Vientiane, 22 June 2026 - Lao PDR launched its first-ever Tax Expenditure Report, marking an important step toward more transparent, evidence-based fiscal policy and stronger domestic resource mobilization.

Tax expenditures, defined as revenue forgone through preferential tax provisions or deviations from a benchmark tax system, are an important part of Lao PDR’s fiscal policy framework. Unlike direct public spending, they are often less visible in the national budget, despite their impact on revenue collection and resource allocation. Systematic analysis of tax expenditures is therefore essential for transparent, accountable, and efficient fiscal management. Until now, Lao PDR had no official stocktaking of this data.

With support from the New Zealand Ministry of Foreign Affairs and Trade and the Integrated National Financing Framework Facility, UNDP partnered with the Department of Economic and Fiscal Policy of the Ministry of Finance through the National Planning and Financing for Inclusive Development (NPFID) project to develop the country’s first Tax Expenditure Report.

The launch marks the culmination of years of technical collaboration and analytical work. This included developing a Benchmark Tax System to identify and define tax expenditures within Lao PDR’s tax system, as well as creating a database of more than 500 concession agreements and government-controlled business projects across nine provinces to estimate the value of these incentives. The report provides estimates of revenue foregone from profit tax, value added tax, customs duties, excise tax, and non-tax revenue, specifically concession fees.

The report finds that revenue foregone from tax expenditures increased steadily in absolute terms in 2023 reaching LAK 876.4 billion, equivalent to 0.6 percent of GDP. Nonetheless, the analysis is constrained by the availability and quality of data and encompasses only 9 provinces. 

Speaking at the launch, H.E. Mr. Soulivath Souvannachoumkham, Deputy Minister of Finance, highlighted the importance of the milestone:

‘By examining revenue forgone, the report provides an important evidence base to inform policy discussions, strengthen domestic resource mobilization, and support more transparent, accountable, and sustainable public financial management’.

Ms. Martine Thérer, Resident Representative of UNDP in Lao PDR, emphasized that the report is part of broader efforts to finance national priorities under the NSEDP (National Socio-Economic Development Plan 2026-2030).

‘Globally, Official Development Assistance flows are declining. For Lao PDR, domestic financing has become essential to advancing national development priorities. Tax expenditure analysis is a key reform area to strengthen the Government’s revenue mobilisation potential’.

The launch brought together senior government officials and development partners to discuss how the report’s findings can strengthen fiscal transparency, accountability, and efficiency, while informing future tax expenditure analysis. Discussions also underscored the importance of such work in addressing financing gaps and supporting Lao PDR’s progress toward the priorities of the 10^th National Socio-Economic Development Plan, particularly as the country prepares for graduation from Least Developed Country status in November 2026.