ADB to Help Modernize Revenue Mobilization in Lao PDR

VIENTIANE, LAO PEOPLE’S DEMOCRATIC REPUBLIC (13 December 2024) — The Asian Development Bank (ADB) approved a $25 million financing package, as well as a $2 million technical assistance grant, to support the Lao People’s Democratic Republic (Lao PDR) in increasing revenue by strengthening the government’s domestic resource mobilization (DRM) and enhancing the efficiency and transparency of tax administration and taxpayer services.

"Inadequate tax revenue contributes significantly to the Lao PDR’s macroeconomic challenges, limiting public investment in development priorities, including poverty reduction programs," said ADB Country Director for the Lao PDR Shanny Campbell. "ADB will support the government’s efforts to build a robust revenue base, reduce public debt, and foster sustainable financing of public services to strengthen its economy and bolster resilience.”

The government has made progress on DRM performance by introducing the Tax Revenue Information System (TaxRIS) in 2020 to process and manage taxpayer information. The Domestic Resource Mobilization Modernization Project will help improve its functionality and interoperability with other government systems to further optimize the country’s revenue potential.

Additionally, about 94% of businesses in the Lao PDR are micro, small, and medium-sized enterprises (MSMEs), and they face higher tax compliance overheads. This hinders their entry into the formal sector; 87% of total businesses remain unregistered in the country. The project will help implement digital solutions, including e-invoicing systems, to alleviate these challenges and improve MSMEs’ tax compliance. The project will also help enhance skills and professionalism of tax officials for better tax administration. 

The financing agreement for the project was signed by the Ministry of Finance on behalf of the government and ADB on 12 December 2024. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.