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Tax rates and tax administration are both considered to be severe obstacles to doing business in Laos by nearly one-third of the firms interviewed as part of the Investment Climate Survey (ICS) conducted by the Government of Lao PDR, the World Bank and the Asian Development Bank (ADB). Whether or not taxes are severe remains unclear, however, since information is lacking on the effective tax rates paid by firms. In practice, a considerably smaller amount of taxes than that implied by the statutory rates are collected by the Government. There are four channels through which substantial revenue losses occur in Laos: (a) non-registration of firms, mainly microenterprises and some small businesses, as a means of avoiding obligations to the tax administration; (b) misfiling by businesses in the wrong tax regime to take advantage of the contract system offered to small businesses; (c) evasion or fraud by taxpayer under-reporting of profits or turnover and over-reporting of deductible expenses; and (d) inadequate implementation of the revenue administration procedures. There are also losses of 30 to 60 percent of revenue from trade-related sources. Disincentives for businesses are nevertheless high since customs and handling charges represent about 25 percent of the cost of shipping goods abroad, despite the trade-weighted average tariff being only 9 percent.