Finance Minister Namgay Tshering

Parliament passes Tax Bill with zero tax for movie tickets

The National Assembly passed the Tax Bill of Bhutan 2022 accepting most of the changes recommended by the National Council.

The NA agreed to reduce the sales tax on movie tickets from 30% to zero though the NC had not recommended any specific number but only suggested a reduction.

The move was supported by many MPs who got up one after the other to support the move saying the film industry generates jobs, it has a positive impact in preserving Bhutanese culture and traditions, the impact of the pandemic and also how Bhutanese invest a lot to make movies.

The Finance Minister Namgay Tshering said he supports the tax becoming zero as the 30% tax had been imposed in 1992 as at the time the movies were mainly foreign in nature.

He said in subsequent fiscal incentives the tax had been reduced, but since the 2021 Fiscal Incentives were targeted they could not incorporate the tax reduction for movie tickets.

The NA supported the NC’s recommendation to reduce tax on eggs from the earlier 50% passed by the NA to 10%. Currently imported eggs have no sales tax.

The NA also agreed to the NC proposal to reduce the sales tax in cement from the 30% passed by the NA to 15%. Currently imported cement has 5% sales tax.

The NA’s Economic and Finance Committee said the reduction of the higher taxes passed by the NA would not make an impact on the domestic eggs and cement products.  

In passing the 100% sales tax for tobacco products, the NA had inadvertently also applied the same tax for nicotine patches and other products used by people to get over nicotine addiction. The NC recommended making it zero Custom Duty and zero Sales Tax which the NA agreed.

The NA, however, did not agree to the NC recommendation to reduce the sales taxes on processed meat like sausages etc and also all kinds of pasta from 20% passed by the NA to 10% by the NC.

The NA also did not agree to the NC proposal to increase taxes on mobiles by 10% to prevent deflection.

The Finance Minister said that deflection may be happening but it is not proven and he said that phones in Bhutan are almost the same price in India though there is around 18% GST tax on phones in India.

He said it is not clear if Bhutan is getting that tax benefit in the first place and a 10% tax on phones may only make it 10% more expensive.

MPs said the mobile phone is a widely used device by all and including students.

The NC had not touched the tax provisions on junk food, tobacco, plastics, furniture, larger cars, ginger and furniture which were passed as it was and are all going up.

The Bill was passed by the NA and will now go to His Majesty for Royal Assent.

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