1 Restrictions
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Under Lao law, land is collectively owned by the national community, with the State acting as its administrator. Foreign nationals, whether individuals or legal entities, are prohibited from owning land. They may only obtain land use rights through leases, State land concessions, or purchase of allocated State land rights of use for a fixed term. Foreign nationals can own or occupy buildings—residential, commercial, or industrial—under lease or concession terms and can own condominium units if qualified under the Decree on Condominiums. Foreign nationals can also hold shares in property-owning companies; however, any land held by such companies must be converted to leasehold in accordance with Lao laws.
Are there restrictions on lending for the purchase of real
estate by foreign companies? If so briefly give an
outline?
There are no legal restrictions on lending to a company for the purchase of real estate in Laos. However, as noted, foreign nationals—whether individuals or legal entities—are prohibited from owning land. They are permitted, nonetheless, to own or occupy buildings, including residential, commercial, or industrial structures through leasehold or concession agreements. While both domestic and offshore lenders may extend credit facilities, any lending from an offshore creditor requires prior approval from the Bank of the Lao PDR.
2 Taxes
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The tax associated with acquiring real estate primarily includes transfer tax when purchasing land use rights:
- If the seller is an individual, a 2% transfer tax based on the official appraised value assessed by the relevant Land Office applies.
- If the seller is a legal entity, the transfer tax is 10%, calculated on the same basis.
- In both cases, the seller is responsible for the payment of the transfer tax, unless otherwise agreed by the parties in the sale and purchase agreement.
In addition, a stamp duty tax is levied at a rate that varies depending on the total contract value and is payable upon registration of the transaction.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
There are annual taxes applicable to real estate and land, based on the type, size and location of the land, and also on the nature of building constructed on it (housing, factories, etc.). While the owner is usually liable for tax, land lease agreement terms that switch the tax burden to the occupier may be adopted by mutual agreement. Annual land tax must be paid between January 1 and December 31 of each calendar year. Payment may be made through the banking system, the National Treasury, or an authorized village authority.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
Land concessions and investment in sectors promoted by the government are entitled to certain incentives, including tax exemptions on real estate for a specific period. The promoted sectors include, among others: agricultural and environmental protection; environmentally-friendly industrial processing of agricultural products; ecotourism; education and vocational training development, as well as the establishment of modern hospitals, pharmaceutical and medical equipment manufacturing facilities, and traditional medicine production and treatment centers.
3 Title of Real Estate
How is the ownership of Real Estate evidenced in your jurisdiction?
A land title is a legal document issued by the DONRE that grants Lao nationals land use rights; and only one original copy will be given to the landowner as long-term evidence until there is a change in accordance with the Law on Land.
In the case of foreign nationals entering into a lease or concession agreement or purchase of allocated State land rights of use for a fixed term, DONRE will issue a State Land Title in the name of the foreign national for a specified term as stipulated under the lease or concession agreement. This State Land Title serves as legal evidence that the State has granted land use rights to the foreign national for the duration and under the conditions set forth in the said agreement.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
Under Lao law, while the Law on Land provides general access to land information via the National Land Database, it remains ambiguous regarding access rights of third parties. Based on our consultation with the DONRE, in practice, land ownership documents will not be disclosed to third parties without the owner's consent. Disclosure is permitted only to judicial authorities in accordance with the Law on Criminal Procedure and the Law on Anti-Corruption. Therefore, ownership information may be kept confidential from the public under current practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
