GST system will come into effect by the mid 2020

The finance minister Lyonpo Namgay Tshering said that with Bhutan’s current taxation policy and the systems in place, the tax base is eroding along with complex tax exemption system in place.

“Most importantly, Bhutan’s tax base is very narrow and taking that into consideration, we have taken up initiative to pursue and implement Goods and Services Tax (GST). The key salient feature of GST is its broad based taxation system, which will also avoid tax on tax which is a burden on the consumers,” said the finance minister, Namgay Dorji.

The minister said that GST will ensure that everyone complies to the taxpaying culture to minimize the loopholes in the taxpaying system. “Having said so, when we say we are going to implement GST system, the government of the day is not going to impose additional taxation measures to the taxpayers. This is mainly to streamline the system and create conducive environment for both the taxpayers and the government.”

Aimed at reducing the burden on the consumers, the GST system will also help in the inflow of additional revenue flowing in the government’s exchequer. The finance minister said that since the GST will be implemented from broader aspects, the project cannot be rushed which is why the Ministry of finance is in the process of drafting the legislation to be put for the cabinet’s endorsement.

“We are not rushing in whatever changes we are trying to bring in the fiscal policies so as to ensure the sustainability of the system that doesn’t require change every five years later.

The GST will come into effect tentatively by the mid of 2020.

Lyonchhen (Dr.) Lotay Tshering added that no politician or democratic set up will play with taxation policy as it can never be right politically. “Nonetheless, we have decided to go for it for the greater good of the country. If there are more sensible people, maybe, things will be different,” said Lyonchhen.

Lyonchhen said that if there is one outstanding reason that the government of the day will not be granted another term in the 2023 election, it can be attributed to the taxation policy.

“We would have done this country a huge favor by revising the taxation policy very stringently. If a person pays Nu 1000 more, another person might have to pay a million more, however, the tax returns will indirectly benefit the individual in the form of improved roads, water supply, education, health, among many other areas.”

The Prime Minister said that it is important for the taxpayers to not take the taxation policy personally but rather have a holistic view for the larger benefit of the country.

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