During the Question-Hour session in National Assembly (NA), Tashicholing MP, Dil Maya Rai, said it has been observed that big business companies investing in millions and billions are given tax holidays or incentives on the business income taxes.
MP said that such tax holidays often result in big loss to the country’s economy. During their party campaigning, she said, it was found that the country is losing on taxes. She asked the Finance Minister if the government has any plans to reduce such losses and doing away with the tax holidays or incentives in the future.
In response to the question, Finance Minister, Namgay Tshering, said that what people should know is whatever they are paying as tax to the government is seen as a social responsibility. And because of the tax, the government is providing numerous services to the people, whereby getting equal and fair services by all the people are seen as social entitlement.
“Since our country is at the stage of entering to developing country from least developing country and being at a stage of an emerging economy, we had to put in place many plans and solutions,” Lyonpo added.
Lyonpo also said that if they fail to put in place a numerous ways and solution then it would be difficult to develop the private sector in the country. When they fail in developing the private sector then it will indirectly affect growth of country’s economy, he added.
He said, “So in order to make the country’s economy stronger, it is very important to develop the private sector, and thereby tax exemption is found to be another solution. Tax exemption cannot only help in developing the private sector and country’s economy but also has seen the possibility to address an unemployment issue in the country.”
Currently, as per the Fiscal Incentive Policy Act of Bhutan 2017, because of tax incentives many organizations were benefited. Lyonpo also said “When we have supported them with tax incentives and upon thorough research, the record showed that it has benefited the country’s economy and as well as in providing jobs. Since it is benefitting the country, so indirectly they are paying tax,” said Lyonpo.
Although the country went under loses of Nu 4.4 billion because of tax incentives, Lyonpo said it has benefitted many organizations and has also helped in establishing the private sector.
“The Fiscal Incentive Policy Act, 2017 will end in 2020 and we will see pros and cons of the Act and we will discuss on whether to do away with the Fiscal Incentive Act or not,” Lyonpo said.
Lyonpo said no individual will want to pay tax however, in order to benefit the people, country and the development of private sectors, one must follow the Act as per the rules, Lyonpo added.