Law on Investment Promotion

The Law on Investment Promotion was first introduced in 2004 with the latest update in 2016. The law regulates both domestic and foreign investment to facilitate and promote investments in Lao PDR.

Incentives offered by the law, which are potentially applicable to the energy sector, include:

• Exemption of custom duty and value-added tax for 
  • Import of materials and equipment, which cannot be supplied or produced in Lao PDR
  • Import of machinery and vehicles directly used for production 
  • Import of raw materials, equipment and parts used in the production for export 
  • Use of domestic raw materials which are not natural resources to produce finished and semi-finished products for export
• Exemption of profit tax
  • Exemption for ten years in zone 1 (poor and remote areas with socio-economic infrastructure unfavorable to investment), exemption for four years in zone 2 (areas with socio-economic infrastructure favorable to investment).
  • Specific regulations apply to special economic zones 
  • Profit tax exemption in the following accounting year, if net profits are used for business expansion.
• Exemption of rental and concession royalty of state land 
  • Exemption for ten years in zone 1 and exemption for five years in zone 2.
  • Specific regulations apply to special economic zones 
• Access-to-finance incentives for loans from commercial banks and other financial institutions 
• Land-use-related incentives 

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