Dorji Choden

The government has directed 11 of the country’s 38 vehicle dealers to refund Nu 30.9 million in overcharged Green Taxes to 4,345 customers after a review by the Department of Revenue and Customs (DRC) uncovered discrepancies.

The vehicle dealers were found to have charged buyers higher taxes than required while depositing lower amounts with the government.

The DRC reviewed vehicle sales between 2019 and November 2024, uncovering the widespread discrepancies.

The dealers have been instructed to refund the overcharged amount by February 15, 2025.

The Prime Minister, accompanied by the finance minister and officials, recently met with vehicle dealers from Thimphu and Phuentsholing. The discussions revolved around ensuring fair pricing for customers while maintaining transparency in tax practices.

Prime Minister Tshering Tobgay acknowledged the need for dealers to make profits but urged them to keep vehicle prices reasonable.

Lyonchhen warned that the government could publicly disclose vehicle import costs if unjustified pricing practices persist.

Under the Green Tax Rules and Regulations of Bhutan 2024, passenger vehicles with an engine capacity of 1,800 cc and above are taxed at 20 percent.

Vehicles with an engine capacity of 1,800 cc and below, as well as buses used for public transport and certain utility vehicles primarily used on rural roads, such as pick-ups and trucks, are taxed at 5 percent.

Electric vehicles are exempt from the Green Tax.

The government’s intervention follows a comprehensive review of vehicle pricing after lifting the vehicle import moratorium in August 2024. During the two-year import ban, changes in vehicle taxes went largely unnoticed until pricing issues came to light, particularly for cars under 1,200 cc, which saw price increases despite being tax-exempt.

Finance Minister Lekey Dorji said, “Dealers can charge customers less, as long as they pay the correct green tax to the government. However, they cannot charge customers more than the required tax and pay less to the government”

The government has also instructed the DRC to issue a public notification through various media channels, informing affected customers to claim their refunds.

The DRC is required to submit a detailed report on refunds and corrective actions by February 28, 2025.

The Prime Minister further instructed the dealers to settle any outstanding taxes owed to the government within a month. Similarly, if the government owes refunds to dealers due to discrepancies in sales tax, they will be reimbursed promptly, provided supporting documents are submitted.

The Prime Minister also warned that repeat offenders will face heavy penalties under Bhutan’s tax laws and could be prosecuted under the Penal Code of Bhutan.