The Bhutanese Leading the way.
At the 50th Meet the Press, the Finance Minister, Namgay Tshering was questioned on the Tax Reforms.
Lyonpo Namgay Tshering said it is inappropriate to include the vehicle quota in the pay revision as it is an entirely different thing.
He said, “It is inappropriate to have vehicle quota combined with the pay revision because these two seem entirely different. This is an additional Fringe benefit for the public servant. In the future, there is no requirement for a vehicle quota.”
However, in the future, if the situation allows 100% tax exemption should be given to all Bhutanese if a family has not bought a car according to the finance minister. However, if the same family buys, a second or a third car they should be charged additional taxes.
The minister said that the quota is not only for public servants or civil servants but every Bhutanese deserves it. Therefore, there is no difference between whoever is getting the quota or tax exemption. The only necessary thing is that everyone should not be charged with sales tax and customs duty.
So this will form part of the tax law which is currently being drafted by the Minister of Finance and another mile stone change happening with taxes is they are working on a brand new bill on income tax
Therefore, whoever comes as the next government has to see the country’s benefit and work accordingly, said the minister.
He said they recently launched E customs (ECMS) E customs management services. E customs is not only about what is happening around MDP at the point of entry, but will also have a provision to integrate with the customs services across the border.
Talking of earlier tax reforms Lyonpo said, “There was an amendment back in 2019. People who earn less than 300,000, farmers who are running businesses, and people who are depending on their pensions were all exempted from personal income tax.”
“We have rationalized the custom duty in 2021 at a uniform rate of 10%. Earlier we use to have 13 different slabs of customs duty which posed a lot of complications for the trader as well as for customs officials at the entry point,” said the minister.
He said for the first time a brand new property tax was implemented. He said the objective of having property taxes is not only to generate additional revenue for the government but to streamline and make the taxes system more efficient and at the same time the hidden agenda of property taxes is to ensure that even rural land can be used as a collateral to avail loan from financial institution where currently financial institutions don’t recognize or take rural asset as a collateral.
Due to the increase in the prices of the essential commodities in the market, during the winter session of parliament last year, he said the tax was decreased for essential items like rice, oil, etc., and taxes for commodities that are bad for health were increased.
To encourage local products, import taxes on products that are also locally produced were also increased.
The minister said, “This is an ongoing process of reform so we are hoping that the next government will continue the work and will enact a new income tax law.”
He said income tax act was originally enacted back in 2001 after which only a certain section was enacted in every government and a certain section was amended but basically, the income tax law was similar to 2001.
