On 18 September 2013, the Ministry of Finance announced that the Lao government is planning to start using an electronic system for tax collection early next year, with a test of the system on motor vehicle tax to begin next month.
Revenue collection has not reached government-forecasted levels because of various violations of the regulations and loopholes in procedures. These, in turn, have resulted in an increase of the government debt. Despite the large number of motor vehicles imported into the country each year, the government only receives a small amount of tax revenue from the trade. Importers and dealers have either reported lower buying prices than the actual price paid or used various means to avoid the payment of any duty.
Finance Minister, Mr. Phouphet Khamphounvong, said the new method of taxation will calculate tax based on a vehicle's engine capacity (both the size and number of cylinders), its brand and model, but not its sale or purchase price.
The ministry had first announced the plan for electronic tax collection several years ago but had not been able to implement it until now, as a lot of preparation was needed to select the best technology. The organisation and training of operating personnel also took time. The new system will be able to report whether tax has been paid, thereby making the collection of tax more efficient. It is anticipated that the government would be able to collect more revenue through the use of this system. A full trial will begin next year and will gradually be applied to other sectors of business.