Lao tax on border trade: 70-80% fall in trade

06 ธันวาคม 2559

Surprise new border tax by Lao govt cuts border trade by 70-80%. Personal effects greater than $50 also taxed.

CROSS-BORDER TRADE

Government to air concerns on Lao VAT

6/12/2016
Phusadee Arunmas

Laos has begun collecting a VAT tax on products imported from abroad, starting at the first Thai-Lao Friendship Bridge between Nong Khai province and Vientiane.

Lao citizens or expats living in Laos must pay a 10% VAT tax on their (new or used) personal effects valued at more than US$50 when they enter Laos through border checkpoints and international airports.

The VAT levy is waived for passengers who travel less than twice a month.

Lao tax on border trade: 70-80% fall in trade

Tourists, expats and day visitors from the Lao side wait at an immigration check point.

IMPACT OF NEW CROSS-BORDER TRADE TAX

The new tax measure will affect the spending of Lao citizens and expats who make frequent trips to Thailand to buy goods.

"We've already started seeing an impact as the number of Lao visitors dropped sharply after the VAT became effective," he said.

After Lao authorities started collecting the VAT, spending on goods by Lao visitors fell by 70-80%.

This is according to Monnipa Kovitsirikul, chairwoman of the Thai Chamber of Commerce for Nong Khai.

"After the VAT came into force, we've seen fewer Lao visitors every day," she said.

"More importantly, most of them are only buying essential goods as they try to dodge paying tax."

The policy will definitely lower border trade value now worth about 60 billion baht a year at the Nong Khai checkpoint.

First Thai-Lao Friendship Bridge that opened in 1994 connecting Nongkhai on the Thai side with Laos and its capital Vientiane on the Lao side (Source: Wikipedia)

THAI-LAO BORDER TRADE

Border trade between Thailand and Laos amounted to 177 billion baht in 2015, with Thai goods accounting for 144 billion.

Key products include automobiles and auto parts, diesel fuel, steel products and livestock.

For the first 10 months this year, border trade between the two neighbours rose 18% year-on-year to 165 billion baht, with exports from Thailand totalling 111 billion, up 4.8%.

A man loads goods from Thailand onto a boat bound for Laos. PATTARAPONG CHATPATTARASILL

RAISING THE ISSUE WITH LAOS

The government is set to raise the issue of Laos's value-added tax (VAT) in a joint discussion with Lao counterparts, fearing the new tax measure may cripple growing border trade.

Thailand will ask for leniency and a new higher spending ceiling from Laos during a meeting expected to be held soon.

SPECIAL ECONOMIC ZONE STIMULUS TO TRADE

Thailand's overall cross-border trade is expected to flourish over the next few years once the government's planned special economic zones (SEZs) start up.

The government decided two years ago to set up industrial estates in SEZs in 10 border provinces for the purposes of agriculture, industry, logistics and tourism.