The Bhutanese Leading the way.
The General Secretary of the Traders Association of Bhutan, Tshering Gyeltshen, has raised concerns over differences in tax regimes between Sarpang and the other 19 dzongkhags, saying the disparity has created an uneven playing field for importers outside Sarpang.
According to Tshering Gyeltshen, Sarpang is still under the BST regime, while the rest of the 19 dzongkhags operate under the GST regime and excise tax regime.
He explained that excise tax is levied on items such as liquor, aerated beverages, cigarettes and coffee. These goods are also liable for permit fees and excise tax, which importers outside Sarpang have to pay.
“These types of goods are not liable for permit fees and excise tax in Sarpang. That’s why you get it cheaper there,” he said.
He said the issue arises when goods imported through Sarpang are moved outside the city through illegal channels and sold at lower prices, affecting importers operating through legal channels.
“If the importers had done it through legal and proper channels, it’s not an issue. But they bring it through illegal channels, they get it (the goods) cheaper, so they sell it outside Sarpang through illegal channels, and it has greatly impacted the other importers,” he alleged.
He said the association has seen goods being brought in at significantly lower prices, particularly Coke, iced tea and other aerated beverages.
“They’re selling it at a cheaper price, but the retailers aren’t selling it at a cheaper price to the customers. They’re selling at a market rate,” he alleged.
Traders have identified iced Coke, other aerated beverages and MAMA cup noodles among the items being moved through what he described as illegal channels.
According to traders, the price difference is significant. While goods are cheaper in Sarpang because they are not subject to the same taxes, he said they should remain within Sarpang. The movement of these goods outside Sarpang, he said, has created an uneven playing field for importers in the other 19 dzongkhags.
Tshering Gyeltshen said he had not personally witnessed the movement of goods through these routes, but said members of the association had informed him that goods were being transported through Bumthang and Trongsa, where there are no checkpoints and goods are not checked.
“Our members have informed me that they are using roads from Bumthang and Trongsa where there are no checkpoints and they don’t check there, so they have sent it through these dzongkhags,” he said.
On pricing, he said importers outside Sarpang had reported that goods coming from Sarpang were being sold at prices lower than the landing price of importers in the other 19 dzongkhags.
“If they sell it within the Sarpang, it’s fine, but it has now created an uneven playing field with the importers there and here,” he said.
Tshering Gyeltshen said the Traders Association has already submitted a letter to the Department of Revenue and Customs (DRC) regarding the issue.
“I have put up a letter to the DRC and they have said that they will put up the issue and look into it,” he said.
A transporter also raised concerns over how goods are allegedly being moved out of Sarpang.
According to the transporter, items are being brought in under loads of gravel and sand that are imported from Sarpang, and they aren’t getting much business since most of the goods are being transported from Sarpang.
