Except for one section, the Economic and Finance Committee of the National Assembly yesterday proposed no major amendments in the Fiscal Incentives Bill 2020.
The committee proposed amendment of section 3 of the Bill deferring expiry year of the income tax exemption to small and micro businesses in rural areas from 31st December 2023 to 31st December 2024.
This, according to Chairperson of the committee, Kinley Wangchuk, would reduce inconvenience to users when the current government’s term ends in 2023. “When governments change, the Committee would also dissolve, hence inconvenience to people.”
However, Member of the Parliament (MP) for Kengkhar-Weringla, Rinzin Jamtsho sought clarification about why articles 4 and 5 of the Bill contradicted with the proposed amendment of section 3.
Article 4 of the Bill states: “Reinvestment allowance, income exemption, tax rebate, additional expenditure deduction, TDS exemption, sales tax and customs duty exemption, concessional customs duty shall expire by 31st December, 2020,” whereas article 5 states: “Income tax exemption to small and micro businesses in rural areas shall expire by 31st December, 2018.”
MP said that the expiry dates of the mentioned articles should be aligned to avoid confusions in future.
Finance Minister Namgay Tshering said except for the expiry date of article 5—31st December 2018—all other expiry dates in the Bill had no issues. He said that while income tax exemption to small and micro businesses in rural areas was granted in 2014, the fiscal incentives policy was changed to an Act only in 2017.
Lyonpo said that the Act superseded the policy and there were gaps in extension of the expiry date. “The current government took over in mid 2018 and we did not get opportunity to extend the exemption expiry dates.”
The ministry, in the current session is proposing extension of expiry date in article 5, ‘31st December 2018’ to the end of 2023. However, major amendments would be proposed in the next session based on findings of an ongoing research.
Meanwhile, Panbang MP Dorji Wangdi asked the finance minister about the government’s plan on extension of income tax exemption which is expiring at the end of 2020.
He said that there were about nine articles in the Bill whose exemption expiry date was in 2020, adding that while making amendments, the government needs to consider the recent introduction of goods and services tax as well.
Lyonpo said the Bill required major amendments according to review and would be presented in the upcoming session. He said the government should make need-based changes in the Act as exemption of income tax has incurred government a loss of Nu 4.2 billion.