NC to deliberate Tax Bill of Bhutan 2022 

National Assembly endorsed Tax Bill of Bhutan 2022, which will now be deliberated in the National Council (NC)

According to the Ministry of Finance (MoF), the Tax bill of Bhutan 2022 intends to ease the shortage of foreign currency reserves, promote the local priority sector, and substitute potential import with the local products and to encompass amendments to Custom Duty (CD), Sales Tax (ST) and Green Tax (GT).

The proposed tax revision includes broad areas in essential items, agricultural inputs, domestically available products, products harmful to the environment and health, vehicles, meat items, metals and cement, amongst others.

Finance Minister Namgay Tshering said during the introduction of the bill to the National Assembly (NA) on November 8, 2022 that the Tax bill of Bhutan 2022 will see lower tax for essential items and increase in the tax of harmful products.

For instance, rice, wheat, oats, flour, cereals, and buckwheat amongst others are some commodities with 0% of custom duty and sales tax, which, tobacco related items, juice related items, noodles, furniture, amongst others are some of the commodities with increased tax as it can be produced in the country while, some are harmful products.

Meanwhile, the proprietor of Druna Ghu, Chimi Dema said, “With the revised tax bill, I am hopeful that there will be less import of commodities that are available in the country and help the country in our own way to full fill food sufficiency in the country.”

Similarly, another proprietor who produces herbal products and detergent powder, Dorji Thinlay said that the objective of the revised tax by the government is a good way forward and a good decision. “I am hopeful that with the revised tax bill, the entrepreneurs in the country will get motivated and energised as they will have a space in the markets.”

Meanwhile, owner of a piggery farm in Gelephu said, “Our business has not been very good and I am worried on repayment of the loan. However, I hope the market situation to get better with the revised tax bill in the coming days.”

A tobacco consumer said that it would have been reasonable if the government has accepted the proposal from the Economic and Finance Committee to reduce the ST on tobacco product from 100% to 50%. “There will be chances of increased black marketing in tobacco products as the consumer will continue to consume but it’s a good decision from the government if we look through the health side.”

Meanwhile, during the third reading on the Tax Bill of Bhutan 2022 on November 16 and 17, 2022 the NA rejected few proposals from the committee to increase the ST and also accepted some proposals.

The house rejected the proposal from the committee to increase the ST on chicken and pork from 20% to 40%. The house debated that increasing directly from 20% to 40% will have to look the market inflation in the country as the increased tax will lead to price inflation and the consumers will have to face the consequences. The house debated that currently the increased ST for chicken and pork of 20% is reasonable.  

Similarly, amongst others, the house rejected to reduce the ST of the tobacco products from 100% to 50%. The committee chairperson, Kinga Penjor said that the proposal is mainly to reduce black market in the country. However, the house decided to impose 100% ST on tobacco products.

The house also rejected the proposal from the committee to increase the ST of dairy products like milk and butter from 10% ST to 50% ST. The house argued that the dairy products that are produced in the country are not sufficient and also in hotels and resort they use different type of butter and cheese.

While the house agreed to increase the ST of eggs to 50% as the country produces enough eggs in the country. Similarly, the house agreed to increase the ST of cement from 15% to 30% as the country even exports the cement to other neighbouring country.

Amongst others, the house endorsed the revised tax by the government on commodities like plastics; gold and silver, heavy machine rides, wood and metal furniture.

Meanwhile, the Tax Bill of Bhutan 2022 was passed from NA on November 18, 2022 with 45 members with yes and only one member with abstain.

Sherab Dorji from Thimphu