Why GST Bill was withdrawn from the Parliament session

The motion to introduce the Goods and Services Tax (GST Amendment) Bill of Bhutan, 2024 for deliberation and adoption was withdrawn from the Parliament session yesterday.

According to Minister of Finance, Lekey Dorji, “We wanted to amend the GST Act 2020 again but the Cabinet advised the ministry to first implement the GST Act without going for amendment again.”

Since the GST amendment 2024 was already slotted on the agenda, finance minister Lekey Dorji motioned to withdraw the GST (amendment) bill 2024 which was promptly and unanimously endorsed by the National Assembly.

The GST Act was passed in 2020, but due to the lack of readiness of the online BITS system and due to the economic impact of COVID-19 its implementation was delayed. It received an extension in 2022 with an amendment that would only come into effect once Parliament grants approval.

Although the GST Act of 2020 was passed as a money bill and was supposed to be implemented immediately, its enforcement was postponed to 2021.

In 2022, the act couldn’t be implemented because the Bhutan Integrated System was still not ready, leading to further delays. Currently, the project has been assigned to Data Quest Limited, a company based in New Zealand. According to the finance minister, the motion was withdrawn for several reasons.

One key reason was that during cabinet discussions, the decision was made to implement the act as originally drafted, without amendments, with the understanding that any issues could be addressed later.

Bhutan now has GST Act 2020, GST amendment Act 2021, and GST amendment Act 2022. However, the implementation of GST has been deferred till now mainly due to unreadiness of the integrated tax system and the onslaught of the Covid-19 right after the passage of the Act in 2020. The GST amendment Act 2022 provides for the deferment of the implementation until the tax system is ready and also requires the endorsement of the Parliament.

The finance minister further reported to the House that the DRC has procured the services of a New Zealand company called Data Quest Limited to work on Bhutan Integrated Taxation System.

The motion was approved by the House, with all members in favor of withdrawing the bill.

The aim is to implement GST by July 2024 but it remains to be seen if the systems will be ready by then.