The domestic revenue for fiscal year 2020-21 is estimated at Nu 33,189 million (M), which is one of the lowest in the recent past.
This is 14 percent lower than that of the previous year mainly contributed by the Covid-19 situation, according to the budget report for the fiscal year.
Presenting the annual budget in the National Assembly on June 1, Finance Minister Namgay Tshering said that with the travel restrictions, the estimated tourism receipts (SDF and Visa Fees) accounting for five percent of the total domestic revenue might not be realised.
He added the sales tax collection from hotels, airport tax, Corporate Income Tax (CIT) and Business Income Tax (BIT) from tourism related business entities would sharply drop as these are closely linked to tourist arrivals.
“Further due to the lock down in the neighbouring countries, imports and exports have been affected, which will also result in lower collection of sales tax and customs duty,” he said.
According to the budget report, the implementation of the new tax measures passed by Parliament will also impact the revenue collection, as 17 percent from estimated personal income tax (PIT) followed by five percent from CIT and five percent from sales tax will be forgone.
Lyonpo Namgay Tshering said, “The payment deferment of BIT and CIT granted under the fiscal measures may have to be adjusted to the evolving situation of Covid-19 which will further aggravate the revenue performance.”
In order to ensure that the revenue targets are met, the Mangdechhu Hydro Power plant shall be maintained under profit transfer modality during the fiscal year and the commencement of debt servicing is scheduled for the beginning of 2021.
However, the finance minister expressed his hope that the Druk Gyalpo Relief Kidu (DGRK), frontloading of 12th Plan activities and government spending through the economic contingency plan (ECP) would stimulate growth and enhance income generating activities. “This will have positive impact on revenue performance.”
To overcome the economic disruptions and with a view to stabilise the economy and stimulate growth, the government has reprioritised the 12th Plan activities and front-loaded various activities to fast track the implementation.
According to the budget report, particular emphasis has been placed on revitalising the rural economy, creating employment opportunities amongst others. Over and above the planned activities, the government has initiated the implementation of ECP in the areas of “Tourism Resilience, Build Bhutan Project, Agriculture and Farm Road improvement”.
The ECP will be implemented with a budget of about Nu 4 billion over and above the regular budget of the agencies. “As the activities under ECP are at an advanced stage of finalisation, most of the activities will be implemented in the FY 2020-21,” the finance minister said.