The Bhutanese Leading the way.
The National Council (NC) endorsed the Goods and Services Tax (Amendment) Bill unanimously by the 22 Members present on 23rd June .
The adoption of two additional recommendations most notably adopting 26th May this year as the commencement date for the tax.
This decision follows Section 46B of the Public Finance (Amendment) Act 2012, which mandates that any change in tax law must take effect retroactively from the date it was first introduced in the National Assembly (NA).
This move came after earlier debates in which Members of Parliament raised concerns about the legality of the NA’s proposed implementation date of 1st January 2026. Section 46B states that “the imposition or increase of any tax or abolition, reduction or remission of any existing tax once passed as law by Parliament, shall be applied retroactively from the date it was initially tabled in the National Assembly.”
During the deliberation, Mongar MP Tshering Wangchen, a legislative committee member, questioned whether Section 46E of the Public Finance Act was in conflict with Article 13(5) of the Constitution.
Section 46E states, “A money or financial Bill, after being passed by the National Assembly, shall be presented to the National Council and that Bill shall be passed during the same session of Parliament.”
Responding to the concern, Minister of Finance, Lekey Dorji, acknowledged that financial and budget-related Bills are generally passed in the same session. However, he noted that the Bhutan Integrated Taxation System (BITS) is still being developed, making it difficult to move forward without firm legal backing.
Lyonpo Lekey Dorji also referenced the GST Act of 2020, which was passed but has not yet been implemented. A six-month preparation period, he added, would help both the government and the private sector, allowing for necessary user acceptance training for Department of Revenue and Customs (DRC) officials and outreach to the business community. He acknowledged the possibility of stockpiling goods with higher tax rates but said the DRC would monitor import patterns to address the issue.
While the NC supported the 5 percent GST rate as proposed by NA, it introduced an additional recommendation for the House to reconsider. One of them included the adoption of Section 229, Chapter 25, Part III of the GST Act 2020. This section allows taxpayers to appeal to the Taxation Review Tribunal instead of a ministry-led review board, addressing concerns about possible conflicts of interest.
