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The Ultimate Guide To
Employment in Laos

Laos Facts

Population size: 6,918,367
Currency: Lao kip (LAK)
Capital city: Vientiane
Languages spoken: Lao
Ease of Doing Business: 139

Employing in Laos: What You Need to Know

In Laos, employment law is regulated by the Labour Law of 2013. The area of this law is quite vast, and follows extensive discussions between the government and the private sector. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Laos.

Key Factors to Consider When Employing in Laos

There are several key areas to be aware of within Laos’ employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    In Laos, contracts can be made either verbally or in writing. They can be made for either fixed or indefinite periods of time. Fixed contracts can made for a maximum period of three years, inclusive of any extensions, otherwise they will considered indefinite term contracts. Any employment contract in Laos must contain details of the employee’s name, scope of rights and responsibilities, salary or wages, address, form of payment, duration of trial period, welfare, leave and benefits.

Employee Entitlements

Information Explanation
Working on Sundays ?

Yes

Disclosure and Confidentiality of Personal Information ?

No specification under law.

Employee Protection and Anti-discrimination Rights ?

Section XII of the Labour Law prohibits discrimination based on health, gender or marital status.

Time Off Work ?

Workers are entitled to annual leave and arrange this privately with their employer.

Medical Leave ?

Workers paid on a monthly basis are entitled to sick leave with full pay for 30 days a year, conditional on presentation of a medical certificate.

Annual Leave Accrual Entitlement ?

A minimum of five days of annual leave up to 15 days for long term employees.

Maternity Leave in Laos ?

Female employees are entitled to not less than 45 days of maternity leave, up to 105 days of maternity leave.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

Whilst the legal position on resignation and/or end of service payment has altered the payable amount, payment is still set out under law and will differ depending on the length of the employee’s service.

Severance / Redundancy Pay ?

Employees who have worked for one to five years entitled to 5 weeks’ wages. Employees with service of five to ten years are entitled to 26 weeks’ pay, and employees with service of over ten years are entitled to a full year’s pay.

Termination of Employment ?

Employment contracts for a fixed term will terminate upon expiration of the contract, or can be termination via mutual agreement or by breach of one of the parties. For manual work, 30 days’ notice must be given, while for specialized skills, 45 days’ notice is required.

An employee may dismiss an employee in certain situations, including:

  • Where the employee is lacking specialized skills
  • The employee is not in good health and therefore cannot continue work
  • The company requires a reduction in staff

Unless prior approval is granted by the Labour Administration Authority, employers cannot terminate the employment for any of the following reasons:

  • The employee is sick
  • The employee is suffering a disaster such as fire or flooding
  • A female employee becomes pregnant or within a year of giving birth

The employer is not required to notify the Labour Administration Authority in any of the following situations:

  • Deliberate causing of damage to the employer
  • Violation of internal regulations in spite of previous warning from the employer
  • Abandonment of work for 4 consecutive days without a valid reason
  • Being sentenced to prison by a court
  • Violation of the rights of other employees in spite of previous warning from the employer

Probation

Information Explanation
Probation Period ?

Employers have the right to impose a probationary period of up to 30 days for manual labour, or 60 days for specialized skills. Probationary periods may not be extended.

Throughout the period of probation, either party may terminate the employment, with 3 days’ notice required for manual labour and 5 days for specialized skills. If the employment contract is terminated during probation, the employee is entitled to receive wages or salary under the law, calculated from the commencement to conclusion of work.

The employee must inform the worker of whether or not their employment will be confirmed within 7 days before the end of the probationary period.

Pension

Information Explanation
Pension Requirements ?

The system of welfare and benefits is complex in Laos, as contributions are largely contingent on the living conditions of employees. In general, contributions are usually made by the employee. There are requirements for both employee and employer contribution rates for pensions based on a percentage of salary, although this can become unclear for other types of insurance, particularly because the schemes of insurance differ based on the type of work undertaken.

The categories of Welfare Contributions include:

  • Pensions: Employer contributes 5% of salary and employee contributes 4.5%

GEO Solutions or DIY Employment in Laos?

Companies entering Laos must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Laos Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Lao entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Outsourcing Employment Through a GEO Employer of Record Service

Using Shield GEO Employer of Record Services in Laos

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Laos. For companies which intend to employ their staff directly through their incorporated Laos entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Laos.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Laos.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Laos

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Laos

– the company needs help with tax, employment, immigration and payroll compliance in Laos

Shield GEO can contract directly with the company to employ and payroll their staff in Laos. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits. Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Payroll

Payroll Laos
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

Lao kip (LAK)

 
Grossed income Tax Rate (%)
LAK 1 - 1,500,000 5%
LAK 1,500,001 – 4,000,000 10%
LAK 4,000,001 – 8,000,000 15%
LAK 8,000,001 – 15,000,000 20%
> LAK 15,000,000 25%

Government employees are subject to a flat tax rate of 10%.

Tax Returns Supplied

Yes

Corporate Tax Requirements

Corporate income tax is 24%, or 26% for companies in the tobacco industry. Profit tax payments are required to be made quarterly.

Employees Social Security and statutory contributions

Employees contribute 4.5% of their salary towards a general pension payment under the compulsory social security system.

Payroll and Tax in Laos

There are specific rules for payroll and taxation in Laos, depending upon whether your company employs foreign nationals or local Lao employees. As Laos has some complex compensation and taxation laws, and many companies in Laos do not actually require a payroll all year round, they therefore look to outsourcing payroll.

Your Payroll Options in Laos

Information Explanation
Remote payroll ?

A remote payroll in Laos is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Laos. The only option for a non-resident company to payroll its employees (both local and foreign) in Laos is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.

Local payroll administration ?

In some cases, a company will register their business in Laos under one of the forms available, (RO, WFOE or JV) but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal payroll ?

Larger companies with a commitment to Laos may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Lao payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Lao employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource payroll and the employment of their staff in Laos to a GEO, like Shield GEO. This is possible for both foreign workers and Laos nationals. This is the easiest, fastest and safest way to payroll staff in Laos.

Shield GEO manages all aspects of payroll for workers in Laos, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Laos

Information Explanation
Employee Information Required ?

The information required from new employees for payroll are:

  • Information about each worker employed by the enterprise, including their name, date of birth, and address.
  • All indications concerning the work performed, wages or salary to be paid, and any leave requirements or holiday entitlments
Tax Registration Requirements ?

Enterprises operating in Laos are required to submit the following documents to the Tax Department in order to register to pay direct and indirect taxes:

  • Application form
  • Resident certificate of managers
  • List of assets
  • List of employees and estimated salaries
  • Copy of lease agreement
  • Office location certificate
  • Map signed and sealed by the village chief
  • 2 photos, size 3cmx4cm, of the Managing Director(s)
  • Copy of the resolution of formation
  • Copy of the ERC
  • Copy of ID cards

The process takes around 14 days at a cost of LAK 125,000.

Social Security Registration ?

To register workers for social security insurance, an application must be made with the Social Security Office, with the application forms available at the agency in charge of registration.

Employees and employers are both required to participate in the social security regime and are expressly forbidden from entering into alternative agreements to avoid participation in the official scheme.

This process takes approximately a week.

Documentation Required for New Employees ?

The following documentation is required for new employees:

  • Employment contracts
  • Work permits (LA-B2 visa), applicable for foreign workers only
  • Evidence of established internal regulations, stipulating calculation and payment of wages, working hours, health and safety measures, and personal leave

Tax Figures

Information Explanation
Corporate Income Tax ?

24%

Income Tax Rate ?
Grossed income Tax Rate (%)
LAK 1 - 1,500,000 5%
LAK 1,500,001 – 4,000,000 10%
LAK 4,000,001 – 8,000,000 15%
LAK 8,000,001 – 15,000,000 20%
> LAK 15,000,000 25%

Government employees are subject to a flat tax rate of 10%.

Payroll Tax ?

N/A

Sales Tax ?

VAT: 10%

Withholding Tax ?

Dividends: 10%
Royalties: 5%
Interest: 10%

These may be reduced under applicable tax treaties.

Other Tax ?

N/A

Income Tax (Personal Allowance) ?

N/A

Time to prepare and Pay Taxes ?

362 hours

Time required to start a Business ?

67 days

Payments

Information Explanation
Payment Mode ?

There is no statutory method for paying workers, the standard methods are either direct bank payment or payment via cheque.

Frequency of Salary Payment ?

This is at the discretion of the employer.

Invoice / Payslips required ?

There is no legal requirement to provide invoices or payslips.

Minimum Wage ?

The minimum wage is LAK 900,000 per month.

Immigration and Work Permits in Laos

Foreign workers are required to have the proper visas and work permits in Laos, as established by immigration laws. Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Lao market. If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

Have your own company?

It is possible for companies that have established a Rep (Representative) Office or WFOE (Wholly Foreign Owned Enterprise) in Laos to arrange LA-B2 Visas. It takes around 6 weeks. It is highly recommended to utilise a Laotian Immigration specialist to assist with the application and processing.

LA-B2 visas are the type of work permit required for foreign employees to commence work in Laos.

The steps required are:

1. Company proposes requirements for foreign labour to the Skill Development and Employment Department of Ministry of Labour and Social Welfare

2. Receive quota approval from the government

3. Submit documents to Ministry of Foreign Affairs

Time: The overall process can take anywhere between 1-3 months, although it is not specified by the Laotian Government how much time exactly is dedicated to each step of the process.

Cost: Up to US$240, depending on the duration of the work permits

1. Company proposes requirements for foreign labour to the Skill Development and Employment Department of Ministry of Labour and Social Welfare

The employer must provide evidence to the Ministry of Labour and Social Welfare that the work in question can only be suitable undertaken by a foreign worker. This request is made before the government assesses whether or not the worker is necessary, and the worker must not be in the country throughout this process. The employer must offer a guarantee of employment

2. Receive quota approval from the government

Foreign workers who are engaged in projects or companies wishing to apply for LA-B2 visas must receive prior quota approval regarding foreign employee utilisation, as well as approval of foreign employee important, investment licence, certificate of concession registration or enterprise registration, attached to the proposal provided to the Investment Promotion Department or company for submission to the Immigration Department, which will then check whether the applicant appears on the prohibited persons list of Laos.

Once this clearance is completed, the documents will be submitted to the Consular Department of Ministry of Foreign Affairs, who then determine whether or then to approve the visa issuance.

The process of approval takes 8 official working days from when the application is lodged.

3. Submit documents to Ministry of Foreign Affairs

Once approval is obtained, the employee must submit it as either the formal letter or just the registration number along with the following documents:

  • 3 copies of the applicant’s passport
  • 3 passport photos of the applicant
  • 1 copy of the enterprise registration certificate
  • 1 copy of the investment licence
  • 1 copy of the proposal form of the company

4. Apply for resident card

Upon approval of the preceding steps, the applicant must apply for their resident’s card at one of the border locations that provide visas – these are the same as for visas on arrival.

These include:

  • Lao international airports in Vientiane, Luang Prabang, Pakse and Savannakhet,
  • Lao-Thai Friendship Bridges in Vientiane, Thakaek, and Savannakhet, and
  • Tha Naleng train station in Vientiane,
  • Some international land border crossing points.

Visas can be renewed every 3 months, 6 months or 1 year, if the work is ongoing.

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Types of visas in Laos

Category Description of Visa
Visa on Arrival

Visas on arrival can be obtained at the following locations:
• Lao international airports in Vientiane, Luang Prabang, Pakse and Savannakhet,
• Lao-Thai Friendship Bridges in Vientiane, Thakaek, and Savannakhet, and
• Tha Naleng train station in Vientiane,
• some international land border crossing points.
It costs US$35 to apply, and applicants need to present their passport, visa application form, and one passport photo. Visas can be extended for up to 30 days.

Business Visa (B2)

Business visas are issued to foreign experts who perform assignments provided by loan agreements and as provided by employment contracts or project wards, to volunteers or experts of NGOs, experts in education or medical sciences, staff members of Diplomatic Missions, UN Agencies, or other international organisations holding ordinary passports from the countries or from third countries, as well as foreign business people. Visas can be renewed.

Visit Visa (B3)

Visit visas are issued to foreign citizens who are visiting relatives working in Laos. They do not entitle the holder to work in Laos and can be extended for up to 30 days beyond the initial 2-`month period. They take approximately 3-5 days to process.

Setting up a company in Laos

When setting up a company you may want to consider these factors:

  1. Business Factors

    Business factors such as:

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional Language

    Regional language may be an influence. Although Laotian is the national language, up to six different dialects are spoken, while various other closely related languages are spoken throughout Laos.

Foreigners may incorporate companies and trade representative offices or branches in Laos. There are pros and cons to each business type, which entrepreneurs should consider carefully before deciding to incorporate in Laos.

Representative Office

This is one of the relatively faster and simpler ways to set up a company in Laos.

Steps Required:

  • Apply for RO registration certificate
  • Apply for company seal

Time: ~2 months

Cost: LAK 120,000 upwards

When a foreign company decides to try and sell to the Laotian market, there are several options – working through an agency or distributor, or registering a Representative Office (RO). Whereas an agent or distributor may have limited loyalty or little interest in end-user satisfaction, an RO is an effective way for foreign investors to get a feel for the Laos market while demonstrating commitment to the market. It is the easiest type of foreign investment structure to set up and, unlike the wholly foreign-owned enterprise, has no registered capital requirements.

Limited Business Scope of ROs

The defining characteristic of an RO is its limited business scope – an RO is generally forbidden from engaging in any profit-seeking activities, and can only legally engage in:

  • Market research, display and publicity activities that relate to company product or services; and
  • Contact activities that relate to company product sales or service provision and domestic procurement and investment.

A RO has no legal personality, meaning it does not possess the capacity for civil rights and conduct, cannot independently assume civil liability, and is limited in its hiring ability. Lao staff working for an RO, although not limited in number, must be employed through a human resources agency that will sign a contract with the RO on the one hand and with the Lao staff on the other in order to ensure social security and housing fund contributions are paid on a regular basis. No more than four foreign employees can be hired per RO. Foreign staff working for ROs should have an employment relationship with the parent company abroad, and any disputes should be settled under the laws of that country.

Representative offices must be established in accordance with Article 47 of the Investment Promotion Law.

1. Apply for RO registration certificate

The planning and investment sector at the central level considers and issues the RO registration certificate. Because this varies by region, it is hard to give a definitive time period within which this is completed. Once issued, the planning and investment sector will issue permission for the company seal to be carved. This part of the procedure takes no more than 7 days.

Time: ~7 days

Cost: Varies

2. Apply for company seal

Businesses must submit the application form with the Seal Carving Unit, a subsidiary of the Ministry of Industry and Commerce and Ministry of Public Security.

Upon carving of the seal, a letter for registration of the seal is issued by the seal carving unit, which can then be used as approval of official use.

Time: 45 days, simultaneous with previous procedure

Cost: LAK 120,000

Wholly Foreign-Owned Enterprise (WFOE)

WFOEs are limited-liability corporations organized by foreign nationals and capitalized with foreign funds. WFOEs are often used to produce the foreign firm’s product in Laos for later export to a foreign country.   The WFOE must go through the entire registration and incorporation process, and is the most costly business structure to setup.

Steps Required:

  • Apply for Name Reservation Certificate & Enterprise Registration Certificate
  • Register the Articles of Association
  • Apply for Tax Registration Certificate
  • Obtain approval of company signage
  • Create a company seal
  • Register workers for social security

Time: Approximately 3 months

Cost: ~ LAK 650,000

A Wholly Foreign-Owned Enterprise (WFOE, sometimes incorrectly written as WOFE) is a common investment vehicle for Laos-based businesses wherein foreign parties (individuals or corporate entities) can incorporate a foreign-owned limited liability company.

WFOEs are limited-liability corporations organized by foreign nationals and capitalized with foreign funds. This can give greater control over the business venture in Laos, and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner.

Advantages of Establishing an WFOE

WFOEs are among the most popular corporate models for non-Laotian investors due to their versatility and structural advantages over a Representative Office or Joint Venture:

  • The ability to uphold a company’s global strategy free from interference by Laotian partners (as may occur in the case of joint ventures);
  • A new, independent legal personality;
  • The ability to both receive and remit RMB to the investor company overseas;
  • Increased protection of trademarks, patents and other intellectual property, in accordance with international law;
  • Shareholder liability is limited to original investment;
  • Easier to terminate than an Equity Joint Venture
  • Simpler establishment than a Joint Venture.

Disadvantages of Establishing an WFOE

The disadvantages of establishing a WFOE include the inability to engage in certain restricted business activities, limited access to government support and a potentially steep learning curve upon entering the Laotian market.

The steps for establishing a WFOE in Laos are as follows:

1. Apply for Name Reservation Certificate & Enterprise Registration Certificate

The first step is to apply for a Name Reservation Certificate and the enterprise registration certificate simultaneously with the Enterprise Registry Office (ERO) within the Ministry of Industry and Commerce (MOIC). A completed application for the reservation of company name must be submitted, which contains three potential names for the company to be established, and a signed Contract of Incorporation – if there are multiple shareholders – in the format approved by the Ministry of Industry and Commerce. The applicant must also submit the application for the Enterprise Registration Certificate at the same time and attach the following documents:

  • 3 copies of the Contract of Incorporation
  • 3 copies of the signed Articles of Association, in the format stipulated by the MOIC
  • 3 copies of the resolution of founders of the company
  • 3 copies of the Power of Attorney in the MOIC standard template, if another person has been assigned to submit the application
  • 3 copies of the founders’ ID card/passport for entities
  • 6 photos of the nominated Managing Director, size 3cmx4cm

When the Enterprise Registration Certificate is issued, the MOIC will also issue a letter than can be used by the applicant to register for a Tax ID.

Time: 14 days

Cost: LAK 390,000

2. Register the Articles of Association

Once the company obtains an Enterprise Registration Certificate, it can then register its Articles of Association with the State Assets Management Department (SAMD) within the Ministry of Finance. For registration the following are required:

  • Letter request
  • The original signed Articles of Association
  • A copy of the Enterprise Registration Certificate

Time: 5-10 days

Cost: No charge

3. Apply for Tax Registration Certificate

Enterprises operating in Laos are required to submit the following documents to the Tax Department in order to register to pay direct and indirect taxes:

  • Application form
  • Resident certificate of managers
  • List of assets
  • List of employees and estimated salaries
  • Copy of lease agreement
  • Office location certificate
  • Map signed and sealed by the village chief
  • 2 photos, size 3cmx4cm, of the Managing Director(s)
  • Copy of the resolution of formation
  • Copy of the ERC
  • Copy of ID cards

Time: 14 days, simultaneous with previous procedure

Cost: LAK 125,000

4. Obtain approval of company signage

The company must then obtain content approval and a building permit from the Ministry of Information Culture and Tourism. For the content approval application, the company is required to complete the application form and provide the following information:

  • The name of the company is Laos
  • Enterprise code under the enterprise registration certificate
  • Office location and contact details of the company
  • The colour in red for letters, and yellow for the background (for domestic companies)

The company sign must not need exceed 2mx4m in dimensions.

With regards to the building permit, the company must complete the application form and attach the signage layout indicating the location and size, and a copy of the company’s licences.

Time: Between 5-14 days

Cost: LAK 10,000

5. Create a company seal

Once the ERO issues the ERC and a letter for seal carving, businesses must submit these documents with the application form with the Seal Carving Unit, a subsidiary of the Ministry of Industry and Commerce and Ministry of Public Security.

Upon carving of the seal, a letter for registration of the seal is issued by the seal carving unit, which can then be used as approval of official use.

Time: 45 days, simultaneous with previous procedure

Cost: LAK 120,000

6. Register workers for social security

The final step is to register workers for social security insurance with the Social Security Office, with the application forms available at the agency in charge of registration.

Employees and employers are both required to participate in the social security regime and are expressly forbidden from entering into alternative agreements to avoid participation in the official scheme.

Time: 7 days

Cost: No charge 

Joint Venture

A joint venture (JV) is a form of foreign invested enterprise (FIE) that is created through a partnership between foreign and Laotian investors, who together share the profits, losses and management of the JV. It is used most often when there is a need for a local business partner who can offer distribution channels, government relationships or significant market knowledge. Despite this the JV structure can bring challenges and risks by entering a business relationship with Laotian investors.

Steps Required:

  • Minimum contribution of equity investment
  • Obtain Enterprise Registration Certificate
  • Submit Articles of Association
  • Submit contracts and agreements and other relevant documents

Time: ~1 month

Cost: LAK 390,000

A joint venture (JV) is a form of foreign invested enterprise (FIE) that is created through a partnership between foreign and Laotian investors, who together share the profits, losses and management of the JV.

A JV is a limited liability company, where the liability of the JV’s investor(s) is generally limited to the assets of the JV. The “total investment” of a JV is the amount of capital required to start-up the business until it becomes self-sufficient from its

Advantages of a Joint Venture

  • The use of local partner’s existing workforce and facilities
  • Existing channels for sales and distribution
  • Use of a partner’s network to build good relationships, avoid red tape and other bureaucratic complexities
  • Entry into industrial sectors which exclude wholly foreign-owned investment

Disadvantages of a Joint Venture

  • Cost & complexity of establishment – authorities carefully inspect all documents presented to them and may ask for clarification or changes
  • Conflicting interests with partners
  • Merging different management styles
  • Liability associated with inheriting staff
  • Risks with technology transfer and intellectual property management
  • Division of profits

The steps are as follows:

1. Minimum contribution of equity investment

Foreign investors who invest in a JV must contribute a minimum of 30% of the total equity investment into the JV.

2. Obtain Enterprise Registration Certificate

The first step is to apply for the enterprise registration certificate with the Enterprise Registry Office (ERO) within the Ministry of Industry and Commerce (MOIC). A completed application for the reservation of company name must be submitted, which contains three potential names for the company to be established, and a signed Contract of Incorporation – if there are multiple shareholders – in the format approved by the Ministry of Industry and Commerce. The applicant must also submit the application for the Enterprise Registration Certificate at the same time and attach the following documents:

  • 3 copies of the Contract of Incorporation
  • 3 copies of the signed Articles of Association, in the format stipulated by the MOIC
  • 3 copies of the resolution of founders of the company
  • 3 copies of the Power of Attorney in the MOIC standard template, if another person has been assigned to submit the application
  • 3 copies of the founders’ ID card/passport for entities
  • 6 photos of the nominated Managing Director, size 3cmx4cm

When the Enterprise Registration Certificate is issued, the MOIC will also issue a letter than can be used by the applicant to register for a Tax ID.

Time: 14 days

Cost: LAK 390,000

3. Submit contracts and agreements and other relevant documents

For any JV in Laos, the contract detailing the relationship between the domestic and

foreign investor must be provided as well as:

  • The resume of the investor
  • Certificate of financial status and experience of the investor
  • Document about the status of foreign legal entity, if applicable
  • Copy of ID card for Laos nationals, or passport for foreigners

 

Time: Simultaneous with previous step

Cost: Free of charge

4. Register the Articles of Association

Once the company obtains an Enterprise Registration Certificate, it can then register its Articles of Association with the State Assets Management Department (SAMD) within the Ministry of Finance. For registration the following are required:

  • Letter request
  • The original signed Articles of Association
  • A copy of the Enterprise Registration Certificate

Time: 5-10 days

Cost: No charge

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Laos, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Laos, they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Laos
  • the company needs help with tax, employment, immigration and payroll compliance in Laos

The complexity of employment regulations in Laos makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Laos allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Laos.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Laos. Read more about outsourced employment through Shield GEO.

  • Laos Employer of Record Overview

Laos Employer of Record Overview

  • Laos Employer of Record Overview

Laos

Laos

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