Thukten Zangpo

The finance ministry announced the extension of fiscal measures for businesses affected by the Covid-19 pandemic from July 1 to December this year on July 6. 

“Some businesses still require support with cash flow in meeting their operational costs while some are recuperating from the effects of repeated lockdowns and economic downturn due to the pandemic,” according to the finance ministry. 

Tour operators, hotels, and airline companies are eligible to defer payment of self-declared tax-business income tax and corporate income tax for income year 2019 until December 31, this year.

However, the companies have to submit applications to the concerned regional revenue and customs office.

The government waived the monthly rental and other charges for the tourism-related business entities leasing the government properties from July until December this year.

Demand charges for high voltage industries were also extended until December this year. However, the economic affairs ministry and finance ministry would determine the deferment on a case-by-case basis.

Similarly, there will be a deferment of demand charges on an actual consumption basis and payment deferment of demand charges for affected medium voltage industries.

Recognising the need of the contracting partners to have adequate cash flow the government provided the relaxation of procurement rules and regulations.

With the relaxation, the existing performance security of 10 percent of the quoted price was reduced to 5 percent. Performance security is designed to financially protect a principal in the event the contractor defaults on its contractual obligations.

The performance security can be submitted in the form of a Bank Guarantee or cash warrant or demand draft or online submission through any banks prior to formal signing of the contract agreement. But the penalties would be as per the contract terms and conditions in case of any failure to complete the contractual obligations.

With the objective of easing financial burden on bidders, the bid securing declaration was introduced for procurement of works above 5 million (M) and procurement of goods above 0.5M.

According to the finance ministry, any defaulting bidders would be given notice to deposit the stated amount in the bid security declaration within 5 days, failing which the bidder would be debarred (across all government agencies) for a period of one year.

“The procuring agency has the authority to immediately go to the next bidder, once the notice is served to the defaulting bidder,” the ministry stated.

The measures also increased the payment of original invoices as secured or material advance from 75 percent to 100 percent upon the verification by the site engineer and confirming the materials on site.

For evaluation scoring of owned and hired equipment, the contractors participating in the procurement of works above Nu 5M would be allocated 100 points for both owned and hired equipment unlike the existing practice of allocating 100 points for owned and 75 points for hired equipment.