Thukten Zangpo

Ministry of Finance (MoF) has said that undervaluation, misdeclaration, and non-declaration of the import and export consignment is a criminal offence and asked importers and exporters to refrain from such practises.

The MoF notified on December 24 that some importers have taken undue advantage of the Department of Revenue and Customs’ (DRC) initiative of zero contact import consignments clearing due to Covid-19.

The department apprehended repeat offenders.

In an earlier interview, director-general of DRC, Wangchuk Thayey, said that with the sheer number of customs officials involved in checking the vehicles and following the Covid-19 protocols, it is difficult to regulate.

“Although, some import invoices are non-taxable, upon physical verification, the items would be taxable,” he said, adding that it takes at least three hours to check a truckload of goods.

The ministry stated that despite downward revision of the customs duty to a flat rate of 10 percent on all the consumable items to promote compliance, the compliance of the importers has not improved in terms of the declaration.

As per section 146 of the Customs Act of Bhutan 2017, mis-declaration, undervaluation, and non-declaration is a criminal offence. The guilty shall be liable for prosecution as per the penal Code of Bhutan.

“Such offences, categorised as a criminal offence, shall not merit appeal at any level,” the ministry stated.

The ministry also stated that collaboration with other relevant agencies, it has initiated an investigation to establish the modus operandi of such offence and shall accordingly initiate necessary intervention.

According to the National Accounts Statistics 2021, taxes on products (indirect taxes) growth dropped to -49.48 percent in 2020 compared to the previous year.

At Nu 4.596 billion, the drop was one of the highest within the past 19 years.

The DRC plans to come up with the Bhutan Integrated Taxation Systems and Goods and Services Tax software by July next year to ensure minimal tax leakage.