The Bhutanese Leading the way.
The recently adopted Excise Tax Bill 2025 and the Goods and Services Tax (GST) Amendment Bill 2025 are undoubtedly a progressive step forward. They promise significant reductions in vehicle prices slashing costs by up to Nu 660,000 for some models. But in a twist of irony, the very laws meant to benefit Bhutanese consumers and reduce inflation now threaten to cripple the country’s vehicle dealership industry.
The core issue lies in the effective date of the new tax rates: 1st January 2026. Vehicle dealers, already battered by the pandemic and a two-year import moratorium, are now facing mass cancellations, plummeting sales, and dangerously large inventories of cars taxed under the current higher tax regime. The result? Dealerships are being financially strangled, with little recourse and even less time.
Zimdra, Kia, Hyundai, Samden, Honda, STCBL, and others face billions in potential losses. Hundreds of vehicles already imported and taxed now sit in lots with little chance of being sold before January 2026, unless the government intervenes. Buyers, understandably, are unwilling to pay higher taxes today for a car that will cost much less just months later.
This is not just a business concern it’s an issue of jobs, economic stability, and policy fairness. Between them, these dealerships employ hundreds of Bhutanese. If the government fails to act, job losses are inevitable, and trust in future business investment will be seriously eroded.
The solution is clear, fair, and already advocated by the National Council: backdate the effective date of the GST and Excise tax rates to May 2025 for vehicles, when the bills were introduced in Parliament. The Public Finance Act provides a precedent for this.
This is a moment for the government to show leadership not just in taxation, but in crisis mitigation. The vehicle industry needs a lifeline. If we act now, we can preserve jobs, prevent bankruptcies, and uphold the integrity of Bhutan’s economic reforms.
In modern times sound policy-making must often come to grips with numbers.
Randal Marlin