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Employing in Laos

At a glance

Employment in Laos

Foreign companies that employ workers in Laos face several challenges and must adhere to the legal and regulatory framework that is in place. The Labour Law has only recently been adapted to facilitate the needs and requirements of the private sector after close discussions, as well as encouraging Lao workers to return from overseas. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well. Our guide explains Lao policies on leave, termination and payment of benefits.

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Payroll & Tax in Laos

Complying with local payroll and tax requirements is essential for a company doing business in Laos. Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources operation. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).

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Immigration / Work Permits in Laos

Foreign workers are required to have the proper visas and work permits in Laos, as established by immigration laws. This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly. The work permit (LA-B2 visa) application can be lengthy and quite complex if not all required documentation is submitted correctly.

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Incorporation

There are several business structures available for incorporation in Laos – the representative office, joint venture, and wholly foreign owned subsidiary – and each has advantages and disadvantages. In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity. Our guide has a comparison of the time and cost for incorporating standard company structures including Rep Office, WFOE and JV.

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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.

Using Shield GEO Employer of Record Services in Laos

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.

 
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.

Employers Social Security and statutory contributions

Employers contribute 5% of the employee’s salary towards a general pension payment under the compulsory social security system.

Employees Social Security and statutory contributions

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

Corporate Income Tax Rate

24%

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

Work Permits
Business Visas
Others
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