Re­moval of 5% voucher tax not pos­si­ble in 120 days

The gov­ern­ment would lose Nu 200mn an­nu­ally once the 5% voucher tax is re­moved

Business Bhutan - - Business - Dechen Dolkar from Thim­phu

The DrukNyam­rupTshogpa (DNT) gov­ern­ment will not be able to waive off 5% voucher tax in 120 days as pledged since it is a tax is­sue and the Par­lia­ment has to de­lib­er­ate and pass it.

Ac­cord­ing to the Depart­ment of Rev­enue and Cus­toms (DRC), the rev­enue earned from telecom­mu­ni­ca­tion ser­vices on voucher tax av­er­ages Nu 200mn an­nu­ally. In 2017, Nu 222mn was earned as rev­enue from voucher tax.

The re­moval of voucher tax will mean the gov­ern­ment will have to forgo around Nu 200mn in rev­enue ev­ery year.

Re­spond­ing to a Busi­ness Bhutan ques­tion dur­ing the Fri­day Meet Ses­sion on Wed­nes­day, Min­is­ter of For­eign Af­fairs Dr.TandiDorji said the re­moval of 5% voucher tax will not be tabled at the on­go­ing Par­lia­ment ses­sion. “When­ever na­tional is­sues are raised, the gov­ern­ment of the day should not hurry. Care­ful anal­y­sis and stud­ies have to be done.” Said Ly­onpo.

The for­eign af­fairs min­is­ter said that the Min­istry of Fi­nance has done an ex­cel­lent anal­y­sis and pre­sented the re­port to the cabi­net. How­ever, since it in­volves taxes, the dis­cus­sion on voucher tax re­moval was de­ferred till the whole tax re­form can be made.

“It would take a few more months and in the first one year, the tax re­forms will be done,” said Ly­onpo.

Fi­nance Min­is­ter Nam­gay Tsh­er­ing said that the is­sue has been dis­cussed in the cabi­net and since the gov­ern­ment is com­ing up with ma­jor re­form­sin tax­a­tion,the min­istry is closely look­ing into broad­en­ing the tax base.

The gov­ern­ment is also plan­ning to in­tro­duce Goods and Ser­vices Tax (GST) in Bhutan and in­crease the Per­sonal In­come Tax slab to Nu 300,000 for low in­come and mid­dle in­comegroup. The gov­ern­ment has also pledged to do away with­Busi­ness In­come Tax for busi­ness firms earn­ing lesser than 200,000 an­nu­ally.

“All these tax re­forms will come un­der a pack­a­geof ma­jor tax re­forms,” said Ly­onpo.

The Fi­nance Min­is­ter also said that the gov­ern­ment is look­ing into ways to make up for the rev­enue loss in­curred through the re­moval of 5% voucher tax.

The Peo­ple’s Demo­cratic Party gov­ern­ment im­posed the 5% voucher and it was im­ple­mented from Oc­to­ber 2014. The 5% tax deducts Nu 5on ev­ery Nu 100 voucher and Nu 2.5 on ev­ery Nu 50 voucher.

The DNT pledged to re­move the 5% voucher tax in its 120 days pledges.

The DNT claimed that since this tax sys­tem ap­plied to all tele­com ser­vice users in the coun­try in­clud­ing­farm­ers and poorer sec­tion of the pop­u­la­tion, the re­moval of the tax would largely ben­e­fit the poorer sec­tion the most. Although it is min­i­mal of Nu 5 and Nu 2.5 but the weight of the tax is felt when it is ac­counted cu­mu­la­tively and over long pe­riod of time.

Un­der the cur­rent tax sys­tem, all telecom­mu­ni­ca­tion ser­vice users such as pre­paid, post­paid In­ter­net and land­line users are im­posed 5% tax on the amount spent on us­ing these ser­vices.It is learnt that the post­paid and in­ter­net lease lines users are the ones who usu­ally pay more com­pared to other ser­vice users. This is ba­si­cally be­causeIn­ter­net­ser­vices are based on pack­age sys­tems.

Bhutan Tele­com had around 438,037 mo­bile sub­scribers and TashiIn­foComm Lim­ited had around 267,640mo­bile sub­scribers as of Septem­ber 2018.

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