Government to refund customs duty in excess of new rates
The Ministry of Finance (MoF) has notified that it will refund the customs duty levied in excess of the new rates passed by the summer session of Parliament.
The Customs (amendment) Act 2021 reduces the customs duty to 10 percent from the existing rates of up to 50 percent on about 500 goods from third countries, which is expected to make them cheaper in the local market.
The ministry has decided to refund the excess customs duty as the new Act became effective from the day it was presented in Parliament in compliance with the Public Finance Act. The (amendment) Bill, which received the Royal Assent recently, was introduced in Parliament on May 31, from which the refund is applicable.
The ministry on July 23 notified that it had promulgated rules, as per which the refund will be only eligible on the commodities that are sold at a reduced price due to the reduction of the duty.
The refund is also applicable on unsold commodities that were imported on or after May 31. But a business or importer will not be eligible for refund if it or its sister companies have any outstanding customs duty, fines and penalties or interest to the government.
The customs duty on the goods imported on or after May 31 and sold to consumers has already been transferred to consumers. In such cases, observers say that the importers and wholesalers are expected to enjoy the refund.
However, Finance Minister Namgay Tshering in the rules stated that in the case of sold goods, the claimant should submit a copy of the invoice or cash memo substantiating that the sales were made at reduced prices due to the reduction in the duty rates.
In the case of the unsold commodities, the claimant should submit the detailed inventory of the unsold stock. Importers must file their claims with the nearest regional revenue and customs office within a year from the date of import of goods, as per the ministry.
According to Section 144(5) of the Customs Act of Bhutan 2017, an applicant who fails to comply with the government notification and conditions are liable to pay a fine ranging from Nu 5,000 to Nu 100,000.
In addition, as per section 146(5) an applicant who commits forgery of documents related to import of goods will be a criminal offence and liable for prosecution as per Penal Code of Bhutan.
The application for refund should be filled and signed by the importer as per the form prescribed in the Customs Rules and Regulation of Bhutan 2017.
Officials hope that the benefits of the reduced duty would trickle down to consumers.
Economic affairs minister Loknath Sharma in a recent interview said that the prices of third country goods would decrease prices for consumers. He said that prices would be further decrease once the Covid-19 restrictions in transportation of goods are eased.
The duty reduction is being implemented at a time when inflation rates remain high amid the Covid-19 pandemic.
The overall consumer price index for the month of May 2021 increased by 8.69 percent from May 2020, according to data published by the National Statistics Bureau on July 13. This means that the prices of goods and services consumed by the households are 8.69 percent costlier in May this year compared to the same month last year.
Edited by Jigme Wangchuk