A customs law was adopted by the National Assembly in late 1994, rationalising and consolidating the tariff system. Tariff reductions are under negotiation in the ASEAN Free Trade Area (AFTA) context and will be further reviewed in the light of Laos' request to accede to the World Trade Organisation (WTO).

Laos uses two types of customs valuations:

I.) Valuation based on the transaction value of the imported item, which is usually based on the shipping invoice.

II.) Valuation based on a certificate from the Lao embassy or a reputable organization having expertise on price and fair market value, such as the Chamber of Commerce of the country of origin.

If the importers cannot provide such documents, the customs valuation will be based on domestic price (the so-called general price), minus 15 percent. The importer must employ a certified customs specialist or certified customs clearance corporation to complete the report.

Lao law does not require an origin determination for imported goods, but relies upon the rules of origin from other countries.

Tariffs and Import Taxes
The Lao import tax system aims at promoting the import of materials and equipment for investment and production, while protecting domestic production and limiting luxury imports. Foreign investors are required to pay a 1% import duty on imports of machinery for production, equipment, and spare parts. Raw materials and intermediate goods needed for export production are exempt from import taxes. Raw materials and intermediate goods imported for import-substituting industries can be accorded special treatment based on an incentive agreement.

There are six rates of import tariffs: five percent for promoted goods such as heavy equipment and machine tools; ten percent for some medicines and some materials used in light industry such as fabrics and some chemicals; twenty percent for some food products, such as frozen fish; thirty percent for certain kinds of fruit and vegetables; and forty percent for automobiles. Besides the import tariff, the government also imposes excise tax on a wide range of products, with the steepest assessed on autos (from 72% to 104%, depending on engine size); motorcycles, beer and cigarettes (50%); and alcohol (60%).

In addition to the excise tax, importers may also face a turnover tax of 5-10% on most goods. Goods are usually assessed at the higher 10% rate; most goods considered essential to domestic production (such as agricultural equipment, power tools, and construction equipment; fabric and cotton thread) are assessed at 5%. Tax-exempt goods include rice; fertilizer and animal feed; fire trucks and wheelchairs. The Lao government is expected to introduce a value-added tax, which will replace the turnover tax, by 2002.

Import/Export License Requirements
Import License: Application for an import license must be made to the provincial trade authority where the importing enterprise is located. An import license is valid for three months, during which time payment for imports and import duties should be made. The Lao government limits the right to import autos to certain import-export companies.

Import/export documentation: for general goods, importers are required to have the following documentation for each shipment:

• Contract with a foreign supplier or purchase order;
• Import license (7 copies);
• Letter of credit or payment guarantee paper from a foreign exchange bank;
• Transport documents;
• Bill of lading;
• Customs clearance (import) report.

Importers of raw materials for re-export are required to have the same documents as other importers, except for the contract and import license for each shipment. Instead, they are required to provide an annual import plan to the provincial or municipal Industry and Handicraft Department where the factory is located.

Since the import of automobiles is restricted by a government-issued quota, automobile importers must show, in addition to the documents mentioned above, quota approval from the government, a technical specification approval from the Ministry of Communications and Transport, and an import license from the Ministry of Commerce and Tourism.

Exporters should have the following documentation when applying for an export declaration:

• application for export declaration;
• export permission from provincial trading authority;
• invoice;
• packing list;
• certificate of country of origin and generalized system of preferences certificate of origin if applicable;
• phytosanitary certificate for food exports; and
• industrial products certification for industrial products.

Temporary Goods Entry Requirements

Products imported for the purposes of processing and assembly into finished products or for exhibition and subsequent re-export are exempt from duty. Trans-shipment of goods through Laos requires all the documents normally needed for both importing and exporting. In addition, the export-import company shipping goods through Laos must submit an annual trans-shipment plan to the related ministry (e.g., Agriculture and Forestry for wood products) and obtain further permission from the ministry for each trans-shipment. Goods travelling through Laos are not subject to import or export taxes.

Special Import/Export Requirements and Certifications

To import or export pharmaceuticals, food and chemical products, the importers must obtain a license from the Food and Drug Control Import Division of the Food and Drug Department of the Ministry of Public Health. For more information please contact Food and Drug Control Division of Ministry of Health at the following numbers: Tel: (856) 21 214-013 or 014; fax (856) 21 214015. Pre-shipment inspection is required for exported goods of any kind.

Prohibited Imports

Lao law prohibits the imports of weapons by private citizens; illegal drugs; toxic chemicals; hazardous materials; pornography; and agricultural produce which is grown domestically in sufficient quantities (i.e., eggplant, tomatoes, bananas, chilies, lemons, etc.).

Export Controls

The GOL uses quotas to control exports of timber and lumber. While export inspections are only required by law for a few items, in practice almost all shipments are inspected before export.

Lao law prohibits the export of weapons; antiques; Buddha images; illegal drugs; logs; 15 ft x 80 ft size and thicker sawed wood (regardless of length); raw rattan and basic processed rattan; and wildlife.

Standards

Laos has no specific law on standards for imported or exported goods. All imported goods are based on the standard certification of the country of export.

Free Trade Zones

Laos has no free trade zone, but the Ministry of Commerce has indicated its willingness to establish free trade zones in many areas of the country as an investment incentive on a case-by-case basis. Plans are currently underway for a free trade zone in Savannakhet province on the Vietnamese border in southeastern Laos.

Membership in Free Trade Arrangements

Laos became a member of ASEAN in 1997 and has committed to bringing all of its tariffs in line with its AFTA commitments by 2008. The following countries have granted MFN status to Laos: China; Myanmar; Thailand; European Union; and Russia. Laos has signed trade agreements with 15 countries, including Bulgaria; Czech Republic; India; Slovak Republic; Hungary; Germany; Cambodia; Mongolia; and Poland.