Nu 10 bn in Fiscal Incentives in last 10 years

Around half the FIs have gone back to government companies or the government

The Finance Ministry has compiled the detailed list of the Fiscal Incentives (FI), including the beneficiary companies from January 2008 to February 2018.

The cabinet recently authorized the list to be published in its entirety on the Finance Ministry’s website based on the request of the Opposition party.

A whopping amount of Nu 10.097 bn was given as FI in various sectors with Nu 5.044 bn in service sectors like airplanes, telecom etc, Nu 4.276 bn in manufacturing, Nu 447.69 mn in hotels (see separate story on pg 1), 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.

From the above around half the FIs have gone to government companies or the government itself.

Services

In services of the top five FI beneficiary companies the top three are government companies.

Of the total Nu 5.044 bn FI the Druk Air Corporation has received Nu 1.779 bn in custom duty and sales tax break for its airplanes and related equipment.

Next is Bhutan Telecom with Nu 1.098 bn mainly for its mobile towers and telecom equipment.

This is followed by BPC at 1.071 bn for its transmission lines, towers and other related equipment.

At number four and five are the private competitors of Bhutan Telecom and Druk Air. Tashi Infocomm got Nu 630 mn in tax breaks while Tashi Air got Nu 189.42 mn.

Number six and seven are also government companies with BBS getting Nu 153 mn in tax breaks and Royal Bhutan Helicopter Service getting Nu 82.35 mn for imports.

Manufacturing

The manufacturing sector for a long time even before the FI industries were exempt from paying Sales Tax (ST) and Customs Duty (CD) on import of various raw materials and certain equipment in order to make Bhutanese industry competitive compared to their regional counterparts. The FI mostly incorporated these long standing exemptions.

Of the Nu 4.276 bn FI for this sector the top five are Army Welfare Project in Gelephu at Nu 722.42 mn, Bhutan Metal private limited with Nu 395.86 mn, RSA Pvt Limited with Nu 373.58 mn, Yarab Pvt Limited with Nu 359.94 mn and Rangshar Industries Pvt Limited with Nu 347 mn.

In terms of the income tax FI foregone in manufacturing the top five are Druk Wang Alloys at Nu 51.67 mn, Ugen Ferro Alloys at Nu 2.85 mn, Bhutan Cable Industries Limited at Nu 19.10 mn, KLS wires at Nu 18.49 mn and RSA carb unit at 15.18 mn.

Health, Education and ICT

Of the Nu 209 mn FI in the health sector the overwhelming bulk of it has gone to the Health Ministry for import of medical equipment and drugs.

In Education of Nu 46.97 mn in Income tax exemption for seven institutions the top three are Royal Thimphu College at Nu 16.69 mn, Tenzin Higher Secondary School at Nu 10.22 mn and Kuendrup Higher Secondary School at Nu 8.49 mn.

Of the Nu 8.97 mn in FI for ST and CD exemptions the top two are Pelkhil private school with nu 1.19 mn, and the government owned Gyelpozhing college with Nu 1.12 mn The rest are a combination of government and private educational institutes. A total of 33 education institutes have benefited in small amounts.

In the ICT sector with a total FI of Nu 18.21 mn the Thimphu Tech Park has ST and CD exemption of 8.92 mn and Nu 7.94 mn in income tax exemption. BBS has Nu 7.86 mn in income tax exemption.

Transport, Travel agent and Film and Media

In the transport sector of the Nu 9.25 mn FI the top two are Dramzop transport services at nu 1.21 mn and Samden Vehicle at Nu 1.12 mn. The rest 44 transport companies have benefited from the rest with small amounts each.

For travel agents the Nu 27.81 mn FI has been distributed between 50 companies with the top three being X-plore Bhutan at Nu 8.34 mn, Bhutan Tourism Corporation Ltd at Nu 7.02 mn and Lotus Adventures Bhutan at Nu 1.42 mn.

In Film and media with a total FI of Nu 5.39 mn around Nu 2.34 mn are for ST and CD exemption to mostly small production houses and PIT exemption of Nu 1.66 mn for Bhutan Times and Nu 1.29 mn for KDC Productions.

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