period.  - Import duty exemption for products or goods imported into the border trade zone to be 
displayed in exhibition or trade fair. However, when such products are sold in the border 
trade zone, there shall be a requirement to pay a turnover tax of 20% of the normal rate according to the Tax Law of Lao PDR.  
- Profit tax will be repaid if all profits are reinvested in the zone for a period of more than 
three consecutive years.  - Profit tax will be reduced by transfer of any business loss to the following year.  
- Import and export duties shall be exempted for goods imported in or exported out of the 
border trade zone directed to other countries.  - Land lease fees exemption for a period of five  years from the initial signing of the lease. 
- Annual losses can be deducted from the following year's profit within the period of five 
years. 
 7. Subsidy per unit or in case where this is not possible, the total amount or the annual 
amount budgeted for the subsidy 
 Not assessable. 
 
8. Duration of the subsidy and/or any other time-limit attached to it 
 
- From 25 March 2002 for the Decree of the Prim e Minister on Densavanh Village Border 
Trade Zone No. 25/PM. 
 9. Statistic data permitting an assessment of the trade effects of the subsidy 
 Not assessable.  
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