Tax revenue forms 70 percent of the total revenue of the country
The net collection which comprises of tax and non-tax revenue amounted to Nu 23,244.610m, which was an increase of 10.2 percent or Nu 2,142.919m in 2014 over the previous fiscal year.
According to the National Revenue report 2013-2014, the total revenue collection has also exceeded the recurrent expenditure by 29.9 percent. The total revenue coverage as a percentage to GDP during the year was 20.6 percent. The tax to GDP ratio for the year stands at 14.3 percent.
During the fiscal year, the ratio of tax to nontax revenue composition stood at 70:30, a trend similar to that of the previous fiscal year. The major contributors also remain the same with corporate income tax being the biggest source under direct tax constituting 55 percent of the direct tax, and excise duty and sales tax under indirect tax collection constituting 50.6 percent and 42.8 percent respectively, states the report.
It further states that, dividend remittance under the non-tax revenue is the major source constituting 53.5 percent of non-tax followed by interest receipts from corporations.
Although the revenue collection trend has been increasing over the past four years at an average of 10.5 percent but due to the Government restricted on some imports of goods from abroad, the report says that, the recent setback in the economy due to adverse balance of payment situation and the government restrictions on selected imports have negatively affected the average growth rate of domestic revenue. While, the revenue target for the fiscal year was Nu 21,860.885m as reflected in the National Budget Report 2014 based on the actual collection for FY 2012-13 and incorporating updates from relevant sectors. The report says that the gross collection amounted to Nu 23, 659.907m which is an achievement of 108.2 percent to the target.
However, the refund disbursed during the year increased by 19.7 percent compared to the previous year bringing down the net collection to Nu 23, 244.610m and the achievement to target in terms of net collection is 106.3 percent. It represents 20.6 percent of the projected GDP, states the report.
While, under direct tax; corporate income tax (CIT) and business income tax (BIT) has exceeded the target contributing Nu 7, 911.321m collectively. Excise duty refund from Government of India (GoI) record an ample receipt of Nu 280.169m over and above the target set for the year.
According to the report, the dividend surpassed the target under non-tax revenue with a contribution of Nu 667.072m over the target of Nu 3, 112.314m.
But amongst the corporate units, Druk Green Power Corporation Limited (DGPCL) topped the list with CIT revenue of Nu 2,311.907m and dividend of Nu 1,969.479m. The net tax and non-tax revenue for the year stands at Nu 16,182.774m and Nu 7,061.836m respectively, states the report.
The report further states that, the net tax collection during the year amounts to Nu 16,182.774m, this comprises of direct and indirect tax, registering an increase of 5.1 percent or Nu 779.656m over the previous year’s collection of Nu 15, 403.118m. The collections from direct taxes have shown an increase compared to the previous year, however, indirect tax comprising of contribution from sales, excise duty, green tax and other indirect taxes has decreased. The direct tax recorded an increase of 18.6 percent over the previous year’s collection, while the indirect tax went down by 16 percent. Tax revenue forms 70 percent of the total revenue.
It also states that, direct tax collection for the year amounts to Nu 11, 132.042m registering an increase of 18.6 percent or Nu 1,742.003m, against the previous year’s collection. Direct tax constitutes 47.9 percent of the total tax revenue and 70 percent of the total revenue.
Corporate income tax ( CIT) continues to be the major contributor under direct tax although the increase in business income tax ( BIT) and personal income tax ( PIT) also has contributed to the increase.
The overall CIT collection during the year is Nu 6,127.428m; this was an increase of 26 percent over the previous year.
Meanwhile, most of the corporate units have performed better than the previous year in terms of tax contribution except for banks, Bhutan Telecom, AWPL, PCAL, STBCL etc. but the main contributor to corporate tax for the year was still the hydropower sector and DHI.