The Bhutanese Leading the way.
Prime Minister Tshering Tobgay has directed the Ministry of Industry Commerce and Employment (MoICE), the Ministry of Finance (MoF) and Royal Monetary Authority (RMA) to evaluate the feasibility of direct imports of cars from dealers outside to ensure cost savings for consumers.
These measures would be implemented once the direct purchase of cars from outside options is formalized.
The PM has directed the MoICE and the MoF to study this if it is cheaper for the customers to buy directly without involving licensed vehicle agents inside.
Finance Minister Lekey Dorji said the authorized vehicle dealers would also try to bring down the prices of cars as much as possible.
The citizens are concerned over soaring car prices, with basic models like the Alto exceeding Nu. 700,000 after 2022 tax revisions, and issues like high down payments and delayed deliveries.
The MoF is investigating whether authorized dealers are overcharging customers by claiming excessive taxes and working on possible solutions to make it affordable.
The MoF Lekey Dorji shared that the government has completed an analysis to assess the impact of the 2022 tax revision on vehicle prices.
He shared that while the tax hike introduced by the previous government was initially not felt due to a vehicle import moratorium, its effects became evident after the moratorium was lifted in August 2024.
However, he highlighted that the price hike for smaller cars like the Alto classified under 1200cc has no changes in tax rates but it was due to rising costs associated with insurance, transportation, upgraded models, and dealer profit margins.
He emphasized that the MoF is collaborating with the Royal Monetary Authority (RMA) and the Department of Trade (DoT) in exploring options for customers to purchase vehicles directly from manufacturers or foreign dealers, without involving local agents to formalize direct purchasing mechanisms, which could provide more affordable options.
He shared that while there are no immediate plans to revise vehicle taxes, the implementation of the Goods and Services Tax (GST) is expected to shift the burden potentially lowering vehicle tax and tax administration.
This is because the GST implementation will change the modalities of tax collection from the point of sale to point of entry, and improve efficiency in tax collection and tax administration.
Vehicle dealers in Thimphu have maintained that the price increase is primarily due to inflation, new technology upgrades and taxes. They say that while Bhutanese can purchase vehicles from outside, if anything happens to the vehicles then the outside dealer will not be accountable.
