The Bhutanese Leading the way.
The government may have given up collecting Business Income Tax from small rural businesses but rural shopkeepers in the Dzongkhags were surprised to find local Bhutan Chamber of Commerce and Industry (BCCI) officials coming to collect the annual membership fees.
Similarly in Thimphu when businessmen and women went to renew their licenses at the Regional Trade Office they saw a BCCI official sitting next to the official asking for the annual membership fee.
Though the amounts were not big this lead to some consternation with a few people even questioning why BCCI was collecting such a fee. A perception also gained that such a fee was compulsory and there was more resentment.
However, the BCCI President Ugen Tsechup Dorji clarified that it was not legally compulsory to pay the membership fee.
He, however, made the qualified that if members did not even pay this nominal fee then BCCI would have to close down.
Secretary General of BCCI Phub Tshering said that the collection last year was Nu 7.5 mn and it was used to pay the salaries of around 38 permanent staff in BCCI and also fund various other activities like seminars and other activities.
He said from this fund BCCI also had to pay on a part time basis some 40 officials in 20 Dzongkhags doing BCCI work.
He said the actual current expenditure of BCCI last year was around 11.5 mn and so BCCI had to come up with its own revenue making activities like hosting trade fairs and giving out its office hall for meetings.
Phub Tshering said that the majority of the Nu 7.5 mn collected last year had been from a few big business houses as the rate was up to Nu 45,000 per license for big companies. He said the President himself who heads multiple companies pays a hefty amount each year.
In contrast the going rate for small businesses are in progressive slabs of Nu 100, Nu 300, Nu 500 and Nu 1,500.
Phub said that government assistance was only by way of trainings and projects and in fact a lot of research work had been funded by big business houses at their own cost.
One grouse of some people in paying is the perception built up over a period of time that BCCI represents big houses and mainly lobbies for their interests without giving them any benefit.
The BCCI President here said this was not true as in fact in his so far two years time as President not even a single big business house had come to BCCI asking for help. He said that big business houses already know their way and have access and so get their work done without having to refer to BCCI.
He also said that under him BCCI was engaged more than ever with small businesses and even the agricultural sector.
Phub Tshering pointed out examples of how small businesses benefitted from BCCI. He said that the BIT Tax relief was given to business in rural areas based on an earlier BCCI report that recommended tax relief. He said that earlier Micro licenses had to renew their licenses with the government ever year paying Nu 500 which was stopped on the intervention of BCCI. It is now only renewed once in three years.
Ugen Tsechup said that the membership rates were not imposed unilaterally but finalized in the Annual General Meeting of the BCCI where there were two representatives from each Dzongkhag.
He said that in his various Dzongkhag tours he had asked local businesses if BCCI should be closed and they had all said that it should not. The BCCI President said that in his tours he had noted the several problems of small businesses in the Dzongkhags and handed it over to the government which ensured that they got resolved.
One additional concern from small businessmen is on whether the money being collected from them is the right amount and if it ever makes its way to the BCCI coffers in Thimphu and is used well.
Phub Tshering said the use of the money was audited every year by the Royal Audit Authority and there were strict internal controls to ensure that the money collected in the Dzongkhags gets deposited into the BCCI account.
According to BCCI officials prior to 2006 the Trade Department under the Ministry of Economic Affairs collected the amount by compulsorily deducting it from the license renewal fee of businesses and then handing the money over to BCCI.
However, there were accounting problems and issues in such a collection mode. The then Minister for Trade and Industry Lyonpo Khandu Wangchuk said it should not be made compulsory and asked BCCI to do it themselves.
BCCI officials said that they had just sought the cooperation of the Ministry of Economic Affairs whereby a BCCI official is allowed to sit with a trade official and then request for the membership fee. This cooperation was granted with the idea that the membership fee is not compulsory.
The BCCI President pointed out that even if the fee is not compulsory people should pay as BCCI is doing real work to benefit the entire business community. He said it would also not be fair for those not paying to avail the same policy and other service benefits as those who are paying.
