The Bhutanese Leading the way.
The Department of Revenue & Customs (DRC) of the Royal Government of Bhutan (RGoB) has announced the signing of a significant contract with Data Torque Limited (DLT) for the development of the Bhutan Integrated Taxation System (BITS) yesterday.
The project (BITS) is a crucial step towards modernizing Bhutan’s tax administration, aiming to expand the taxpayer base, improve resource mobilization, and enhance taxpayer services with the implementation of Goods and Services Tax (GST).
Director General (DG) Sonam Jamtsho shared, “The development and implementation of Bhutan’s Integrated Taxation System mark a significant milestone. This project represents more than just a technological enhancement, it signifies a major transformation in our tax administration approach.”
GST is a 7percent tax on what people buy that will replace sales tax and change how excise taxes work.
Kuenzang Thinley, the Commissioner of the BITS and GST Project, stated, “Three international participants were involved in the bidding process. The Ministry of Finance and the GovTech Agency also set up a technical evaluation committee. Data Torque Ltd was chosen based on the merit of their proposal.”
DRC selected DLT through an international competitive bidding process for their expertise in customizing Commercial Off-The-Shelf (COTS) solutions.
DG Sonam also shared several reasons for the importance of BITS. Firstly, it is essential for the rollout of GST Act, enacted in 2020, which will help increase the taxpayer base. Secondly, the system is designed to simplify tax compliance, encouraging greater engagement from both businesses and individuals. Thirdly, BITS will enhance taxpayer services by providing better interfaces and integrating seamlessly with other government agencies, creating a comprehensive platform for all taxpayer services. Lastly, BITS will replace the outdated RAMIS system, offering more efficient and effective tools for managing tax administration.
With the introduction of GST, which requires monthly returns, the government will benefit from a steady cash flow. This reliable revenue stream will enable the government to better support its initiatives in areas, such as health, education, and infrastructure.
Additionally, the implementation of GST will allow to reform both direct and indirect taxes that people often find burdensome. As a consumption tax, GST will ensure that those who consume goods and services are responsible for paying the associated taxes.
Regarding the implementation of GST, DRC have received substantial international support. The International Monetary Fund (IMF) has been very helpful throughout the process, with Mr Dean serving as an international revenue advisor. Additionally, DRC have a resident advisor provided by the IMF to assist with the project.
The project, fully funded by the RGoB at a cost exceeding Nu 1 billion, will unfold over five years, three years for implementation and two years for warranty. The two years is a pilot testing for the project.
It will be executed in three phases: For the first release, the DRC will implement GST within 12 months, for the second release is for non-tax and TDS in 6 months, and lastly, the replacement of RAMIS for the Direct Tax in 12 months.
BITS system will feature real-time data processing, automated tax filing, e-invoicing, and a user-friendly interface.
BITS will have all the taxes under one system, which will make it easier for the tax payers to avail services from DRC.
The contract signing marks a transformative moment for the country’s tax reform, setting a new standard in tax administration and promising long-term benefits for the country.
