The Bhutanese Leading the way.
Businesses are confused about the Goods and Services Tax (GST) regime and speak about the lack of advocacy. With 4,500 businesses under compulsory GST registration, the GST Help Desk has also been getting about a minimum of 100 people coming for enquiries and complaints daily.
Several business owners said they were struggling to understand the GST tax regime and the technical requirements needed to comply.
One business owner said confusion over exemptions and technical requirements had delayed registration. The owner said that they had not registered for the GST yet because of the confusion caused by the tax regime. They said that authorities were not clear enough about which necessities were exempt from taxes. They gave an example that there were many varieties of rice, such as Basmati and Raj Bhog, and many types of oil, but it had been announced that olive oil would be taxed under GST.
The owner said that while registration was required, finding technical support had been difficult. They explained that they needed to register, but could not find a software expert. They said that the DRC did not offer support but kept telling them that registration was necessary, and that failure to register would prevent them from adding GST.
The owner emphasized that they were aware they could not add GST and had not done so for any clients so far since they were still looking for technical help. The owner also said that not registering had financial consequences.
They explained that if they did not register, they would lose profit since they could not add GST to their sales, but they still had to pay other wholesalers when purchasing goods from them.
Another business owner said that installing the required system had some issues and required additional resources. They said that since a different system was required to charge GST, which meant hiring technical workers who could operate it and people familiar with how the system worked.
The owner said that confusion was widespread across the supply chain. They explained that when they went to buy alcohol for their shop, all the alcohol wholesalers were closed, probably because they had not installed the system or were also confused about GST.
The owner said the situation created further uncertainty. They added that when big businesses they purchased from claimed that they were not viable for GST, it was misleading. They recounted that when they went to purchase alcohol in bulk from wholesalers, assuming others would be registered for GST, all stores had been closed for four days.
After contacting authorities, the owner said responsibility was unclear. They explained that they had called OCR, which told them to contact DRC for the issue.
Despite the challenges, the owner expressed hope that the situation would improve over time. They said they hoped things would get better and guessed that it would improve gradually.
The owner also raised concerns about online businesses. They said their main concern was about online businesses operating without clear locations for license registration, which allowed them to operate at lower costs than physical stores and potentially evade taxes.
They added that brick-and-mortar businesses faced higher operating costs. The owner explained that GST implementation required workers to operate the system, and that if all stores had to hire technical staff, market readiness for such staff would also be a concern.
A member of the GST team said the GST Help Desk had been under pressure since the rollout. They said that initially, at least 100 people came to the help desk daily, though the number had reduced slightly over time. They added that when the help desk reached capacity, people were sent to the sales tax division, which was authorized to help with GST enquiries.
The team member said many enquiries are related to technical issues. They said that people came in with confusion and needed help regarding technical matters. They mentioned that the GST team had around 40 members, including those from the sales tax division, with only a handful at the GST Help Desk.
According to the team member, confusion was not limited to small businesses. They said that recently, someone from BPC had visited the help desk seeking guidance on operating under the new regime despite having a contract with a supplier.
The team member added that the issue was not about education but complexity. They explained that it was not because business people were uneducated, but because the GST Act was difficult to comprehend.
International best practice and rule-of-law principles encourage tax laws to be clear and understandable to ordinary taxpayers.
Another business person said that earlier and broader outreach could have reduced confusion. They explained that proper advocacy of the GST regime would have made things much clearer. They added that they were called for a GST meeting once, and that countrywide meetings only started in October, even though the tax was announced in July.
