GST, Income Tax Act, Property Tax, FI 2020, Supplementary Budget and Tourism Levy Exemption all coming in this mega finance NA session
The third session of the third Parliament of Bhutan scheduled from 15th January to 6th March 2020 will see a host a taxation laws and amendments coming into play, all of which will play an important part in the country’s economy.
The Income Tax (Amendment) Bill of Bhutan 2020 will be introduced and debated. The Bill will seek to make a series of changes to the outdated 2001 tax law to not only make it more up to date but also give it more powers to ensure that tax loopholes are closed and revenue is boosted. It will also include wide ranging tax reform measures.
The government will then introduce the Tax (Amendment) Bill of Bhutan 2020 that will list out a host of tax changes. One is that the current PIT slab may increased from the current Nu 200,000 up to Nu 300,000 or even 250,000 with other combinations.
PIT tax could also be increased from the current 25 to 30 percent for those earning above Nu 1 mn a year.
The government will also introduce the Property Tax Bill of Bhutan 2020 that will bring about some reforms in property taxation to ensure compliance.
The tax reform may look at reducing the current property and vehicle transfer tax of five percent to improve compliance but with measures to ensure the right tax is paid.
The NA will also see the introduction of the Goods and Services Tax Bill of Bhutan 2020 that will be the biggest indirect tax reform of the current sales tax and customs duty.
GST will replace the multiple rate sales tax and customs duty right now with a single GST tax rate which was last proposed at seven percent but could be anywhere between a five to 10 percent flat rate.
The GST Bill will give the legal cover for this major tax reform which will encourage people to file their GST to get benefits like avoiding double taxation. GST will also be an automated system on the implementation side.
If the above was not enough the government is also brining in the Fiscal Incentives (Amendment) Bill of Bhutan 2020.
This Bill will be very important for the private sector as the 2017 Fiscal Incentives Act with exemptions on sales tax and customs duty runs put on 31st December 2020. It also gives a host of tax rebates and income tax exemptions in various businesses which are established till 31st December 2020.
Nu 10 bn had been given as FI from January 2008 to February 2018, however, around half of this went to government companies and the government itself.
Of the 10.097 bn Nu 5.044 bn was in service sectors like airplanes, telecom etc., Nu 4.276 bn in manufacturing, Nu 447.69 mn in hotels, Nu 209.63 mn for health equipment, Nu 57 mn for education, Nu 28.88 mn for travel agents, Nu 18.21 mn in ICT, Nu 9.25 mn in transport and Nu 5.39 mn in film and media.
The government is planning to reprioritize the FIs to ensure that it goes more into areas that the government wants to encourage which is also in tandem with its slogan of ‘narrowing the gap.’
Also, since the 2017 FI Act expires in December 2020 the government wants to make changes and renewals before it expires by the end of the year.
The Parliament will also see the introduction of the Tourism Levy Exemption (Amendment) Bill of Bhutan 2020.
The Tourism Levy Exemption Act 2017 exempted tariff paying tourists the USD 65 per-day Sustainable Development Fee if they travelled to the eastern circuit.
Given that it expires by December 2020 the government may want to renew and also make some additional changes to enhance the spread of tourism to the east and south.
The government is also supposed to inform the house of the SDF fee for Regional Tourists which could be anything from Nu 500 to Nu 3500 per day along with other fees like vehicle fees and processing fees.
The government is also bringing in a Pay Revision (Amendment) Bill of Bhutan 2020 for deliberation and adoption though it is not clear what will be the exact content of this bill but it will be linked to the recent pay hike.
The government will also introduce a Supplementary Budget Appropriation Bill for the Financial Year 2019-2020.
The Mines and Minerals Bill of Bhutan 2020 will also see reading, deliberations and adoption in the house.
The mining industry will look forward to this bill.
The other Bills that will be discussed in the NA are the Impeachment Procedure Bill of Bhutan 2019 and Minister and Minister Equivalent Post Holder’s Entitlement Bill of Bhutan 2019.
The BIMSTEC Convention on Cooperation in International Terrorism, Transnational Organized Crime and Illicit Drug Trafficking and the Charter (Amendment) of the SAARC Development Fund will also be put up for adoption.
The session will also see Private member bills like The Anti-Corruption (Amendment) Bill of Bhutan 2020 and Negotiable Instruments (Amendment) Bill of the Kingdom of Bhutan 2020.
There will also be a motion to defer the deliberation on the Local Government (Amendment) Bill of Bhutan 2020
There will also be discussions on reports like the PAC’s report on the 2018 Audit Report, follow up report on implementation status of the resolutions (Annual Audit Reports from 2010-2017) and implementation status of the past resolutions on the financial audit reports
There will be a reports and discussion on National Key Result Areas of Gender Equality, Productive and Gainful Employment and Carbon Neutral, Climate and Disaster Resilient Development.
There will be a follow up on the resolutions of the second session which are a Report on the Master Plan of the Hydropower Projects, Report on the Status and Responsibilities of Bhutan Chamber of Commerce and Industries (BCCI) and Report on the Formulation of Comprehensive Policy for the Differently Abled Person.
Petitions from the local government will be on requirement of Budget Appropriation for Gewogs and the issue of Farm Shops.