Summary：Giving different types of equity incentives to employees has been a common practice in developed countries for many years.An incentive stock option (ISO) is a corporate benefit that gives an employee the right to buy shares of company stock at a discounted price with the added benefit of possible tax breaks on the profit. But these conveniences are not available in Laos.
KeyWords：Laos、ISO、Incentive Stock Option
License：This work is licensed under a Creative Commons Attribution 4.0 International License.
In order to fulfill our commitment to ourselves: to promote the development of Laos’ pharmaceutical industry with IT technology, and to facilitate the progress of Laos’ economy and industry, we will disclose to the public the knowledge and experience accumulated by our company in the process of operation and development. For reference by others who need to conduct trade in Laos.
Incentive Stock Options(ISOs) are the most effective financial tool for underfunded startups to hire high-quality professionals.But the system is based on the legal and tax systems of the entire economy.The institutional arrangements of the economy are crucial to the efficiency of the circulation of funds and industries.
According to the laws of Laos, the registered capital of a wholly foreign-owned company needs to be 2 billion Lao kip, and the transfer of equity needs to pay a tax corresponding to 3% of the registered capital.This is about the tax cost of 60 million Lao kip.In most advanced economies, ISO increases tax on capital gains tax, and for start-up companies, the tax rate is basically 0%.
The requirements of different industries, such as production type, will be higher.And all types of property rights transactions here, the government will collect taxes and fees.The cost of doing business will give you an intuitive feeling that it is higher than in developed economies.
It has to be said that it is difficult for foreigners to develop and establish enterprises in Laos to operate here in a mature market system.Laos’ legal and tax system is not conducive to investment and growth of start-ups, and maintaining a small scale is more conducive to controlling risks.
But if you have already established a business in Laos and you want to use the option tool, what should you do? Maybe you can consider debt-type tools.