Thukten Zangpo

The finance ministry has “temporarily” extended the property tax collection deadline from December 31 this year to January 1 to March-end next year.

The ministry on October 5 notified the extension of the assessment and collection of property tax for 2023 recognising the unique circumstances surrounding the introduction of property tax and the ongoing efforts in system preparation coupled with the continued collection of land tax arrears for the years up to 2022.

“All the taxpayers are encouraged to take note of this extension and plan their financial commitments accordingly,” the ministry stated.

Section 28 of the Property Tax Act of Bhutan 2022 states, “All taxes under this Act are due and payable within December 31 of each year even if an objection or appeal has been made under Chapter 6 of this Act.”

However, the decision to extend the deadline comes as a temporary measure intended to accommodate the intricacies associated with the inaugural implementation of property tax, the ministry stated.

The government revised the property tax of land and building to 0.1 percent of the taxable value of land and buildings during the winter session of the Parliament last year which will earn millions for the government.

Before the revision, Nu 12 per acre or Nu 0.12 per decimal was taxed for dry land in rural areas, and Nu 24 per acre or Nu 0.24 per decimal for wetland. While the commercial land tax rate in Thimphu and Phuentsholing was Nu 217.5 per decimal and the residential land tax rate was Nu 108.75 per decimal.

Suppose a 24-decimal land in E4 (Babesa, Simtokha, Lubding, and Pamtsho) in Thimphu, which was earlier taxed at Nu 2,623 annually, has to pay Nu 12,156 annually from after the revision. This is an increase of 363 percent.

Similarly, a 10-decimal land along the Norzin lam, which falls under the core sub-precinct 1A in Thimphu will see the annual tax increase from Nu 1,452 to Nu 26,540, an increase of over 1,500 percent.

With the revision, a building owner of 10 flats in Olakha, Thimphu will have to pay Nu 18,000 as annual building tax compared to Nu 1,000 earlier.

A Class A dry land in Paro will have to pay Nu 2,988 per acre or Nu 29.88 per decimal as land tax Nu 1,318 per acre or Nu 13.18 per decimal in Mongar and Nu 624 per acre or Nu 6.24 per decimal in Gasa from earlier uniform rate of Nu 12 per acre or Nu 0.12 per decimal.

The finance ministry had projected the country’s tax revenue to grow by about 18 percent in the current fiscal year 2023-24 from fiscal year 2022-23. In figures, the tax is forecast to grow to Nu 31.5 billion from Nu 26.75 billion with anticipated improvement in economic conditions.