Financial Reporting Lens Issue 2

Recent developments in Laos’ economic environment have important implications for financial reporting, particularly for Thai parent entities with foreign operations whose functional currency is the Lao Kip. Previously, these entities were required to apply TAS 29 due to the hyperinflationary status of the Lao economy. These reporting requirements have now changed, rendering this update crucial for such entities.

According to recent data from the Bank of the Lao PDR, the three-year cumulative inflation rate fell below 100% as of October 2025. Furthermore, IMF forecasts indicate that this downward trend is expected to continue through 2026 and 2027.

As a result, the Lao economy is now considered to have ceased being hyperinflationary. Accordingly, Thai parent entities should discontinue applying TAS 29 for reporting periods ending on or after 31 December 2025. The amounts in the financial statements immediately preceding cessation of hyperinflation should be used as the carrying amounts in the subsequent financial statements.

Below is an example scenario, and its related accounting implications, for the cessation of hyperinflation:

• The Thai parent entity has a foreign operation in Laos, prepares both quarterly and annual consolidated financial statements, and uses a non-hyperinflationary presentation currency.
• The last reporting period in which TAS 29 was applied ended 30 September 2025 (Q3 reporting).
• The parent previously implemented an accounting policy under which comparative financial statements were not restated in the first period in which TAS 29 was applied.
• The following financial information of the Lao entity should be included in the Thai parent entity’s consolidated financial statements.

We hope this update provides clarity and practical guidance for your upcoming reporting periods. If you have any queries, please do not hesitate to contact us.