Starting a Trading Business in Laos: Key Legal and Regulatory Considerations

Given Lao PDR’s strategic location at the heart of rapidly expanding Southeast Asian markets, establishing a trading (export-import) business in the country can be a highly promising venture. However, to ensure compliance with relevant laws and regulations, both foreign and local investors must navigate a range of legal, administrative, and regulatory procedures.

This article outlines the essential steps, legal requirements, and regulatory considerations involved in setting up a trading company in Laos.

Corporate Registration in Laos

Before engaging in import or export activities, a company must first obtain an Enterprise Registration Certificate (ERC) from the Ministry of Industry and Commerce (MOIC). This requirement applies to both foreign and Lao investors.

The process of incorporating a company in Laos is described in detail here.

Operating Licences

While 100% Lao-owned companies are generally not required to obtain an operating licence to engage in trading (export/import) activities, foreign-owned companies must apply for a Domestic Trade Business (Wholesale and Retail) Operating Licence. This licence is subject to specific minimum capital and foreign ownership requirements, which are outlined further below.

Additionally, the importation and distribution of certain regulated goods, such as information and communication technology equipment, pharmaceutical products, and fuel, require separate sector-specific operating licences issued by the relevant authorities.

Minimum Registered Capital and Foreign Ownership Limits for Domestic Trade Businesses

‍

Under Decision No. 1005/MOIC, a foreign investor’s ownership in a trading (wholesale and retail) business in Laos is directly linked to the level of paid-up registered capital. The following thresholds apply:

1. 100% foreign ownership:
   Minimum registered capital: LAK 20 billion (approx. USD 1 million)
2. Up to 70% foreign ownership:
   Minimum registered capital: LAK 10 billion (approx. USD 500,000)
3. Up to 50% foreign ownership:
   Minimum registered capital: LAK 4 billion (approx. USD 200,000)

The registered capital must be paid up in installments over four years as follows:
• 30% within the first year
• 30% within the second year
• 30% within the third year
• 10% within the fourth year

For 100% Lao-owned trading companies, there is no statutory minimum capital requirement. However, in practice, a minimum capital of LAK 500 million (approx. USD 25,000) is typically expected. This capital is not required to be paid up.

Registration of Importers and Exporters of Goods

Pursuant to the Decision on the Registration of Importers and Exporters of Goods No. 0752, all importers and exporters must register their business activities and the categories of goods involved with the MOIC.

The purpose of this registration is to support the MOIC in building a centralised database to monitor trade activities and track the flow of goods in and out of the country.

The registration certificate is valid for one year and is renewable annually for the same period.

Import-Export Bank Accounts

Under Decision No. 677 issued by the Bank of the Lao PDR (BOL), importers and exporters are required to register with the BOL and open a dedicated commercial bank account for their import-export activities.

After completing registration with the MOIC and receiving a registration certificate, businesses must register with the BOL within 10 days. Upon receiving a complete application, the BOL will issue a registration notification within five working days. Following this, the importer or exporter has another 10 days to submit the BOL registration certificate, along with the necessary supporting documents, to a commercial bank to open the specified account.

All cross-border payments for goods and services, whether made or received, must be conducted through this dedicated account via electronic wire transfer. Importers are generally required to present supporting documentation such as an invoice and a sale-purchase agreement to the commercial bank to process each transaction.

Similarly, exporters must receive payment through the same account within the timeframe set out in the relevant sale-purchase agreement, but in any case no later than 180 days from the date of export. Once payment is received, the exporter may be asked to submit copies of the invoice and agreement to the commercial bank as proof of the transaction.

Foreign Currency Repatriation and Conversion Rules

As previously noted, all Lao-incorporated exporters of goods and services are required to channel all export payments into a designated import-export account at a commercial bank in Laos.

Under Decision No. 333/BOL, exporters must repatriate a sector-specific portion of each invoice within fixed time limits, as follows:

• 85% of mining revenues within 90 days
• 80% of service revenues within 60 days
• 75% of agricultural revenues within 60 days
• 70% of other-goods revenues within 90 days
• 20% of electricity revenues within 180 days

Once the foreign currency funds are received, the exporter must, within three working days, sell a required portion of the inflow to its bank:

• 35% for mining
• 30% for agriculture
• 20% for services, electricity, and other goods

If the exporter fails to convert the required amount within the time frame, the bank will automatically convert the shortfall at the prevailing buying rate, with the equivalent amount in Lao kip credited to the exporter’s account.

Documentation for Customs Clearance

For Importers

When goods arrive at Lao borders, importers are generally required to provide the following documents:

• Commercial Invoice
• Carrier’s Report, Bill of Lading, or Airway Bill (depending on the mode of transport)
• Packing List
• Copy of Business License
• Copy of Tax Registration Certificate
• Relevant Import License or technical permits (for regulated goods)
• Customs Declaration Form

In accordance with Article 24 of the Customs Law (2011), importers must submit their customs declaration within 15 days of cargo arrival. Failure to comply—due to delays or discrepancies—can result in penalties ranging from administrative fines to stricter enforcement, particularly in cases of repeated or intentional violations.

For Exporters

Exporters are typically required to prepare the following:

• Commercial Invoice
• Packing List
• Road Transit Document or Bill of Lading
• Copy of Business License
• Export Customs Declaration
• Relevant Export License (if applicable)
• Certificate of Origin (if required by the destination country or for preferential tariff treatment)

In addition, certain exports may require phytosanitary certificates (e.g., for agricultural or food products) or sector-specific certifications based on the nature of the goods.

Tariffs and VAT

Tariff rates in Laos generally range from 0% to 40%, with higher rates applied to sensitive or agricultural goods. As of current practice:

The average import duty is approximately:

• 8.3% for non-agricultural goods
• 14.9% for agricultural goods

A Value-Added Tax (VAT) of 10% applies to most imported goods.

In contrast, exports are typically zero-rated for VAT purposes. However, certain exports—particularly raw, semi-processed, or natural-resource-based commodities—may still be subject to a 10% VAT.

Warehouse and Temporary Import Regimes

Laos offers customs mechanisms to support flexible trading strategies:

Under the Warehouse Regime, businesses can defer tariff payments by storing goods until they are ready for sale or circulation in the domestic market.

The Temporary Import Regime allows exemptions for goods intended for re-export, such as:

• Raw materials for production
• Exhibition items
• Equipment used for project supervision or temporary operations

These regimes reduce upfront costs and improve cash flow for eligible businesses.

Special Economic Zones (SEZs)

Companies operating within Special Economic Zones (SEZs) benefit from generous incentives under the Law on Investment Promotion (2016), including:

• Duty-free imports of production inputs and raw materials
• VAT deductions on both imports and exports

These incentives are designed to attract investment and facilitate streamlined import-export operations.

How We Can Assist

Navigating the regulatory landscape for trading businesses in Laos can be complex, particularly for foreign investors and businesses dealing with sensitive or high-value goods. Our firm provides end-to-end support tailored to your specific commercial goals and compliance needs.

We can assist with:

• Business Setup and Licensing
  Guiding you through the company incorporation process, including securing your Enterprise Registration Certificate (ERC), tax registration, and all necessary operating licences.
• Import-Export Registration
  Advising on and handling registrations with the Ministry of Industry and Commerce (MOIC) and the Bank of the Lao PDR (BOL), including import-export account setup and compliance with BOL Decision No. 677 and No. 333.
• Customs and Trade Compliance
  Preparing and reviewing documentation for customs clearance, import/export declarations, and goods classification, as well as advising on warehousing, temporary import regimes, and bonded storage.
• Foreign Currency Controls and Repatriation
  Ensuring compliance with foreign exchange regulations, including sector-specific repatriation timelines and mandatory currency conversions under BOL rules.
• Regulatory Advice for SEZs and Incentives
  Supporting applications for tax and duty incentives available under the Law on Investment Promotion, and advising on operations within Special Economic Zones (SEZs).
• Ongoing Legal and Strategic Support
  Providing continuous legal, tax, and regulatory advice to help your business remain compliant as laws evolve, and to strategically position your trading operations in Laos and the broader ASEAN region.

Whether you are entering the Lao market for the first time or expanding existing operations, our team offers practical, up-to-date guidance to help you trade confidently and compliantly.