Welcome to the new DFDL Legal Brief edition. In this issue we will inform you about four new Lao PDR laws and three amended existing laws.

But first things, first:

Corrections

Please note the following corrections to the DFDL Legal Brief, Important Update: Labor Law dated 4 December 2014:

  1. The 2013 Labor Law became effective on 29 October 2014 (not 4 November 2014); and
  2. The calculation of severance pay under the 2013 Labor Law is fixed to 10% of the previous month’s salary or wage multiplied by the number of months worked (not years worked).

Amended and New Legislation in Lao PDR

The 8th Ordinary Session of the National Assembly (7th legislature) (“NA”), which opened on 9 December 2014 and closed on 26 December 2014, approved four new laws and amended three existing laws as follows:

New Laws:

  1. Law on Entry-Exit Lao PDR and Foreigners Control;
  2. Law on Control of Alcoholic Beverages;
  3. Law on Management of Foreign Exchange;
  4. Law on Anti-Violence against Women and Children.

Amended Laws:

  1. Law on Health Care (amending the Law No. 09/NA on Health Care, dated 09 November 2005);
  2. Law on Customs (amending the Law No. 04/NA on Customs, 20 December 2011);
  3. Law on Handling Petition (amending the Law No. 07/NA on the Handling Petitions, dated 9 November 2005).

As none of these laws have yet been promulgated, final versions are not available. Once they become public, updates will be forthcoming. Meanwhile, we set out below a summary of legislation which recently became effective.

Unemployment Benefits in Lao PDR

The Law on Social Security (No. 34/NA) (“Social Security Law”) adopted in July 2013 introduced an unemployment benefit for members of the Social Security Fund.  In December 2014, the Ministry of Labor and Social Welfare adopted a Decision regarding Implementation of the Unemployment Benefit (No. 3623/MLSW, 23 December 2014) (“Unemployment Benefit Decision”).

The Unemployment Benefit Decision provides that a person must meet the following conditions for obtaining an unemployment benefit:

  • Has contributed to the National Social Security Fund for 12 months or more during the last 24 months;
  • Is unemployed due to the  bankruptcy of a labor unit or the persuasion to resign;
  • Is unemployed due to the need to reduce the number of employees due to the impact of an economic crisis to the productivity of the labor unit;
  • Is unemployed for 30 days or more as confirmed by a Letter of Confirmation from the relevant labor unit;
  • Is in good health and can return to the labor market;
  • If previously in receipt of an unemployment benefit, a person must accumulate a new unemployment benefit through contribution [to the Social Security Fund] for another 12 months or more in order to be entitled to obtain a new unemployment benefit.

Unemployment benefits are not available in the following situations:

  • Employee performs seasonal work or work on a production basis;
  • Employee is unemployed due to violation of the employment agreement or the internal rules of the labor unit;
  • Employee voluntarily resigns from work due to various reasons;
  • Loss of working capacity or having a disability;
  • Summer vacation period of a teacher in a private school;
  • Once a person who was receiving an unemployment allowance becomes employed.

The calculation of the unemployment benefit is set forth in the Social Security Law.

Contribution Rates: the Unemployment Benefit Decision confirms that the increased contribution rates effective from 1 January 2015, i.e., 6% for employers and 5.5% for employees, are due to this new unemployment benefit.

Trial Use of New Tax Invoice in Lao PDR

The Ministry of Finance issued a Notification on the Trial Use of New Tax and VAT Invoices for Rewards (No. 428/MOF, 29 December 2014).  Starting from 1 February 2015, there will be a trial use of new invoices within Vientiane Capital.  All types of tax invoices previously purchased from the tax authorities or self-printed tax invoices will be cancelled and replaced by new tax and VAT invoices.

The Vientiane Capital Tax Division can nominate enterprises to receive rewards.  The designated enterprises will be required to summarize and report the use of their tax invoices to the relevant tax authorities.  The Vientiane Capital Tax Division can confirm for enterprises whether they are subject to the new tax invoices.